Professional Documents
Culture Documents
PROJECT REPORT
ON
1
PREFACE
There are number forces that make marketing an endlessly changing activity.
The constantly activity sociological, psychological and political environment
may represent the uncontrollable marketing factors. To understanding these
factors in better way marketing research is of utmost importance.
HDFC STANDARD LIFE is the name which is working as one of the best private
insurance company in insurance secto33r.
With such large population and the untapped market of populations insurance
happens to be very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 percent annually. Together with banking services,
It adds about 7 percent to the country’s GDP. In spite of all this growth the
statistics of the penetration of the insurance in the country is very poor. Nearly
80% of Indian populations are without Life Insurance cover and the Health
Insurance. This is an indicator that growth potential for the insurance sector is
immense in India.
2
CONTENTS
Page No
ACKNOWLEDGEMENT 7-8
EXECUTIVE SUMMARY 15
PROJECT OBJECTIVE 16
3
Section 3 : MAIN SECTION 69-79
1) Financial Planning
2) 360º Financial Planning
3) Consumption Pattern
4) Objective & Sales Procedure
APPENDICES 99-111
1) Questionnaire
2) Tables
3) Glossary
4) Bibliography
4
Acknowledgem
ent
5
ACKNOWLEDGEMENT
7
I am also indebted to the Institute faculty members for
SANJAY KUMAR
SHARMA
8
Declaration
9
DECLARATION
Date:
10
Certificate
Of
Approval
11
CERTIFICATE OF APPROVAL
Name Signature
12
Executive
Summary
13
EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and
growth in the years ahead. Delivering service, building trust and being
innovative are key areas in which any company will have to excel in order to do
well in the long road ahead. Different companies will take different approaches
and it would be myriad of solutions that will be found to delight the Indian
customer.
During the first part, I was given complete classroom training about the various
Commission and Renewal structure, Club Membership-Additional benefit which
the company offers.
Later, Market Research was done through various activities and tele-calling
which are discussed further in the report. Activities led to practical exposure
and taught me the aspects of people dealing.
Finally, interesting conclusions were drawn out of the data collected regarding
the Awareness of Financial Planning among the people in today’s environment.
14
Project
Objective
15
PROJECT OBJECTIVES
16
Research
Methodology
17
RESEARCH METHODOLOGY
18
customer who is actually interested in entering into the insurance
market. Once the problem was known, then descriptive research was
applied as to what benefits and extra thing could be given to customer
so as to attract the customer.
Research tool:
In this project we have used primary data as well as secondary data.
Primary data is one in which we find out the raw data through directly
contacting the people and asking them to fill in the questionnaire and
through some activities ands secondary data is by using the contacts
which are already available Primary data is applied as we have used the
questionnaire and through marketing activities, secondary data has been
used in form of yellow pages, various personal contacts.
Questionnaire:
Questionnaire contains around fifteen questions contain the information
about the financial consultants and their work. The questions relate to as
in what kind of difficulties do they face before becoming the financial
consultants and how much the company helps them to achieve their
goals.
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SPSS has used to fill in the data in excel and to analyze the data
collected.
20
Means Looking for the Suspect who May or May Not be interested in
the Business Proposal.
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AREA ASSIGNED
There was no as such a particular area was assigned. Out of six Advisors
which I have recruited from different areas of New Delhi. I use to fix
meetings by making Tele calls and then go to the residence or the office
of the clients, sometimes in Noida, and Often in New Delhi.
During my training I enjoyed both the in-house on job training but in
field was little problem for me as I don’t know much areas in Delhi and
that I didn’t had any of my personal conveyance to go. Sometimes it
was very frustrating when I use to go to the residence of my client and
he refuses to talk to me or he was not present at the given address. But
later I realized that life is a journey and you have to move on and on.
TARGET ASSIGNED
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D.6 MAJOR PROBLEMS FACED
• Some people, even if hey are not interested, they directly don’t
say ‘NO’ rather they linger on and have a series of appointments
till the time the seller loses enthusiasm and makes sure that the
client is not going to give a sale.
• Some of the prospects don’t even listen to anything and straight
away say ‘NO’ they don’t even give you the chance to say what
one wants to ; most of these men were businessmen who perhaps
had less time to listen to sales pitch
• I find difficulty in interacting with people due to negative
responses that made me demoralized sometimes
• Some people don’t even understand the concept of insurance the
worse is that they don’t even want to know about it.
