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A Summer Training Report
On
ANALYSIS OF VARIOUS POLICIES OF HDFC
ofSubmitted in Partial Fulfillment of award of Bachelor of
Business Administration, Degree (Affilated by CCS University Meerut)
Submitted To: Submitted By:Mr. Saurabh Mittal Chandra Kant(HOD ) Roll No:8553542
SESSION 2011-12
Shri Ram Group Of Colleges,Muzaffarnagar
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.
This Summer trainingReport has been completed in Partial fulfillment of
my Management Program, BACHELOR OF BUSINESS
ADMINISTRATION (BBA) in the company STANDARD LIFE INSURANCE. The objective of my project was Analysis of various policies of HDFC,
HDFC STANDARD LIFE INSURANCE is the name which is working as
one of the best private insurance company in insurance sector.
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 countrys 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.
ii
ACKNOWLEDGEMENT
On the successful completion of this project I would like to express my
gratitude to all the people who have helped me throughout the project.
At first, I owe my debt of thanks to HDFC STANDARD LIFE
INSURANCELife, which gave me an opportunity to do this project work.
I wish to extend my deep and sincere gratitude to Mr.Nitin Rastogi (SDM) and Mr.Amit Singhal (Trainer) who provided me with their guidance from day one and also helped me whole heartedly to achieve
the ultimate goal of the project.
I am also indebted to Mr.Saurabh Mittal Department of business
Administration and all staff members for providing me with this learning
opportunity.
Chandra Kant
iii
DECLARATION
The summer project on Analysis of various policies of HDFC, in HDFC STANDARD LIFE INSURANCE is the original work done by me. This is the property of the institute and use of this report without prior
permission of the institute will be considered illegal and actionable.
Chandra Kant
i.
CONTENTS
S.no Topics Page No.
DECLARATION iPERFACE iiACKNOWLEDGEMENT iii
1. EXECUTIVE SUMMARY 12. PROJECT OBJECTIVE 23 .RESEARCH METHODOLOGY (3-4)
a) Type of Research 3
b) Data Collection 3
c) Sampling Unit & Size 3
d) Limitations 4
4 Section 1 : INDUSTRY PROFILE (5-32)1) Overview & Historical Perspective 6-
7
2) Insurance Sector Reforms 8-10
3) Nature of Industry
11-14
4) Indian Insurance Industry 15
Regulatory Body : IRDA
5) Importance of Liberalization 16-20
Market share of various players
6) Current Scenario 21-29
7) SWOT Analysis of Industry 30-32
5. Section 2 : COMPANYS PROFILE (33-55) HDFC STANDARD LIFE INSURANCELtd. : 1) Introduction
34-38
2) Subsidiary & Associate Companies 38-39
HDFC STANDARD LIFE INSURANCELIFE
40-55 1) Introduction 40-42
2) Key Personnel 43-44
3) Knowledge Management 45-47
Life Stages
4) Product Mix 48-51
5) Current Sales 52-54
6) Future Plans 55
6. Section 3 : MAIN SECTION (56-66)1) Financial Planning 57
2) 360 Financial Planning 58-61
3) Consumption Pattern 62
4) Objective & Sales Procedure 63-66
7.Section 4 : DATA ANALYSIS (67-78)
8 .Section 5 : FINDINGS (79-80)
9 .Section 6 : CONCLUSIONS (81-83)
10. Section 7 : RECOMMENDATIONS (84-87)
11. APPENDICES (88-99)1) Questionnaire 89-92
2) Glossary 93-98
3) Bibliography 99
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 unit linked as well as the traditional plans and solutions 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 customer dealing.
Finally, interesting conclusions were drawn out of the data collected
regarding the Awareness of Financial Planning among the people in
todays environment.
It was great experience because selling an insurance product demands
a great deal of confidence and product knowledge.
(1)
PROJECT OBJECTIVES
To Analysis of various policies of HDFC,.
To study the importance of Insurance in todays scenario.
Brand awareness of various private insurance companies.
Preference among different investment tools.
Purpose of buying insurance.
Preference in choosing channel for buying life insurance.
Quality of service provided by agents and clients
satisfaction level.
Customers perception of improvements brought in by entry
of Private Insurance Companies.
To generate leads for Unit Linked Insurance and the Unit
Linked Pension Plans, by interacting with walking and existing
customers of the company.
