INTRODUCTION

INTRODUCTION
With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 2007). Together with banking services, it adds about 7% to the countrys Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense.

A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country. (Source:

www.indiacore.com)

OBJECTIVE OF THE STUDY To analysis the product details of HDFC Standard life Insurance Company
Limited and LIC.

To highlight Points of Parity and Points of Difference of HDFC Standard

Life Insurance Company Limited and LIC.

To limelight the factors that influence customers to purchase insurance

policies and give suggestions for further improvement.

SCOPE OF THE STUDY

This study can be used to compare the performances & products of the private & government insurance players in insurance industry. This study can be used to analyze the market stand of HDFC Standard Life insurance Company limited and Life insurance Corporation of India insurance companies. This study is helpful for the investor while choosing the plan that provide maximum rate of return at lower cost. It provide us with the information as to which factor motivate the respondant to purchase Insurance.

INDUSTRY PROFILE

INDUSTRY OVERVIEW
The life insurance industry in India grew by an impressive 47.38%, with premium income at Rs. 1560.41 billion during the fiscal year 2008-2009. Though the total volume of LIC's business increased in the last fiscal year (2008-2009) compared to the previous one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a companys ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include investment plans with insurance and good returns (unit linked plans), multi purpose insurance plans, pension plans, child plans and money back plans.

HISTORICAL PERSPECTIVE
The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

INDUSTRY REFORMS
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. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously such to its schedule of framing regulations and registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents.

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, 1. issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; 2. protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; 3. specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; 4. specifying the code of conduct for surveyors and loss assessors; 5. promoting efficiency in the conduct of insurance business; 6. promoting and regulating professional organisations connected with the insurance and re-insurance business; 7. (levying fees and other charges for carrying out the purposes of this Act; 8. calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurance

9. control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); 10. specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; 11. regulating investment of funds by insurance companies; 12. regulating maintenance of margin of solvency; 13. adjudication of disputes between insurers and intermediaries or insurance intermediaries; 14. supervising the functioning of the Tariff Advisory Committee; 15. specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause 16. specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural socialsector; an(q) exercising such other powers as may be prescribed.

COMPANY PROFILE

10

HDFC STANDARD LIFE INSURANCE COMPANYLIMITED

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending March 31, 2009 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2009.

HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27 years.

SNAPSHOT-I
Incorporated in 1977 as the first specialized Mortgage Company in India. Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors. Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In: 1. HDFC Standard Life insurance Company- HDFC holds 78.07 %. 2. HDFC Asset Management Company HDFC holds 50.1% 3. HDFC Bank- HDFC holds 22.25%. 4. Intel net Global (Business Process Outsourcing) HDFC holds 50%. 5. HDFC Chubb General Insurance Company HDFC holds 74%.

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SNAPSHOT-II

Loan Approvals (up to Dec 2009)

Rs. 805 billion (US $ 18.30 bn.)

Loan Disbursements (up to Dec. 2009) Housing Units Financed Distribution Offices Outreach Programs

Rs.669 billion (US $ 15.20 bn) 2.5 million. 181 90

KEY PLAYERS
Mr. H T Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC.

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GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India. HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager. Intelenet Global: BPO services for international customers. CIBIL: Credit Information Bureau India Limited. HDFC Chubb: Upcoming Private companies in the field of General Insurance. HDFC Mutual Fund HDFC reality.com: Helps to search properties in all major cities in India HDFC securities

STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 years is a modern company surviving quite a few changes since selling its first policy in 1825. The company expanded in the 19th century from kits original Edinburgh premises, opening offices in other towns and acquitting other similar businesses.

Standard Life Currently has assets exceeding over 70 billion under its management and has the distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

SNAPSHOT
Founded in 1875, company supporting generation for last 179 years. Currently over 5 million Policy holders benefiting from the services offered. Europes largest mutual life insurer. 13

JOINT VENTURE
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. Reach 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 Moodys 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.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life Insurance Companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias leading housing finance institution and the Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are will known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry- all important factors to consider when choosing your insurer.

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BUSINESS GROWTH
Track Record so far The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856 crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8,77,000 lives year ending March 31, 2007. Company also declared our 5th consecutive bonus in as many years for our with profit policyholders.

KEY STRENGTH
Financial Expertise As a joint venture of leading financial services groups. HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently. Range of Solutions HDFC SLIC has a range of individual and group solutions, which can be easily customized to specific needs. These group solutions have been designed to offer complete flexibility combined with a low charging structure. Strong Ethical Values: HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed. Most respected Private Insurance Company HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity, Innovation and Customer Care.