• The other difficulty was sometimes the client was ready to become
the insurance advisor of HDFC STANDARD LIFE but it was difficult
to fetch out nine hundred for the examination fees.
• I also faced difficulty in traveling to different areas of Delhi,
Gurgaun, Gr.Noida and Noida to meet the clients for part time
business proposal.
• It was difficult to convince the clients to become insurance advisor
of HDFC STANDARD LIFE by paying nine hundred rupees when
some other companies were taking less or no fees for the
examination.
• The difficulty was to maintain a continuous level of self-motivation
because we are giving our best shot but results don’t come.
• The sales pitch if delivered to a group of friends together, has a
more probability of landing up in a mockery, as then everyone in
group tries to out smart the salesperson.
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D.7 DATA ANALYSIS
The whole project work of 8 weeks gave an understanding that the
insurance is one of the most difficult products to sell because of its
nature being intangible but convincing peole to become the insurance
advisor is much more difficult then selling insurance policies. Insurance
sector has a huge potential in India to grow, keeping in mind the huge
unexplored market in India and increasing per capita income of the
country. People today are more educated and hence more aware and
receptive towards the concept of life insurance.
The real difference today lies in how much the customers are aware of
the brand and how much do they have faith on the brand. The
distribution channel and reaching the customer first is also a major
aspect to counter the competition.
Insurance is a product that is sold by putting the hands over the nerve
of emotion so the products and the company should be positioned as a
family member to the client.
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Major thing is to do marketing at two levels both internal as well as
external. In this business, because the products are almost same for all
the companies, the real edge can be provided if the life advisors or
agents of the company themselves have real faith on their products and
integrity of the company. Only a well motivated and aware sales person
can make the great sales. The other type of marketing is external
marketing, which is done for the end customer of the product and this
marketing should also be appropriate providing the company a great
positioning in the minds of the customer.
The study of awareness about Financial Planning among the people and
particularly the insurance sector covers data collection through
questionnaire and interview of consumers.
Identify the course of action to solve it. For this purpose the information
proved useful for giving right suggestion to the company.
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SECTION- 1
26
INDUSTRY PROFILE
Overview
Historical Perspective
The insurance came to India from UK; with the establishment of the
Oriental Life insurance Corporation in 1818.The Indian life insurance
company act 1912 was the first statutory body that started to regulate
the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms were been established in India. Then the
central government took over these companies and as a result the LIC
was formed. Since then LIC has worked towards spreading life insurance
and building a wide network across the length and the breath of the
country.
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Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
1956: 245 Indian and foreign insurers and provident societies were
taken over by the central government and nationalized. LIC formed by
an Act of Parliament- LIC Act 1956- with a capital contribution of Rs.5
cr. from the Government of India.
1907: The Indian Mercantile Insurance Ltd. set up- the first company to
transact all classes of general insurance business.
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Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was
monopoly of LIC.
Structure
Government stake in the insurance Companies to be brought down to
50%. Government should take over the holdings of GIC and its
subsidiaries so that these subsidiaries can act as independent
corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion
should be allowed to enter the sector. No Company should deal in both
Life and General Insurance through a single entity. Foreign companies
29
may be allowed to enter the industry in collaboration with the domestic
companies.
Regulatory Body
Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%. GIC and its subsidiaries are not to hold more
than 5% in any company (there current holdings to be brought down to
this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension
plans. Computerization of operations and updating of technology is to be
carried out in the insurance industry
This section gives the users important and detailed statistics of the
Indian as well as the Global insurance industry. These statistics would
give important insights of where the respective markets are headed for.
30
• The global life insurance market stands at $1,521.2 billion while
the non-life insurance market is placed at $922.4 billion.
31
Insurance companies assume the risk associated with annuities and
insurance policies and assign premiums to be paid for the policies. In the
policy, the companies states the length and conditions of the agreement,
exactly which losses it will provide compensation for, and how much will
be awarded.
The premium charged for the policy is based primarily on the amount to
be awarded in case of loss, as well as the likelihood that the insurance
carrier will actually have to pay. In order to be able to compensate
policyholders for their losses, insurance companies invest the money
they receive in premiums, building up a portfolio of financial assets and
income-producing real estate which can then be used to pay off any
future claims that may be brought.