(2)
RESEARCH MEHODOLOGY
Analysis of vanious policies of HDFC, and particularly the insurance
sector covers data collection through observation, questionnaire and
interview of consumers.
Type of research : Exploratory :Type of research carried out was EXPLORATORY in nature; the
objective of such research is to determine the approximate area where
the drawback of the company lies and also to identify the course of
action to solve it. For this purpose the information proved useful for
giving right suggestion to the company.
Data Collection:
Primary data
Secondary data
Data used for the research work was primary in nature.
Sample unit: -
The research process was done by interacting with number of customers
during the activities performed, which included, markets, cold calling,
canopies, etc. Sample Design consists of Random Sampling.
Sample size: - 100 people
(3)Method of collection: -Field procedure for gathering primary data included observation and
interview schedule in which the questionnaires were filed by the
interviewer.
Personal interviews through self administered survey was done to collect
the data, market research was undertaken, that was accomplished by
performing various activities designed.
Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points: -
Giving the respondents clear comprehension of the question.
Inducing the respondents to co-operate.
Giving instructions as to what is wanted.
Identifying the needs to be known.
Limitations:The following were the limitations that were there during the course of
the study:4
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.
(4)
SECTION 1
(5)
INDUSTRY PROFILE
Overview
With 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.
Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This it-self is an indicator that growth potential for the insurance sector is immense.
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.
(6)
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.
Important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company to
transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of
India, frames a code of conduct for ensuring fair conduct and sound
business practices.
1972: The general insurance business in India nationalized through The
General Insurance Business (Nationalization) Act, 1972 with effect from
1st January 1973. 107 insurers amalgamated and grouped into four
companies- the National Insurance Company Limited, the New India
Assurance Company Limited, the Oriental Insurance Company Ltd. and
the United India Insurance Company Ltd. GIC incorporated as a
company.
(7)
Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and
RBI Governor R.N. Malhotra- was formed to evaluate the Indian
insurance industry and recommend its future direction. The Malhotra
committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at creating a
more efficient and competitive financial system suitable for the
requirements of the economy keeping in mind the structural changes
currently underway and recognizing that insurance is an important part
of the overall financial system where it was necessary to address the
need for similar reforms. In 1994, the committee submitted the report
and some of the key recommendations included:
StructureGovernment 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.
CompetitionPrivate 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 may be
allowed to enter the industry in collaboration with the domestic
companies.
(8)
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body
should be set up. Controller of Insurance- a part of the Finance Ministry-
should be made independent
InvestmentsMandatory 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 ServiceLIC 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.
(9)
STATISTICS (INDIAN & GLOBAL)
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.
The global life insurance market stands at $1,521.2 billion while
the non-life insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the
$2443.6 billion global insurance market and Japan stands next
with a 20.62% share.
India takes the 23rd position with US $9.933 billion annual
premium collections and a meager 0.41% share.
Out of one billion people in India, only 35 million people are
covered by insurance.
India's life insurance premium as a percentage of GDP is just 1.77
per cent.
The income derived by GIC and its subsidiary companies through
investment was Rs.2491.76 crore and the investable fund
generated was Rs.2843 crore in 1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the
assumption of a 7 per cent real annual growth in GDP.
(10)
NATURE OF INDUSTRY
The insurance industry provides protection against financial losses
resulting from a variety of perils. By purchasing insurance policies,
individuals and businesses can receive reimbursement for losses due to
car accidents, theft of property, and fire and storm damage; medical
expenses; and loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or insurers)
and insurance agencies and brokerages. In general, insurance carriers
are large companies that provide insurance and assume the risks
covered by the policy. Insurance agencies and brokerages sell insurance
policies for the carriers.
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.
(11)
There are two basic types of insurance carriers: Direct and Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance policies and annuities, while Reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally
underwritten by other insurance carriers.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiariesusually spouses and dependent childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to work due to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady
income during retirement for the remainder of ones life.
Property-casualty insurance protects against loss or damage to property resulting from hazards such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility for injuries to others or for damage to other peoples property. Most policies,
such as automobile and homeowners insurance, combine both property-
casualty and liability coverage. Companies that underwrite this kind of
insurance are called property-casualty carriers.
(12)
What is Life Insurance?
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.
A Term insurance product provides a fixed amount of money on death during the period of contract.
A Whole Life insurance product provides a fixed amount of money on death.