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PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -- they will help you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance plans are created keeping in mind the changing needs of family. Its life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. It offers a full range of transparent, flexible and value for money products. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals. (Source: www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

Individual Products 1. Protection Plans A person can protect his family against the loss of his income or the burden of a loan in the event of his unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan. 2. Investment Plans HDFC SLICs Single Premium Whole of Life plan is well suited to meet long term investment needs. This provides attractive long term returns through regular bonuses. 3. Pension Plans Pension Plans help to secure financial independence even after retirement. Pension range includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus.

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4. Savings Plans Savings Plans offer a flexible option to build savings for future needs such as buying a dream home or fulfilling your childrens immediate and future needs. Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back, Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II. Group Products One-stop shop for employee-benefit solutions 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. It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.

HDFC SLIC offers the following group products to esteemed corporate clients: Group Term Insurance Group Variable Term Insurance Group Unit-Linked Plan An investment solution that provides funding vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company.

Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes.

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Social Product Development Insurance Plan Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss. Eligibility Members of the development agency and their spouses with: Minimum age at the start of the policy 18 years last birthday Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members. Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group.

The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received. Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum

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assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. The role of the Development Agency Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include: Submission of member data in a specified computer format Collection of premiums from group members Recording changes in the details of group members Disbursement of claim payments and the mortality rebate (if any) to group members These tasks would be in addition to the usual duties of a policyholder such as: Payment of premiums Reporting of claims Keeping policy holder information up to date Training and support will be available to give guidance on how to complete the tasks appropriately. Since these additional tasks will impose a burden on the Development Agency, the Development Agency may charge a Rs. 10 administration fee to their members.

PROHIBITION OF REBATES
Section 41 of the Insurance Act, 1938 states :- No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any

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rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer. If any person fails to comply with sub regulation (previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundred

INTROUCTION TO UNIT LINKED FUNDS

Unit linked plans are based on the component of the premium or the contribution of the customer towards the plan. This contribution can be in different modes like yearly, half yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection, rider protection, savings, transparency, investment choices, liquidity and planning for taxes. These plans work like mutual funds.

The premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. The Net Asset Value is the value of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and investments and dividing this number by the total number of outstanding units.

Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value of every investor is now Rs. 12 and not Rs. 10.

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UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

Parameters Safety Liquidity Returns Life Cover Tax benefits RBI Bonds High None Low 1 time amount Tax free Fixed Deposits High High Low 1 time amount Taxed Mutual Funds Medium High High 1 time amount Taxed Unit linked High High High 10 times Tax free

We find that life insurance unit linked plans is a good area to invest money in as it provides liquidity, safety, high returns, life cover and tax benefits in a single plan. HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a large extent as the company invests in a diversified portfolio of stocks.

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Tax Benefits
INCOME TAX GROSS SECTION Sec. 80C SALARY Across Slabs All ANNUAL HOW MUCH TAX HDFC STANDARD CAN YOU SAVE? income Upto Rs. LIFE PLANS

33,990 All the life insurance

saved on investment plans. of Rs. 1,00,000.

Sec. 80 CCC

Across slabs.

all

income Upto

Rs.

33,990 All the pension plans.

saved on Investment of Rs.1,00,000.

Sec. 80 D

Across slabs

all

income Upto Rs. 3,399 saved All on Investment

the

health riders with the

of insurance available

Rs. 10,000.

conventional plans. Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein. TOTAL SAVINGS POSSIBLE Rs37,389

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.

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LIFE INSURANCE CORPORATION OF INDIA

The Life Insurance Corporation of India (LIC)(hindi): ) is the largest state-owned life insurance company in India, and also the country's largest investor. It is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of 9.31

trillion (US$202.03 billion). It was founded in 1956 with the merger of more than 200 insurance companies and provident societies.

Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public.

HISTORY
The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans in India were its primary target market, and it charged Indians heftier premiums. The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life)

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The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover.

The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two years. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance.

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Current status

LIC building, at Connaught Place, New Delhi, designed by Charles Correa, 1986. Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7 % of India's GDP in 2006.

The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $ has grown to 25000 servicing around 180 million policies and a corpus of over 8 trillion (US$173.6 billion). The recent

Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the Country.

Comparison between the share of LIC and other Private Players in Indian Market

22%

78%

lic

other private firms

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PLANS

THAT

ARE

OFFERED

BY

LIFE

INSURANCE

CORPRATION OF INDIA(LIC)
As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

Endowment Plus

Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Child Fortune Plus

Komal Jeevan Marriage Endowment Or

Educational Annuity Plan Jeevan Chhaya Child Future Plan

Jeevan Aadhar Jeevan Vishwas

The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand

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New Janaraksha Plan Jeevan Amrit

Jeevan Shree-I Jeevan Pramukh

The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat

Jeevan Bharati - I

The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium Jeevan Anand Jeevan Tarang

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Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I

Jeevan Saathi Plus Jeevan Saathi

Various types of ULIPs plans offered by Life insurance corporation of India.