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Liability insurance shields policyholders from financial responsibility
for injuries to others or for damage to other people’s property. Most
policies, such as automobile and homeowner’s insurance, combine both
property-casualty and liability coverage. Companies that underwrite this
kind of insurance are called property-casualty carriers.
Nature of Industry
Human life is subject to risks of death and disability due to natural and
accidental causes. When human life is lost or a person is disabled
permanently or temporarily, there is a loss of income to the household.
The family is put to hardship. Risks are unpredictable. Death/disability
may occur when one least expects it. There are a number of life
insurance products which offer protection and also coupled with savings.
33
also the full amount of money assured on death during the period of
contract.
34
INDIAN INSURANCE INDUSTRY
REGULATORY BODY
35
Reforms in the Insurance sector were initiated with the passage of the
IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously stuck to
its schedule of framing regulations and registering the private sector
insurance companies.
MISSION-IRDA
IMPACT OF LIBERALISATION
36
are very competitive and have given immense competition to the on
time monopoly of the market LIC. Since the advent of the private
players in the market the industry has seen new and innovative steps
taken by the players in this sector.
The new players have improved the service quality of the insurance. As
a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though
LIC still holds the 79% of the insurance sector but the upcoming natures
of these private players are enough to give more competition to LIC in
the near future. LIC market share has decreased from 95% (2002-03) to
81 %( 2004-05).
Among the private players ICICI Prudential has the maximum of appx
5.60%
Below is the table that shows the market share of various players of the
industry.
The following companies have the rest of the market share of the
insurance industry.
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HDFC STANDARD LIFE 3.11
BIRLA SUNLIFE 2.32
TATA AIG 1.45
SBI LIFE 1.24
MAX NEWYORK 0.90
AVIVA LIFE 0.82
ING VYSYA 0.66
OM KOTAK LIFE 0.54
AMP SANMAR 0.38
METLIFE 0.33
RELIANCE LIFE 0.05
The liberalization of the Indian insurance sector has opened new doors
to private competition and the new and improved insurance sector today
promises several new job opportunities. With private players now in
the field, there will be innovative products, better packaging, improved
customer service, and, most importantly, greater employment
opportunities.
India with about 200 million middle class household shows a huge
untapped potential for players in the insurance industry. Saturation of
markets in many developed economies has made the Indian market
even more attractive for global insurance majors. The insurance sector
in India has come to a position of very high potential and
competitiveness in the market.
38
Innovative products and aggressive distribution have become the say of
the day. Indians, have always seen life insurance as a tax saving device,
are now suddenly turning to the private sector that are providing them
new products and variety for their choice. Life insurance industry is
waiting for a big growth as many Indian and foreign companies are
waiting in the line for the green signal to start their operations. The
Indian consumer should be ready now because the market is going to
give them an array of products, different in price, features and benefits.
How the customer is going to make his choice will determine the future
of the industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector.
After the entry of the foreign players the industry is seeing a lot of
competition and thus improvement of the customer service in the
industry. Computerization of operations and updating of technology has
become imperative in the current scenario. Foreign players are bringing
in international best practices in service through use of latest
technologies. The one time monopoly of the LIC and its agents are now
going through a through revision and training programs to catch up with
the other private players. Though lot is being done for the increased
customer service and adding technology to it but there is a long way to
go and various customer surveys indicate that the standards are still
below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the
country like India but still the increasing use of other sources is
39
imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
• Direct selling/Retail
• Corporate agents
• Group selling
• Brokers and cooperative societies
• Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents (Financial
Consultant) of the company. This is the main distribution channel
due to the complexity of most insurance products (Endowment,
Whole of Life, Unit Linked). This tends to be the focus of most
companies due to its past success as well as its ability to deliver the
right advice. However, this channel can be expensive and it is a time
consuming sales process. An agent is the public face of an Insurance
company. Hence it is important that this face is always smiling and
presentable and the facts and figures at his/ her command are updated
and correct.
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to offer and must also understand the customer’s psychology well to
deal in an efficient manner.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the
bank's distribution channel. It is a phenomenon wherein insurance
products are offered through the distribution channels of the banking
services along with a complete range of banking and investment
products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
Advantages to banks
• Productivity of the employees increases.