An Endowment Assurance product provided a fixed amount of money either on death during the period of contract or at the expiry of contract if
life assured is alive.
A Money Back Assurance product provides not only fixed amounts which are payable on specified dates during the period of contract, but
also the full amount of money assured on death during the period of
contract.
An Annuity product provides a series of monthly payments on stipulated dates provided that the life assured is alive on the stipulated
dates.
(13)
A Linked product provides not only a fixed amount of money on death but also sums of money which are linked with the underlying value of
assets on the desired dates.
There are a variety of life insurance products to suit to the needs of
various categories of peoplechildren, youth, women, middle-aged
persons, old people; and also rural people, film actors and unorganized
laborers.
Life insurance products could be purchased from registered life insurers
notified by the IRDA. Insurers appoint insurance agents to sell their
products.
As per regulations, insurers have to give the various features of the
products at the point of sale. The insured should also go through the
various terms and conditions of the products and understand what they
have bought and met their insurance needs. They ought to understand
the claim procedures so that they know what to do in the event of a loss.
(14)
INDIAN INSURANCE SECTOR
REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals
with insurance business in India is: Insurance Act, 1938, and Insurance
Regulatory & Development Authority Act, 1999.
The Insurance Regulatory and Development Authority (IRDA)
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.
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 IrDAs online service for issue and
renewal of licenses to agents. Since being set up as an independent
statutory body the IRDA has put in a framework of globally compatible
regulations.
MISSION-IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
(15)
IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors
in the dull industry. The initiatives taken by the private players 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).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx.
5.60%
Followed by HDFC STANDARD LIFE INSURANCE(3.27 %) and HDFC
STANDARD LIFE INSURANCELife of about 3.11%.
Below is the table that shows the market share of various players of the
industry.
(16)
NOP Premium (Cr) Company
Business Performance As On 31-03-07
The following companies have the rest of the market share of the
insurance industry.
COMPANY NAME MARKET SHARELIC 79.30
ICICI PRUDENTIAL 5.63BAJAJ ALLIANZ 3.27
HDFC STANDARD LIFE INSURANCELIFE
3.11
BIRLA SUNLIFE 2.32TATA AIG 1.45SBI LIFE 1.24
MAX NEWYORK 0.90AVIVA LIFE 0.82ING VYSYA 0.66
OM KOTAK LIFE 0.54AMP SANMAR 0.38
METLIFE 0.33RELIANCE 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.
(17)
NOP Premium (Cr) Company
Business Performance As On 31-03-07
(18)
Bharti Axa LifeSahara LifeShriram Life Met LIFE ING Vysya OM KotakTata AIGAviva Reliance Life Max New YorkSBI Life BAJAJ Allianz Bajaj Allianz ICICI Prudential LIC
1,889,8353925.212.1,905,7673027.553.363,3221220.854.480,0651198.835.544,121752.846.432,684687.868.293,382656.919.406,265518.8810.
35,63619.7015.
116,988302.6713.
159,101499.3411.
5,2207.7516.
76,19887.2614.
227,342418.0012.
32,143,89123899.291.
NOP Premium (Cr) Companys.no.
Business Performance As On 31-03-07
There are a number of options to choose from for a career in Insurance. Ideally an insurance company will have openings in the following fields:
Actuaries
Underwriter
Surveyor
Investment
Marketing & Distribution
Actuaries
Evaluates the risk for companies to be used for strategic
management decisions.
Actuaries use their analytical skills to predict the risk of writing
insurance policies through the use of mathematical, statistical and
economic models.
An actuary not only fixes the premium rates for new products, but
also revises both products and prices. They calculate costs to
assume risk
Underwriters
Insurance underwriters review insurance applications and decide
whether they should be accepted or rejected based on the degree
of risks involved in insuring the people or objects of concern.
In the life insurance business, an underwriter is expected to filter
the "bad or substandard lives". Whereas, in the general insurance
segment, he takes care of risk management.
(19)
Agents/Brokers:
Insurance agents may work for one insurance company or as
independent agents selling for several companies.
Insurance agents and brokers can find openings in the health
insurance sector, financial planning services, retirement planning
counseling or even provide other services, for e.g. sell mutual
funds, annuities etc.
Surveyor/Loss Assessor:
Surveyors are professionals who assess the loss or damage and
serve as a link between the insurer and the insured.