Unit Plans are the safest way to invest your money. Get the Share Market benefit plus insurance benefit with UNIT plans.

Unit linked insurance plan (ULIP) is life insurance solution that provides protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time.

UNIT LINKED PLAN (ULIP)

Market Plus I Profit Plus Fortune Plus Money Plus-I Health Protection Plus Child Fortune Plus Jeevan Saathi Plus LIC Wealth Plus

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MARKET PLUS I ULIP PLAN

Market Plus 1 (Table No 191) is a unit linked pension scheme (ULIP). Policy holder can choose the plan with or without risk cover. This investment plan is divided in four types of investment Funds namely Bond, Secured, Balanced and Growth Fund. Market Plus 1 is primarily a Pension policy and the plan has many attractive features and options that make it an ideal Retirement solution for your future.

Features:
Option to pay one time premium Critical illness benefit minimum Rs 50,000 and the maximum Rs 10 lakh Accident benefit from Rs 25,000 upto a maximum of Rs 50 lakh. Switch from one type of fund to another upto four times a year. Premium top up. Policy can be taken with or without risk cover. Net Asset Value (NAV) declared on a daily basis.

Fund Types:
Bond Fund Secured Fund Balanced Fund Growth Fund

Benefits:
A)- On Vesting: On vesting of the policy, the Fund Value will be utilized to provide a pension based on the then prevailing Annuity rates. An option to commute upto one third of the payable benefit in a lump sum is available.

B) On Death: In event of the unfortunate death of the policy holder the Fund Value along with the Riders, if any, will be payable in a lump sum or as a pension.

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Top-Up (Additional Premium)

The policy holder can pay additional premium in multiples of Rs.1,000/without any limit at anytime during the term of the policy.

Revival:
An attractive feature of the plan is that provided the premiums have been paid for a minimum period of three years, all the riders under the policy will continue for a period of two years from the due date of first unpaid premium by deduction of relevant charges from the policy fund. This period of two years is called the Revival Period. Further, if premiums have been paid for a minimum period of three years, revival can be effected merely by paying the arrears of premium, within the Revival Period.

Change in Fund Type:

The plan also allows a policy holder to switch from one type of fund to another upto four times a year, free of charge.

PROFIT PLUS-ULIP PLAN

LICs Profit Plus (Plan No.188) is a Unit Linked Endowment Insurance Plan. Profit Plus (ULIP) is designed for common man to enhance their savings and financial protection to their family. Four types of investment Funds are offered in Profit Plus. The Policyholder has the option to choose any ONE out of the following 4 funds. Bond, Secured, Balanced and Growth.

Features:
Payment of Premiums: You may pay premiums regularly at yearly, halfyearly, quarterly or monthly (ECS) intervals over the premium paying term of 3, 4 or 5 years. The minimum premium will be Rs.10,000/-.

Single premium: Single premium can be paid subject to a minimum of Rs.20,000/-.

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Partial Withdrawals: You may encash the units partially after the third policy anniversary subject to certain conditions.

Switching of Funds: You can switch between any fund types for the entire Fund Value during the policy term subject to switching charges, if any.

Discontinuance of premiums: If premiums are payable either yearly, halfyearly, quarterly or monthly (ECS) and the same have not been duly paid within the days of grace under the Policy, the Policy will lapse. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium.

Settlement Option: When the policy comes for maturity, you may exercise Settlement Option and may receive the policy money in installments spread over a period of not more than five years from the date of maturity. There shall not be any life cover during this period. The value of installment payable on the date specified shall be subject to investment risk i.e. the NAV may go up or down depending upon the performance of the fund.

FORTUNE PLUS-ULIP PLAN

LICs Fortune Plus is a Unit Linked Plan (ULIP) where premium payment term (PPT) is 5 years and the premium payable in the first year will be 50% of total premium payable under the policy. Fortune Plus serves the purpose of insurance-cuminvestment. Four types of investment Funds are offered in Fortune Plus. The Policyholder has the option to choose any ONE out of the following 4 funds. Bond, Secured, Balanced and Growth.

Features:
Payment of Premiums: You may pay premiums regularly at yearly, halfyearly, quarterly or monthly (ECS) intervals for 5 years. The minimum First year premium will be Rs.20,000/- and you may pay any amount exceeding it.

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From second year onwards each years premium will be 25% of the first year premium.

Partial Withdrawals: You may encash the units partially after the third policy anniversary subject to certain conditions.

Switching of funds: You can switch between any fund types for the entire Fund Value during the policy term subject to switching charges, if any.