• By providing customers with both the services under one roof,
they can
improve overall customer satisfaction resulting in higher customer
retention
levels.
• Increase in return on assets by building fee income through the
sale of
insurance products.
• Can leverage on face-to-face contacts and awareness about the
financial
conditions of customers to sell insurance products.
• Banks can cross sell insurance products e.g.: Term insurance
products with
loans.
41
Advantages to insurers
• Insurers can exploit the banks' wide network of branches for
distribution of products. The penetration of banks' branches into
the rural areas can be utilized to sell products in those areas.
• Customer database like customers' financial standing, spending
habits, investment and purchase capability can be used to
customize products and sell accordingly.
• Since banks have already established relationship with customers,
conversion ratio of leads to sales is likely to be high. Further
service aspect can also be tackled easily.
Advantages to consumers
• Comprehensive financial advisory services under one roof. i.e.,
insurance services along with other financial services such as
banking, mutual funds, personal loans etc.
• Enhanced convenience on the part of the insured
• Easy accesses for claims, as banks are a regular go.
• Innovative and better product ranges
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1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being
that life insurance proceeds are paid to the insured's beneficiaries in
case of death. The money proffered by life insurance helps buy time to
adjust to the change of circumstances. Insurance provides large
amounts of cash that will keep the lifestyle for the survivors the way it
was before the insured's death.
For the person who buys an insurance policy, it offers absolute and
complete peace of mind. He or she knows that the decision made by him
will provide sound benefits in the future, whether or not the individual
may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long
he or she will live. The investment benefit is paid to the insured's
beneficiaries after his death or it can be used during the life as well. Life
insurance policy owners can turn to the cash value of the policy in case
of a financial emergency when all avenues are either blocked or denied.
4) Enduring Elasticity
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5) Financial Security
The purchase of life insurance clearly displays care and concern for the
people the policy owner loves.
7) Insurance is Safer
The proof of strength and safety that insurance companies have ensured
even under the most adverse of conditions is a matter of pride for the
entire insurance industry. For generation after generation, life insurance
has been acclaimed as the very benchmark of security against which the
other industries are measured.
In the now open sector on insurance, the following is what I feel will
determine the success of the company in particular and the industry in
general:
44
• A change in the attitude of the population
The reason for this being on the top of our understanding is that when
ever we have seen any sector open up in India there are always grey
areas and unsure policies. These are not exactly what any player, be it
Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process. Insurance as a sector requires players who are
strong financially and are willing to wait for returns. Their confidence can
be bolstered only if there is an open and a transparent policy guidelines.
This will also help the consumers feel safe that the regulatory is an
active one and cares to do everything possible to keep things under
control and help the insurance environment grow maturely.
45
promising to pay back only on your death. Thus the players will require
an excellent sales team to sell their products in the now competitive
environment.
This will itself ensure the market grows. And that every class/society
gets a product that best suits them.
SPECIAL PROVISIONS
POLICYHOLDERS GRIEVANCES
46
for speedy resolution. The IRDA however does not adjudicate on
complaints.
STRENGTH
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
47
2. Misleading facts given by Financial Consultant about the returns of
ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
OPPORTUNITY
THREAT
48
CONCLUSION
And also the changing attitude and increasing awareness level of the
population is an indicator that growth potential for the insurance sector
is immense.
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SECTION 2
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COMPANY’S PROFILE
INTRODUCTION
Background
Business Objectives
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ORGANIZATION AND MANAGEMENT
BOARD OF DIRECTORS
HDFC has a staff strength of 1029, which includes professionals from the
fields of finance, law, accountancy, engineering and marketing.
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SUBSIDIARY & ASSOCIATE COMPANIES
• HDFC Bank
• HDFC Reality
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HDFC STANDARD LIFE INSURANCE
INTRODUCTION
HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance
sector. Each of the JV player is highly rated and been conferred with
many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,
Standard Life is rated 'AAA' both by Moody's and Standard and Poors.
These reflect the efficiency with which HDFC and Standard Life manage
their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture,
to enter the Life Insurance market, in January 1995. It was clear from
the outset that both companies shared similar values and beliefs and a
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strong relationship quickly formed. In October 1995 the companies
signed a 3 year joint venture agreement.