They usually function only in non life business.
Their job is to assess the actual loss and avoid false claims.
Sales/Marketing:
And who can forget the guys who make and break a brand. They
would be required in a large number in order to promote the number
of products that will be launched by numerous companies in the
insurance sector.
(20)
CURRENT SCENARIO OF THE INDUSTRYINSURANCE MARKET IN INDIA
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.
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 SERVICEConsumers 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
(21)
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 CHANNELSTill 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
imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
LIC has already well established and have an extensive distribution
channel and presence. New players may find it expensive and time
consuming to bring up a distribution network to such standards.
Therefore they are looking to the diverse areas of distribution channel to
have an advantage. At present the distribution channels that are
available in the market are:
Direct selling/Retail Corporate agents Group selling Brokers and cooperative societies Bancassurance
DIRECT SELLING/RETAILDirect selling or retail business is carried out by Agents of the company.
This is the main distribution channel due to the complexity of
most
(22)
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.
An agent should be a pleasing personality with complete knowledge
about the various plans and solutions which the company has to offer
and must also understand the customers psychology well to deal in an
efficient manner.
BANCASSURANCEBancassurance 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, theycan 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.
(23)
Banks can cross sell insurance products e.g.:
Term insurance products with loans.
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
(24)
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For
some, it is a premium to be paid on time. For others it offers liquidity
since cash can be borrowed when needed. For the investment-minded, it
denotes a constantly growing capital account and numerous other
benefits.
The contractual guarantee is the promise to pay, backed by one of the
oldest and most stably regulated financial industry operating in the
Indian sub-continent today.
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.
2) Insurance Offers Peace of Mind
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
(25)
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
Since life insurance is flexible enough to serve several needs, the
insured can keep several long-term goals in mind once he or she invests
in the insurance plan. The cash value of the policy can be allocated
towards augmenting the monthly income during the retirement years.
Leisure years should be turned into pleasure years. Permanent life
insurance is designed on the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for
peace of mind when they buy life insurance. Life insurance offers
complete financial security. The purchase of life insurance demonstrates
concern for a family's future financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the
people the policy owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can
back its products with reserves and surplus as sound as those of the
insurance industry.
(26)
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.
OPPORTUNITIES FOR INSURANCE COMPANIES
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:
A change in the attitude of the population
Indians have always been wary of employing their hard-earned money in
a venture that will pay them on their death. Insurance has always been
used as a Tax saving tool. No more, no less. It is upon the insurers to
educate the people to secure/insure their future against any unknown
calamity and make a shield around their families and businesses.
An open and transparent environment created under the IRDA.
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.
(27)
A well-established distribution network.
To cater to the largest democracy in the world is by no means a
cakewalk. Insurance profits are directly related to number of insured and
this is in turn related to the reach.
Trained professionals to build and sell the product.
It is said that the insurance agent is the best salesman in the world. He
makes you pay, regularly, an amount 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.
Encouragement of new and better products and letting the hackneyed ones die out.
This will itself ensure the market grows. And that every class/society
gets a product that best suits them.
SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance
policy (not being a Key Man policy) is also exempt from taxation. But it is wise to remember that Pensions received from Annuity plans are not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an
individual assesses for any amount paid as a premium.
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POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of
their policies or their claims. As per Regulations for Protection of
policyholders interests, 2002, every insurer should have in place, a
grievance redressal system to address the complaints of policyholders.
The IRDA has a Grievance Redressal Cell which plays a facilitative role
by taking up complaints against insurers with the respective companies
for speedy resolution. The IRDA however does not adjudicate on
complaints.
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SWOT ANALYSIS OF INSURANCE
INDUSTRY
STRENGTH
1. Best returns with the added advantage of 100% life insurance
coverage.
2. Good option for new investors into the market as all the money is
invested by best fund managers so with less knowledge also they can
earn good Returns.
3. Best commission charges paid to the agents which vary from 12% to
35% which is much higher as compared to mutual funds i.e. , only 2-
2.5%.
WEAKNESS
1. HDFC STANDARD LIFE INSURANCESLIC could not able to match
LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
OPPORTUNITY
1. 80 percent of Indian population is still under insured.
So there is a big opportunity for insurance companies.
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2. As the stock market can be under the mark any time so it can bring loss to the investors but as in ULIPs there is proper
mixture of debt securities and equity so the loss is incurred during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life
insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the investors.