Discontinuance of premiums: If premiums are payable either yearly, halfyearly, quarterly or monthly (ECS) and the same have not been duly paid within the days of grace under the Policy, the Policy will lapse. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium.

Settlement Option: When the policy comes for maturity, you may exercise Settlement Option and may receive the policy money in installments spread over a period of not more than five years from the date of maturity. There shall not be any life cover during this period. The value of installment payable on the date specified shall be subject to investment risk i.e. the NAV may go up or down depending upon the performance of the fund.

LIC Products:
Apart from the usual schemes such as money back plans, whole life plans, and term assurance plans, the company offers several special insurance plans for children, women, physically challenged dependants, and high net-worth individuals.

The Life Insurance Corporation of India also offers several attractive pension plans such as Jeevan Nidhi, Jeevan Akshay, Jeevan Dhara, and Jeevan Suraksha. The company has 3 Unit plans - Market Plus, Profit Plus, and Fortune Plus.

32

Group schemes are also offered by The Life Insurance Corporation of India under plans such as Gratuity Plus, Group gratuity Scheme, and Group Leave Encashment Scheme.

The Life Insurance Corporation of India is almost synonymous with the concept of insurance in India in spite of the fact that the Indian government has opened up the insurance market to private insurance companies. In 2005-06 itself, LIC added as many as 100,00,000 policies to its already impressive portfolio and grew by almost 17% during the given period.

33

TAX BENEFIT FOR LIC

INCOME-TAX AND TAX BENEFITS FROM LIFE INSURANCE

A] SOME IMPORTANT INCOME TAX BENEFITS AVAILABLE UNDER VARIOUS PLANS OF LIFE INSURANCE ARE HIGHLIGHTED BELOW:

1) Deduction allowable from Income for payment of Life Insurance Premium (Sec. 80C). Life Insurance premia paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof, Provided premium paid is not in excess of 20% of capital sum assured. Contribution to deferred annuity Plans in order to effect or to keep in force a contract for deferred annuity, on his own life or the life of his spouse or any child of such individual, provided such contract does not contain a provision to exercise an option by the insured to receive a cash payment in lieu of the payment of annuity is eligible for deduction. Contribution to Pension/Annuity Plans - New Jeevan Dhara-I.

2) Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan (U/s. 80CCC) A deduction to an individual for any amount paid or deposited by him from his taxable income in the above annuity plans for receiving pension (from the fund set up by the Corporation under the Pension Scheme) is allowed.

NOTE: The premium can be paid upto Rs.1,00,000/- to avail deduction u/s.80C, 80CCC & 80CCD. However, there is no sectoral cap i.e. the limit of Rs.1,00,000/can be exhausted by paying premium under of the said sections.

3) Deduction under section 80D Deduction allowable upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of assessee or his family (i.e. Spouse & children)

34

Additional deduction upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of parents In case of HUF, deduction allowable upto Rs.15,000/- if an amount is paid to keep in force an insurance on health of any member of that HUF

Note: If the sum specified in (a) or (b) or (c) is paid to effect or keep in force an insurance on the health of any person specified therein who is a senior citizen, then the deduction available will be upto Rs.20,000/-. provided that such insurance is in accordance with the scheme framed by. the General Insurance Corporation of India as approved by the Central Government in this behalf or; Any other insurer and approved by the Insurance Regulatory and Development Authority.

4)Jeevan Aadhar Plan (Sec.80DD): Deduction from total income upto Rs.50000/- allowable on amount deposited with LIC under Jeevan Aadhar Plan for maintenance of an handicapped dependent (Rs.1,00,000/- where handicapped dependent is suffering from severe disability)

5)Exemption in respect of commutation of pension under Jeevan Suraksha & Jeevan Nidhi Plans: Under Section 10(10A) (iii) of the Income-tax Act, any payment received by way of commutations of pension out of the Jeevan Suraksha & Jeevan Nidhi Annuity plans is exempt from tax under clause (23AAB).

6)Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D) Under the provisions of section 10(10D) of the Income-tax Act, 1961, Maturity/Death claims proceeds of life insurance policy, including the sum allocated by way of bonus on such policy (other than amount to be refunded under Jeevan Aadhar Insurance Plan in case of handicapped dependent predeceases the individual or amount received under a Keyman Insurance Plan) is exempted from income-tax. However any sum (not including the premium paid by the assessee) received under an

35

insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds 20% of the actual capital sum assured will no longer be exempted under this section.