Towards the end of 1999, the opening of the market looked very
promising and both companies agreed the time was right to move the
operation to the next level. Therefore, in January 2000 an expert team
from the UK joined a hand picked team from HDFC to form the core
project team, based in Mumbai.
COMPANY’S MISSION:
This not only means being the largest or the most productive company
in the market, but a combination of several things like-
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• Innovative products to cater to different needs of different
customers
• Use of technology to improve service standards
• Increasing market share
COMPANY’S VISION:
IN SHORT:-
“ The most obvious choice for all ”.
COMPANY’S VALUES:
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KEY MANAGEMENT PERSONNEL
Chairman
Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
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Bankers
KNOWLEDGE MANAGEMENT
Your insurance need will change as your life does, from starting to work
to enjoying your golden years and all the stages in between. Each one of
these stages may pose a different insurance need/cover for you. In this
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section, we have drawn up the basic life stages and help you analyze
various insurance needs accordingly.
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Your needs:
Your needs:
Once you have children, your need for life insurance is even more. You
need to protect your family from an untoward incident. Ensure your
protection umbrella takes into account the future cost of securing your
60
child’s dream. You will want life to go on for your loved ones, and having
enough life insurance is a way to help ensure that.
Your needs:
While you are busy climbing the ladder of success today, it is important
for you to take time and plan for your life after retirement. Having an
early start for retirement planning can make a significant difference to
your savings. Think about your golden years even before you have
reached them. The key is to think ahead and plan well using your time
and money.
Your needs:
PRODUCT MIX
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At HDFC Standard Life, there is a bouquet of insurance solutions to meet
every need. They cater to both, individuals as well as to companies
looking to provide benefits to their employees.
For organizations they have customized solutions that range from Group
Term Insurance, Gratuity, Leave Encashment and Superannuation
Products.
PROTECTION - You can protect your family against the loss of your
income or the burden of a loan in the event of your unfortunate demise,
disability or sickness. These plans offer valuable peace of mind at a
small price.
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PENSION - Our Pension Plans help you secure your financial
independence even after retirement and live a relaxed retired life.
SAVING - Our Savings Plans offer you flexible options to build savings
for your future needs such as buying a dream home or fulfilling your
children’s immediate and future needs.
Children’s Plan,
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GROUP PLANS
HDFC Standard Life has the most comprehensive list of products for
progressive employers who wish to provide the best and most innovative
employee benefit solutions to their employees. They offer different
products for different needs of employers ranging from term insurance
plans for pure protection to voluntary plans such as superannuation and
leave encashment.
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DISTRIBUTION OFFICES
FINANCIAL CONSULTANTS
65
period 2004-05, with a new business first year premium of Rs 1,029
crore.
During the year the company issued over 3,97,000 policies and has
covered more than 22,50,000 lives”
April- April-March
Parameters March 2005-06 Growth
2004-05 (Rs. Cr) (%)
(Rs. Cr)
Total received
668.40 1532.21 129.23
premium
66
i. New Business 486.15 1028.94 111.65
Effective Premium
Income (Total) 436.08 887.30 103.47
Group Business
Premium (EPI) 49.40 135.15 173.58
FUTURE PLANS
67
loyal and satisfied client base for future growth. Internal systems have
been developed to be robust and agile, to take into account changes in
the volatile external environment.
SECTION 3
68
FINANCIAL PLANNING
You may have many dreams, needs and desires. For example, you could
be dreaming of:
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EXPERIENCE THE POWER 360º FINANCIAL PLANNING
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children’ Future Planning
Retirement Planning
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Everyone needs to save for a rainy day. Once you have saved enough to
take care of emergencies, you should start thinking about investing and
to make your money grow.
• Risk Profiling
• Asset Allocation and Portfolio Construction
• Creation and Accumulation of Wealth through Systematic
Investment Plans (SIP)
• Regular review of progress and Portfolio Rebalancing
CASH FLOW PLANNING: To provide for assets and meet the periodic
cash requirements
In simple terms, cash flow refers to the inflow and outflow of money. It
is a record of your income and expenses.
According to the Income Tax Act, 1961, One will be eligible for Tax
Benefits under Section 80C and Section 10(10D) of the act.