2. Govt.s instability has a long term repercussions affecting companys
policies and its growth.
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CONCLUSION
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India, which is growing at the rate of 15-20 per cent annually.
Nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security.
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
COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC
STANDARD LIFE INSURANCEhas 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.
HDFC STANDARD LIFE INSURANCEoperates through 75 locations
throughout the country with its Corporate Headquarters in Mumbai,
India.
OBJECTIVES AND BACKGROUND
Background
HDFC STANDARD LIFE INSURANCEwas incorporated in 1977 with the
primary objective of meeting a social need that of promoting home
ownership by providing long-term finance to households for their housing
needs. HDFC STANDARD LIFE INSURANCEwas promoted with an
initial share capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC STANDARD LIFE INSURANCEis to
enhance residential housing stock in the country through the provision of
housing finance in a systematic and professional manner, and to
promote home ownership. Another objective
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is to increase the flow of resources to the housing sector by integrating
the housing finance sector with the overall domestic financial markets..
ORGANIZATION AND MANAGEMENT
HDFC STANDARD LIFE INSURANCEis a professionally managed
organization with a board of directors consisting of eminent persons who
represent various fields including finance, taxation, construction and
urban policy & development. The board primarily focuses on strategy
formulation, policy and control, designed to deliver increasing value to
shareholders.
FOUNDER Mr. Hasmukhbhai ParekhBrief profile of the Board of Directors
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC STANDARD LIFE INSURANCELimited). He joined HDFC STANDARD LIFE INSURANCELimited in a senior management position in 1978. He was inducted as a whole-time director of HDFC STANDARD LIFE INSURANCELimited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC STANDARD LIFE INSURANCELimited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).
Mr. Keki M Mistry joined the Board of Directors of the Company in December, 2000. He is currently the Managing Director of HDFC STANDARD LIFE INSURANCELimited. He joined HDFC STANDARD LIFE INSURANCELimited in 1981 and became an Executive Director in 1993. He was appointed as its Managing Director in November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered
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Accountants of India and a member of the Michigan Association of
Certified Public Accountants.
Mr. Alexander M Crombie joined the Board of Directors of the
Company in April, 2002. He has been with the Standard Life Group for
34 years holding various senior management positions. He was
appointed as the Group Chief Executive of the Standard Life Group in
March 2004. Mr. Crombie is a fellow of the Faculty of Actuaries in
Scotland.
Ms. Marcia D Campbell is currently the Group Operations Director in
the Standard Life group and is responsible for Group Operations, Asia
Pacific Development, Strategy & Planning, Corporate Responsibility
and Shared Services Centre. Ms. Campbell joined the Board of
Directors in November 2005.
Mr. Keith N Skeoch is currently the Chief Executive in Standard Life
Investments Limited and is responsible for overseeing Investment
Process & Chief Executive Officer Function. Prior to this, Mr. Skeoch
was working with M/s. James Capel & Co. holding the positions of UK
Economist, Chief Economist, Executive Director, Director of Controls
and Strategy HSBS Securities and Managing Director International
Equities. He was also responsible for Economic and Investment
Strategy research produced on a worldwide basis. Mr. Skeoch joined
the Board of Directors in November 2005. Mr. (36)
Mr. Gautam R Divan is a practicing Chartered Accountant and is a
Fellow he Institute of Chartered Accountants of India. Mr. Divan was
the Former Chairman and Managing Committee Member of Midsnell
Group International, an International Association of Independent
Accounting Firms and has authored several papers of professional
interest. Mr. Divan has wide experience in auditing accounts of large
public limited companies and nationalised banks, financial and taxation
planning of individuals and limited companies and also has substantial
experience in structuring overseas investments to and from India.
Mr. Ranjan Pant is a global Management Consultant advising
CEO/Boards on Strategy and Change Management. Mr. Pant, until
2002 was a Partner & Vice-President at Bain & Company, Inc.,
Boston, where he led the worldwide Utility Practice. He was also
Director, Corporate Business Development at General Electric
headquarters in Fairfield, USA. Mr. Pant has an MBA from The
Wharton School and BE (Honours) from Birla Institute of Technology
and Sciences.
Mr. Ravi Narain is the Managing Director & CEO of National Stock
Exchange of India Limited. Mr. Ravi Narain was a member of the core
team to set-up the Securities & Exchange Board of India (SEBI) and is
also associated with various committees of SEBI and the Reserve
Bank of India (RBI).