POINTS OF PARITY Funds available with ULIP Plans

Risk Category in company

General Description

Nature of Investments Primarily invested

Equity Funds

stocks with the general aim of capital High appreciation

Income, Fixed Interest and Bond Funds

Invested

in

corporate

bonds,

government securities and other fixed Medium income instruments Sometimes known as Money Low Market Funds invested in cash, bank deposits and money market instruments

Cash Funds

Balanced Funds

Combining

equity

investment

with fixed interest instruments

Medium

Generally all life insurance companies have three types of fund which are Equity fund, Debt fund and Balance fund. These fund have different risk profile. Equity fund has high risk but it gives high return, Debt fund has low risk so it gives low return and Balanced fund is combination of both Equity and Debt fund so risk is medium and return is also low.

Both HDFC SLIC and LIC have 7 types of funds based on combination of DebtEquity fund. These are liquid fund, stable managed fund, secure managed fund, defensive managed fund, balanced managed fund, equity managed fund, growth fund.

36

Indexation
You have the option to increase your regular premiums by an indexation rate at any policy anniversary to protect the real value of your investment against inflation. The rate of indexation will be in line with the increase in the Whole Sale Price Index (or in the event that this Index ceases to be published such other index as the Company may select for this purpose). The base sum assured and sum assured of any attached rider would also be increased by the corresponding indexation increase.

Charges, Fees and Deductions in ULIP

Premium Allocation Charge:- This is a premium-based charge. After deducting this charge from premiums, the remainder is invested to buy units. The Allocation charges are guaranteed for the entire duration of policy term.

Mortality Charge:- The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.

Fund Management Charge:- 1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA.

Policy Administration Charge :- Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies.

37

Surrender Charge:- This is the charge that applies when the policy is surrendered. It is equal to 50% of the difference between regular premiums expected and those paid in the first year of the contract.

Service Tax Deductions:- 12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits
Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are also tax free.

Riders and Bonuses

HDFC Insurance Free Look Period Reversionary Bonus 15 days Based on Standard Life LIC 15 days company's Based on company's

performance Based on

performance company's Based on company's

Terminal Bonus TOP UP

performance Minimum Rs. 5000

performance Minimum Rs. 5000

Riders Critical Illness (CI) Benefit Additional Term Benefit (ATB) Accidental Death Benefit (ADB) Double Benefit Triple Benefit Payer Benefit Rider (PBR) Gives on diagnosis of anyone Gives on diagnosis of anyone of 6 critical illness Provides of 12 critical illness Provides

Provides Provides Provides Does not provide

Provides Does not provide Does not provide Provides

38

POINTS OF DIFFERENCE

HDFC Insurance Grace Period Policy Administration Charge Guaranteed Bonus Loyalty Bonus 15 days

Standard

Life

LIC 31 days Rs. 55 per month 10% on sum-assured after 10 year 0.25% after every 4th year

Rs. 60 per month Does not give 0.1% every year

Total 24 free switches in a 4 free switches per year Fund Switching Charge policy after this Rs. 100 per Switch 50% of all
st

after Rs. 250 per switch 30% paid premium per of all

this

Guaranteed Surrender value

premium

premium 1st

paid excluding 1 premium 0.80% per

excluding

Fund Management Charge

annum 1.75%

annum

on the fund value Total 12 free Premium

on the fund value First 2 Premium in a

Premium Redirection Charge

Redirection in a policy after this Rs. 250 per Premium Redirection

Redirection

year is free after this Rs. 1000 per Premium Redirection 72%

Last Year Return

42.70%

We see that both the life insurance companies products are almost same. They have same charges, fees and deductions. There is slightly difference in charges and maximum limits of all charges are fixed by IRDA. Before buying any life insurance policy one should check charges and fees on policy and companys overall performance and return given to its consumers.

39

LITERATURE REVIEW

40

LITERATURE REVIEW
The head of the family generally supports the family for their basic needs, such as, food, clothing & shelter by bringing income at a regular interval. So long as he or she lives & the income is received steady, the family is secure; but untimely death or disability of the person puts the family in a very difficult situation, and sometimes in stark poverty. Uncertainty of death is inherent in human life.

It is the uncertainty that is risk, which gives rise to the necessity for some form of protection against the financial loss arising from death. Insurance substitutes this uncertainty by certainty.

The primary purpose of life insurance is the protection of the family. Insurance in its various forms protects against such misfortunes by having the losses of the unfortunate few paid by the contribution of the many that are exposed to the same risk. This is the essence of insurance the sharing of losses and substitution of certainty for uncertainty.

MEANING OF LIFE INSURANCE:- Life insurance is a contract between an insurance policy holderand an insurer, where the insurer promises to pay a designatedbeneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such asterminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the premium; however, in Australia the predominant form simply specifies a lump sum to be paid on the policy holder's death.

The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones.

41

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion.

Life-based contracts tend to fall into two major categories: Protection policies designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

Investment policies where the main objective is to facilitate the growth of capital by regular or single premiums.