One has to compare the advantages of several tax saving schemes and
depending upon your age, social liabilities, tax slabs and personal
71
preferences, decide upon a right mix of investments, which shall reduce
your tax liability to zero or the minimum possible.
"Insurance is not for the person who passes away, it for those
who survive," goes a popular saying that explains the importance of
Insurance Planning.
Like every parent, you too must be overjoyed to watch your child grow.
All parents want to give the best possible upbringing to their children.
This includes good education and security, in case of any eventuality.
Soon, your little bundle of joy will grow up, and it will be time to provide
for his or her higher education and wedding.
72
Some like it. Some don’t. But retirement is a reality for every working
person. Most young people today think of retirement as a distant reality.
CONSUMPTION PATTERN
73
The consumption pattern is determined by the income so more would be
the income more would be the consumption. The consumption though
can differ in terms of areas where the money is actually spent. The
above representation tells us the consumption pattern of the consumer
in India i.e. where do they actually invest their money and in what
proportion do they spend in various areas. The chart shows that people
are spending 6.9% of their savings into savings and investments.
FIRST
CONVERSATION
Follow Up
APPOINTMENT
Follow Up
FILLING THE
PROPOSAL FORM
COLLECT THE
REQUIRED
DOCUMENTS AND
THE74FIRST
PREMIUM
STEP 1: FIRST CONVERSATION WITH A KNOWN OR
AN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get the
information from him about the industry or the company and understand
the customer’s insight i.e. what actually does a customer expects from
the companies.
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3) CANOPY AT GURGAON: This activity was designed to
target the people working in BPOs and other IT companies.
STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed
are then followed up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans
offered by the company. The customer is informed about the procedure
and the options he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly
mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he desires.
4) With Maturity Benefit, choose the additional benefits like:
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Benefit
c) Extra Life & Health option Death Benefit +
Critical Illness
Benefit + Accidental Death
Benefit
After the second step, the interested customers are required to fill the
proposal form which requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
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d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
Once the form is filled all the necessary documents are collected like :
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is
collected.
Within 15 days, the policy documents reach the customers place, and
the customer is required to read the documents carefully.
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SECTION 4
79
AGE DIS
80
MARITAL STATUS
MARITAL STATU
100%
90%
16
80%
Total number of single respondents – 23
Total number of married respondents – 77
70%
60%
50%
40%
19
30%
20% 81
INCOME DISTRIBUTION
INCOME DISTR
> 5 lacs 1 10
INCOME
3 - 5 lacs 5
which mainly comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the
income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs,
which are in age group of above 45 years.
1.5 - 3 lacs 13
82
ARE YOU AWARE ABOUT FINANCIAL PLANNING ?
DO Y
FINA
100
F PEOPLE
90
80
9
70
BRAND RECALL 60
50 83
BR
51
60
100 % respondents mentioned first name to be LIC
71
Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%
75
INVESTMENT PREFERENCE
64 84
INVESTMENT PREFE
as an investment tool preference.
9%
21% respondents prefer banks and post office schemes
21%
Funds, as they provide higher returns than banking
investment tools.
Insurance ranks 2nd as an investment tool choice, which
itself includes various protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people
of higher age group rather than young generation.
Property as an investment option is most lucrative
choice. However it is important to mention that majority of
respondents are in age group of above 30 years and people
11%
with high income bracket prefers to invest in Real Estate.
20%
INSURED PERCENTAGE
85
13%
COMPANY PREFERENCE
86
COMPANY
1 55%
55% of respondents have insurance cover provided by
LIC only
0 20 40
ONLY LIC
87
TYPE OF PLAN BOUGHT
17, 20%
Money back Policies have been most popular and also the
endowment plans.
As people today are more aware about financial
planning, so people of the age 30 years have planned for their
Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.
24, 28% 88
PURPOSE OF BUYING INSURANCE
PURPOS
Retirement
Planning
14%
Risk cover remains the most important purpose for buying
insurance followed by option as Tax saving tools.
Retirement Planning in a early period is also gaining the
Investment 11%
89
DISTRIBUTION CHANNEL PREFERENCE
CHAN
1
56
According to the data, known/current Advisors remains the
1st choice for buying Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying
life Insurance.