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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 STANDARD LIFE INSURANCELimited 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.
Ms. Renu S. Karnad is the Executive director of HDFC STANDARD
LIFE INSURANCELimited, is a graduate in law and holds a Masters
degree in economics from Delhi University. She has been employed
with HDFC STANDARD LIFE INSURANCELimited since 1978 and
was appointed as the Executive Director in 2000. She is responsible
for overseeing all aspects of lending operations of HDFC STANDARD
LIFE INSURANCELimited.
HDFC STANDARD LIFE INSURANCEhas a staff strength of 1029, which includes professionals from the fields of finance, law, accountancy, engineering and marketing.
SUBSIDIARY & ASSOCIATE COMPANIES
HDFC STANDARD LIFE INSURANCEBank
HDFC STANDARD LIFE INSURANCEMutual Fund
HDFC STANDARD LIFE INSURANCELife ++
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Intelenet Global Services Ltd.
HDFC STANDARD LIFE INSURANCEChubb General Insurance Company Ltd.
HDFC STANDARD LIFE INSURANCEReality
Other Companies Co-Promoted by HDFC STANDARD LIFE INSURANCE
HDFC STANDARD LIFE INSURANCETrustee Company Ltd.
HDFC STANDARD LIFE INSURANCEDevelopers Ltd.
HDFC STANDARD LIFE INSURANCEVenture Capital Ltd.
HDFC STANDARD LIFE INSURANCEVentures Trustee Company Ltd.
HDFC STANDARD LIFE INSURANCEInvestments Ltd.
HDFC STANDARD LIFE INSURANCEHoldings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd
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HDFC STANDARD LIFE INSURANCELIFE
INSURANCE
INTRODUCTION :
HDFC STANDARD LIFE INSURANCELife 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 STANDARD LIFE
INSURANCEis 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 STANDARD LIFE
INSURANCEand Standard Life manage their asset base of Rs. 15,000
Cr and Rs. 600,000 Cr respectively.
HDFC STANDARD LIFE INSURANCELife Insurance Company Ltd was
incorporated on 14th August 2000. HDFC STANDARD LIFE
INSURANCEis the majority stakeholder in the insurance JV with 81.4 %
stake and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is
the MD and CEO of the venture.
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THE PARTNERSHIP :
HDFC STANDARD LIFE INSURANCEand 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 strong relationship quickly
formed. In October 1995 the companies signed a 3 year joint venture
agreement.
Around this time Standard Life purchased a 5% stake in BAJAJ
ALLIANZ, further strengthening the relationship.
In October 1998, the joint venture agreement was renewed and
additional resource made available. Around this time Standard Life
purchased 2% of Infrastructure Development Finance Company Ltd.
(IDFC). Standard Life also started to use the services of the HDFC
STANDARD LIFE INSURANCETreasury department to advise them
upon their investments in India.
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 STANDARD LIFE
INSURANCEto form the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC
STANDARD LIFE INSURANCEand a 5% stake in HDFC STANDARD
LIFE INSURANCEBank.
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COMPANYS MISSION:
To be the top life insurance company in the market.
This not only means being the largest or the most productive company in
the market, but a combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different
customers
Use of technology to improve service standards
Increasing market share
COMPANYS VALUES:
SECURITY: Providing long term financial security to our policy holders will be our constant endeavor. This is done by offering life
insurance and pension products.
TRUST: Company appreciates the trust placed by our policy holders in us. Hence, company will aim to manage their
investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customers, company will be offering a range of innovative products to meet
these needs.
Companys mission is to be the best new life insurance company in India
and these are the values that will guide us in this.
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KEY MANAGEMENT PERSONNEL
ChairmanMr. Deepak S. Parekh
Board of DirectorsMr. 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
Managing Director & CEOMr. D. M. Satwalekar
AUDIT COMMITTEE Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
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BankersHDFC STANDARD LIFE INSURANCEBank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
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KNOWLEDGE MANAGEMENT
When Should One Go For Insurance?
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
section, we have drawn up the basic life stages and help you analyze
various insurance needs accordingly.
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Stage 1: Young and Single
This is an important stage where one lays down the foundation of a
successful life ahead. Take advantage of the time and power of
compounding to ensure that you build up your dreams, so start saving
early.