Costs, insurability and underwriting

The insurer (the life insurance company) calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science, which is based on mathematics (primarily probability and statistics). Mortality tables are statistically based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation.

The two main variables in a mortality table are commonly age and gender, but more recently, preferred class-specific tables have been introduced. The mortality tables provide a baseline for the cost of insurance, but in practice these mortality tables are used in conjunction with the health and family history of the individual applying for a policy to determine premiums and insurability.

Most of the revenue received by insurance companies consists of premiums paid by policy holders, with some additional money being made through the investment of some of the cash raised from premiums. Rates charged for life

42

insurance increase with the insurer's age because, statistically, people are more likely to die as they get older. The insurance company will investigate the health of and applicant for a policy to assess the likelihood of incurring a claim, in the same way that a bank would investigate an applicant for a loan to assess the likelihood of a default. Group Insurance policies are an exception to this. This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked, with certain responses or revelations possibly meriting further investigation. As part of the application, the insurer often requires the applicant's permission to obtain information from their physicians.

Underwriters will determine the purpose of insurance; the most common being to protect the owner's family or financial interests in the event of the insured's death. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose.

Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable. The policy can be declined or rated (increasing the premium amount to compensate for a greater probability of a claim).

43

RESEARCH METHODOLOGY

44

RESEARCH METHODOLOGY
A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods.

Research comprises of defining & redefining problems, formulating hypothesis or suggested solutions, collecting, organizing & evaluating data, making deductions & reaching conclusions. In research design we decide about:

Type of data From whom to get data How to analyze data How to make report

DATA TYPE
Data collected was both Primary and Secondary in nature.

DATA COLLECTION
There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. The information is collected through the PRIMARY SOURCES like:

For the purpose of above stated project a survey through structured questionnaire is being conducted. It includes both open ended and close ended questions.

45

Data was collected from following SECONDARY SOURCES like

To keep abreast with the dynamic Indian market, I seek to consult various existing data also in the related areas so that a comparative study is formulated. The source used includes books, Journals, Magazines, Newspapers, Internet and even academicians in the related areas.

The collected information was edited & tabulated for the purpose of analysis.

SAMPLING
Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study. SAMPLING SIZE:- How many people to be surveyed? Generally the more is the sample size the more reliable is the result. The sample size constituted of around 100 individuals of Delhi/NCR circle. This people belong to different part of the city. SAMPLING TECHNIQUE:- Random sampling technique was used in the survey conducted.

TOOLS USED FOR PROJECT

While making the project file various tools were used. These tools helped in doing the work. These are: Microsoft Excel Microsoft Word Various analysis tools like Bar Graphs, Pie Graphs, tables. Percentages and averages have also been used to represent data clearly and effectively.

46

DATA ANALYSIS & INTERPRETATION

47

RESEARCH FINDINGS AND IMPLICATIONS

This study was undertaken to identify which type of insurance plans HDFCSL should market to beat LIC in India. A survey was undertaken to understand the preferances of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:
Age group 20 - 29 years 30 - 39 years 40 - 50 years More than 50 years No. of Respondents 47 25 17 11

CHART 1:

11 17

20-29 30-39 47 40-50

25

more than 50 years

48

Analysis:
From the chart above we find that 47% of the respondents fall in the age group of 20 29 years, 25% fall in the age group of 30 39 years and 17% fall in the age group of 40 50 years, 11% fall in the age group of above 50 years.

Therefore most of the respondents are relatively young (below 29 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.

49

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2:

Particulars Male Female

No. of Respondents 71 29

CHART 2:

00 29% male female 71%

50

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:

Customer profile Student Housewife Working Professional Business Self Employed Government service employee

No. of respondents 23 2 43 18 9 5

CHART 3:

Analysis:
From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 25 years having surplus income, interested in good returns on their investment and saving income tax.

51

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME:

TABLE 4:

Person who have life insurance policy Yes No 38 62

CHART 4:

00 YES NO

38% 62%

ANALYSIS:
This graph shows that out of total 100 respondents only 38 respondents have life insurance policy in their name. Rest all dont have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.

52

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

LIFE INSURER HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS

NUMBER OF POLICIES 2 1 2 3 20 2 4 2 1 1

CHART 5:

53

Analysis:
In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.

The above chart clearly state that LIC lead the market share and it cover more than 50% of market all the other company are very far and talking about HDFC it cover only 4% of the market which can be increase in future.

54

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) Rs. 5000 - Rs. 15000 Rs. 15001 - Rs. 35000 Rs. 35001 - Rs. 60000 Rs. 60001 - Rs. 100000 Above Rs. 100000

No. of respondents 54% 17% 12% 12% 5%

CHART 6:

5 12 12 54 17

Rs.5000Rs.15000 Rs.15001Rs.35000 Rs.35001Rs.60000 Rs.60001Rs.100000 Above Rs.10000

55

Analysis:
From the chart above we find that, 54% of the respondents surveyed pay an annual premium less than Rs. 15000 towards life insurance. 17% of the respondents pay an annual premium less than Rs. 35000 and 12% pay an annual premium less than Rs. 60000. Hence we can safely say that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum.