Group insurance is a channel which customers expect but it
is not so popular because only few employers have taken the
initiative.
Buying insurance from a unknown person or getting a
phone call is still not preferred by most of the people
0 90 20 40
THE BARRIERS FACED DURING THE PROCESS:
The Attitudinal Barriers To Purchasing …..
• Death - a taboo topic for discussion
“It’s quite ashubh talking about death”
• The belief in karma … destiny
“Jo kismet me likha hai wohi hoga, hum kya kar sakte hai”
91
CONCLUSION
92
There has been a tremendous change in the insurance industry. And
with it there has been continuous growth in this sector both in Indian as
well as world context.
The opening up of the insurance sector has changed the whole look of
the industry. While the LIC, in order to face the competition is coming
up with new strategies. New private players are leading the sector due
to their strategic management and tailored made projects.
From the research, we also conclude that though the awareness and
people opting for LIC plans are more as compared to other private
players’ but the latter are gaining momentum in the market day by day.
The demand for insurance is likely to increase with rising per-capita
income, rising literacy rates, and growth of service sector. In-fact
opening up of the insurance sector is an integral part of the liberalization
process being persued by many developing countries.
Life insurance as a form of protection is the single-most important
financial product any earning member of a family must have. Having
said this, a well-diversified portfolio is one of the first rules of financial
planning, and as such one should consider different instruments as the
ability to save increases.
Possible investment options range from bank deposits and government
small saving schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need
of protection, with savings, and hence are an excellent addition to your
portfolio.
93
assume that the features and benefits of a ULIP come at no cost, though
the charges are considerably lower than that of a traditional product.
In fact, the very reason the product is transparent is because the
customer knows the charges and risks.
All intermediaries can’t sell all lines of business profitably in all markets.
There should be clear demarcation in the marketing strategies of the
company from this perspective. Clients should also receive price
differentials for using different channels.
The intermediaries need to be empowered with the right learning,
training and sales tools and technology enablers. Coupled with the right
product mix, this
will help the insurers to survive and flourish in this competitive market
scenario.
So lets conduct this business with utmost economy with the
spirit of trusteeship; thereby making insurance widely popular.
RECOMMENDATION
94
• Fears relating to thefts, ailments, death could be addressed
through ‘sensitive’ communication
• Fears relating to claims: Need to promote “trust”.
Demonstrating claim testimonials, positioning as “worry free”.
• Low returns: Reposition insurance as a risk cover, security
instrument rather than a financial investment.
• Lack of understanding: Training of Channels
To provide quality advice on products best suited
• Lack of Knowledge: Ease of Process,
simplifying the product and the procedure
• Need to promote the quality of awareness
The benefits:
Leverage on Risk Protection or Returns oriented or both
The product:
catering to life stages
• Need for Branding in Insurance: Branding is more relevant in
the Insurance market which not only faces the problem of securing
and retaining customers in an increasingly competitive marketplace
but also experiences the need for heightened relevance of the brand
proposition in a world where brand has been termed the new religion.
In rural India, the LIC is especially synonymous with insurance. But in
the
wake of competition insurance companies have to do a considerable
brand
building exercise at least in urban India. Adequate time, investment
and
longer-term management of the brand are essential, not only for
success but also survival. All brands need to be built around well-
differentiated and
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credible positioning that springs from the organization’s history. The
brand
must not only be believed but lived by management and employees.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services
rather than customer segments. It is a sensible strategy for those
companies who have distinctive advantages or strengths in offering
certain products and services. In the insurance industry too, it is
possible to achieve a unique position by focusing on certain category
of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on
the differing needs of different groups of consumers. This can be
done successfully if a company has unique strengths to service a
group of customer needs better than others.
The insurance needs of customers vary significantly for different
groups of customers. The insurance needs of young family with small
children will be quite different from that of a family in which the
income-earner is close
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customer needs and there is no company focusing on a particular
customer need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are
accessible. That is different groups of customers may be accessible in
different ways even though they may have similar needs. Access is
typically a function of customer geography or customer scale. There
is excellent opportunity in the insurance industry to employ access-
based positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban
market in terms of needs, income levels and distribution (seasonality,
for example), penetration of media and so on. Rural market can be a
highly profitable position if one is able to carefully plan and tailor an
entire set of low-cost activities of advertising, distribution, and
product design etc. to successfully exploit the potential.