Only 17% of the respondents pay more than Rs. 60000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.

56

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans

No. of Respondents 39% 45% 6% 3% 7%

CHART 7:

Analysis:
From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. 57

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:

Awareness of Unit Linked Plans Yes No

No. of Respondents 57 43

CHART 8:

Analysis:
From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively.

58

Unit linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

59

CHART SHOWING IDEAL POLICY TERM TABLE 9:

Ideal policy term 3 - 5 years 5- 15 years 15 25 years 25 30 years More than 30 years Whole life Policy No. of respondents 19 50 25 2 1 4

CHART 9:

60

50

40

30

20

10

0 3-5 YEARS 5-15 YEARS 15-25 YEARS 25-30 YEARS MORE THAN WHOLE LIFE 30 YEARS POLICY

60

Analysis:
From the chart given above it can be seen that 50% of the respondents prefer a policy term of 5 15 years, 19% prefer a term of 3 5 years and 25% prefer a term of 15 25 years. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.

61

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 10:

Parameter Advertisements High returns Advice from friends Family responsibilities Others 13% 31% 17% 33% 6%

No. of Respondents

CHART 10:

62

Analysis:
From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 31% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.

63

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 11:
Type of Company Government Company Public Limited Company Private Company Foreign Company Owned 60% 29% 7% 4% Percentage

CHART 11:

Analysis:
From the graph above one finds that 60% of the respondents preferred to vpurchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.

64

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 12:

Expected Returns Less than 5% 5% - 15% 15% - 20% MORE THAN 20%

No. of respondents 7%1 31% 18% 44%

CHART 12:

50 45 40 35 30 25 20 15 10 5 0 LESS THAN 5% 5%-15% 16%-20% MORE THAN 20%

65

Analysis:

From the chart above it can clearly been seen that 18% of the respondents would like 16 20% returns, 31% would like returns between 5% 15% and 7% would like returns of LESS THAN 5% on their investments. Therefore the average return on investment should be at least 5% 15%.

Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.

66

LIMITATIONS

67

LIMITATIONS
As applied to every research work here also there are certain limitations to the study which must be mentioned beforehand so that the reader might perceive it in those regards. Geographical: - The study is relevant only under the geographical inbounds of Delhi/NCR as the data is collected from the respondents of the users in Delhi/NCR. Lack of cooperation from respondents: - Faced problems in reaching the target respondents due to reluctance from the company people where the sample has been targeted while gathering information for research purpose. Also low awareness level of products and services in the market comes as a big hurdle in collecting data. Resources: - Study is also constrained by the lack of resources because of which sophisticated methodology couldnt be used. Time Constraints: - Time is another crucial factor which critically entombs the study. As the study is being conducted single handedly, time remains the major constraint. Money: - Money is a constraint since the project is self financed. Use of secondary data:- During the preparation of this project report, assistance has been taken from secondary data such as data from internet websites and other references like books, magazines, companys brochures, and other circulars etc. any misrepresentation in those data sources may fall impact on the results of the research. The conclusion is totally based on the truthfulness of information provided by the respondents. So it may lead to wrong conclusion due to some unavoidable errors faced during survey as lack of time to respond, no response, inaccuracy in response etc. Other limitations: - Other limitations in this research could be the biased nature of the respondents.

The old and out dated technique of telemarketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor

68

shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue.

Some of the main problems in marketing the policies are:

Large amount of competition (23 players in the market) Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments

Large amount of documentation Lack of awareness about the unit linked funds in the market No money back plan present in the product portfolio

69

RECOMMENDATIONS AND SUGGESTIONS

70

RECOMMENDATIONS & SUGGESTIONS

Advertise about the company and its products it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time Rs. 5000 Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance Promote insurance in colleges and corporate houses Promote HDFC SLIC as an Indian Company to build trust HDFC SLIC could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential Diversify product portfolio Make products more straight forward reduce complexities

71

Working professional could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

Because only 38% respondents have life policy, therefore there is a very big scope for this.

The target market would be working individuals in the age group of 20 29 years having surplus income, interested in good returns on their investment and saving income tax.

The largest life insurance company is Life Insurance Corporation of India. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.