Questionnaire
Glossary
Bibliography
97
Steps in the Development of the Survey Instruments
The main instruments required for survey was a well – developed
questionnaire .
The questionnaire development took place in a series of steps as
described below.
98
Research objectives are being transformed into
Step information objectives.
1
The Appropriate data collection methods have been
Step 2 determined
99
QUESTIONNAIRE
Introduction
This survey
Name: ________________________
Age: _________________________
Gender: MALE FEMALE
Marital Status: Married Single
Occupation: ___________________
100
Contact No: __________________
YES NO
Q2) Mention the names of Life insurance companies you have heard of:
1) ________________ 4) ________________
2) ________________ 5) ________________
3) ________________ 6) ________________
101
Q5) Have you taken any life insurance policy on your own life or on life
of
YES NO
Endowment Plan
Pension Plan
ULIP
a) PROTECTION
OF FAMILY
102
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of the
following
(Please √), also Rank according to your preference from whom
you are most likely to buy insurance?
(√ Here) (Rank)
1) Known/Current Advisor
Q10) Do you feel opening up of the sector has created more insurance
YES NO
_____________________________________________________
_____________________________________________________
103
THANK YOU FOR YOUR CONTRIBUTION
GLOSSARY
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event
of death or injury by accident
Annuity
An investment option that makes a series of regular payments to an
individual in exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
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Bonus
The amount paid as return in a ‘with-profit’ policy. The bonus, expressed
as a percentage of the sum assured, is generally declared every year.
The amount is linked to the profits earned by the insurer. Depending on
the time of withdrawal, there are two kinds of bonuses – reversionary
and cash. A reversionary bonus can be encased only on maturity of the
policy; a cash bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate.
Long-term capital gains arise from assets owned for more than a year
while short-term capital gains are made from assets owned for less than
a year.
Corpus
The amount of money available with a scheme for investing. If already
invested, the corpus is the current value of the scheme’s portfolio.
Cover
Another word for insurance; it also refers to the amount of insurance.
Death benefit
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The amount payable to the nominee on death of the policyholder. The
amount paid is the sum assured plus benefits applicable (if any) less
outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some
return on investment. Usually suitable for the risk-averse
Financial planning
It covers the essential elements of a person’s financial affairs and is
aimed at achieving a person’s financial goals.
Group Insurance
An insurance policy taken out by employers to provide life cover to their
employees. Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy
Insurer
The insurance company
Investments
106
Assets like fixed deposits, post office savings, bonds and stocks that are
acquired for the purpose of earning a return
Liquidity
The quality of assets that can be easily and quickly converted into cash
without any, or significant, loss in value.
Lock-in period
The period of time for which investments made in an investment option
cannot be withdrawn.
Maturity date
The date on which a policy term or fixed-income investment like fixed
deposit or bond comes to an end.
Money-back plans
A variant of endowment plans in which survival benefits are disbursed
through the policy term, rather than in a lump sum at the end.
Nominee
The person(s) nominated by the policyholder to receive the policy
benefits in the event of his death.
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Pension Plan
Investment products offered by insurance companies and mutual funds
that required the investor to make defined contributions over regular
periods, mostly every year. The contributions are invested according to
a pre-decided investment plan. At retirement, the accumulation is paid
out through regular pay-out options.
Policy
The legal document issued by an insurance company to a policyholder
that states the terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
108
The amount of cover taken under a life insurance policy, it is the
minimum amount that will be paid on death of the policyholder during
the policy term.
Surrender value
The amount payable by the insurer to the owner of an investment-based
plan in case he opts to terminate the policy after three years (the
mandatory lock-in period) but before its maturity date. The surrender
value will be the premia paid till date minus surrender charges and any
outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no
return on the premium paid
Vesting date
In pension plans, it is the date from which the policyholder starts
receiving pension. In children’s plans, it is the date from which a child
becomes the owner of a policy taken out in his name (generally, around
his 18th birthday).
Will
A document that designates the assets of a person-both financial and
physical- to various family members and other heirs.
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Whole-life plans
Class of life insurance policies that provide cover through your lifetime.
BIBLIOGRAPHY
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
Other References:
Brochures of various plans
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