Try to give good returns on short time life plan. A good combination of the two instruments debt and equity is a wise choice

72

CONCLUSION

73

CONCLUSION
The financial markets have continued to witness unprecedented liberalization, growth and reforms over the last decade prompted by regulatory compulsions and a rapid integration between domestic and global markets. And as a result, one has seen substantial growth in the number of financial firms (insurance companies, mutual funds, brokerages, banks etc.) and in the number and variety of financial products and services offered by them. As the need of the people is changing so is changing the investment habits of the people and this has brought in a spate of new products and schemes where people can invest. The concept of insurance as an investment option has arrived where people first identify the varying needs of money then converts the needs into specific amount of money and time required to achieve the objective of investments plans. The objective of insurance as an investment is to ensure that investments are driven by pre determined and well thought out investment plan and that the investments are suitable and adequate to meet these plans. But for this the planner must understand the universe of investments options. He/she must be well informed on the risk and return attributes of these options.

In addition to the above, companies should also innovate to come up with better products that would suit the Indian population and should also try to market and sell their products through new channels of distribution that can be effective in selling their products to the masses. People should identify their needs and then decide on the type of policy they want to invest in. insurance is a good investment option for those people who do not know where to invest and who do not want to the risk of capital erosion. But, people who are financially savvy can opt for term insurance and invest the rest in other options that may give them higher returns. HDFC standard life was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company).

The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of

74

advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients

75

REFERENCES

76

REFERENCES
1. BOOKS REFERRED:

William Anthony, Pamela Perrewe & Michele Kacmar (1999)-HRM: A Strategic Approach-3rd Ed. Fundamental of Risk and Insurance- Emmet J Vaughan and John Willy Life and Health Insurance- Kenneth Black and Harold D.

2. WEBSITES REFERRED www.banking.com www.licindia.com www.irdaindia.org www.hdfclife.com

3. NEWSPAPER The Hindustan Times Times of India Business Standard

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QUESTIONNAIRE
COMPARATIVE ANALYSIS BETWEEN HDFC STANDARD LIFE INSURANCE AND LIC
1. Do you know about insurance policies? (1) Yes 2. Do you have a life insurance policy? (2) No

(1) Yes

(2) No

3. (a)If yes which companys insurance policies do you hold?

(1) HDFC SLIC (3) ICICI

(2) LIC (4) Bajaj Allianz Life Insurance

(5) Others (Specify) __________________________________ (b) If no, why? ___________________________________________

4. Have you heard about HDFC Standard Life Insurance? (1) Yes (2) No

5. Rate the Insurance Company according to your preference?

(1) HDFC SLIC (2) LIC (3) ICICI (4) Bajaj Allianz Life Insurance (5) Reliance Life Insurance
(6) Others (Specify)

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6. How do you rate the quality of service provided by HDFC Standard Life Insrance?

(1) Excellent
(4) Bad

(2) Good
(5) Cant say

(3) Average

7. How do you rate the quality of service provided by LIC?

(1) Excellent
(4) Bad

(2) Good
(5) Cant say

(3) Average

8. What is the approximate premium paid by you annually (in Rupees)?

(1) Rs. 5,000 Rs. 15,000 (3) Rs. 35,001 Rs. 60,000

(2) Rs. 15,001 Rs. 35,000 (4) Rs. 60,001 Rs.100000

(5) Above Rs. 100000 (specify premium)

9. What kind of insurance policy would suit you best in your current stage of life?

(1) Life Insurance (3) Pension Plans (5) Tax saving plans

(2) Life Insurance and Investment plans (4) Child Plans

10. Are you aware of the new unit linked insurance plans (ULIP) in the market?

(1) Yes

(2) No

11. Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)

(1) 3 to 5 years (3) 15 to 25 years (5) More than 30 years

(2) 5 to 15 years (4) 25 to 30 years (6) Whole life policy

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12. What motivates you to purchase insurance/investment plans?

(1) Advertisements (2) Advice from friends

(2) High Returns (4) Family responsibilities

(5) Others (specify) _________________________________________

13. In which kind of company would you prefer to make a purchase of insurance?

(1) Government owned company (3) Private Company

(2) Public Limited Company (4) Foreign based company

14. Typically what kind of returns would you look at from your investments?

(1) Less than 5% (2) 16% - 20%

(2) 5% - 15 % (4) More than 20%

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Personal Details :
NAME: ADDRESS: SEX: (1) M (2) F

AGE: (1) 20-29 CONTACT NO. :

(2) 30-39

(3) 40-50

(4) Above 50

E MAIL ID: __________________________________________

PROFILE OF RESPONDENT: (1)Student (3)Working Professional (5) ce Employee (2) (4) Employed

(6) Business (2) 10001-20,000 (4) ABOVE 50,000 (2) GRADUATE (4) PROFESSIONAL Date:

INCOME (RS.): (1) LESS THAN 10000 (3) 20,001-50,000 QUALIFICATION: (1) 10+2 (3) P.G.

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