Your needs:
oSave for a home and weddingoTax PlanningoSave for Golden years
Stage 2 - Just MarriedMarriage brings about a significant change. New dreams and new
opportunities also bring in additional responsibilities. While both of you
look forward to a happy and secure life, it is equally important to ensure
that eventualities dont come in the way of shaping your dreams.
Your needs:
o Planning for home / securing your home loan Liability
o Save for vacationo Save for your first child
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Stage 3 - Proud Parents
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
childs 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:
o Provide for childrens educationo Safeguarding family against loan liabilitieso Savings for post-retirement
Stage 4 - Planning for Retirement
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:
o Provide for regular income post retiremento Immediate Tax benefitso Lead a secure, independent and comfortable
Life style after retirement
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PRODUCT MIX
At HDFC STANDARD LIFE INSURANCELife, 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 individuals, they have a range of protection, investment, pension and
savings plans that assist and nurture dreams apart from providing
protection. One can choose from a range of products to suit ones life-
stage and needs.
For organizations they have customized solutions that range from Group
Term Insurance, Gratuity, Leave Encashment and Superannuation
Products.
PRODUCTS FOR INDIVIDUALS
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.
Plans: Term Assurance Plan
Loan Cover Term Assurance Plan.
INVESTMENT - This includes a plan that is well suited to meet your long term investment needs. We provide you with attractive long term returns
through regular bonuses.
Plan: Single Premium Whole Of Life
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PENSION - Our Pension Plans help you secure your financial independence even after retirement and live a relaxed retired life.
Plans: Personal Pension Plan
Unit Linked Pension
Unit Linked Pension Plus
SAVING - Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home or fulfilling your
childrens immediate and future needs.
Plans: Endowment Assurance Plan,
Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Childrens Plan,
Unit Linked Young star,
Unit Linked Young star Plus.
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GROUP PLANS
HDFC STANDARD LIFE INSURANCELife 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.
Plans: Group Term Insurance with Riders Group Term Insurance with Profit-Share
Group Unit-Linked Plan
For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan
RURAL CUSTOMER - According to research findings, there is keenness among rural customers to invest in savings cum protection plan with a
term of five years, especially, if the premium amount is low and
affordable. Keeping this in view, HDFC STANDARD LIFE
INSURANCESTD> LIFE has plans like:
Plans: Bima Bachat Yojana.
Super Bachat Yojana
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DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169
offices in over 135 cities/towns in the country. It has a widespread
network of Financial Consultants, Corporate Agents and Brokers
servicing customers in these cities and towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your
Company increased from over 23,000 in the previous year to over
33,000 in the current year. During the year, the Company continued its
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CURRENT SALES- HDFC STANDARD LIFE
INSURANCELife
HDFC STANDARD LIFE INSURANCELIFE PACING AHEAD
The Financial Express 15th May 2007
HDFC STANDARD LIFE INSURANCELife has recorded a strong year-on-year growth of 112% for the period April-March 2006-07, in comparison to the same period 2005-06, with a new business first year premium of Rs. 1,029 crore.
In terms of effective premium income (EPI), which gives a 10% value to a Single Premium policy and is an internationally-accepted indicator of an insurance company's performance, the EPI grew by 103% to Rs. 887 crore from Rs. 436 crore.
HDFC STANDARD LIFE INSURANCELife's growth in new business is a manifestation of the number of lives insured as well as an increase in the average premium. For the individual business, volume measured by the number of lives insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2006-07 from Rs 17,000 in 2005-06.
During the year the company issued over 3,97,000 policies and has
covered more than 5,80,000 lives
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Table Showcasing Financial Results:
Parameters
April-March
2005-06
(Rs. Cr)
April-March
2006-07
(Rs. Cr)
Growth
(%)Total received premium
668.40 1532.21 129.23
i. New Business 486.15 1028.94 111.65
ii. Renewal 182.25 503.27 176.14
Effective Premium Income (Total) 436.08 887.30 103.47Group Business Premium (EPI) 49.40 135.15 173.58
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Fund Name Offer Prices (Rs)Bid Price
(Rs)
Liquid Fund 24.5113 23.2857
Secure Managed Fund 24.7568 23.5190
Defensive Managed Fund 29.6157 28.1349
Balanced Managed Fund 34.1340 32.4273
Unit Prices as on 29/08/2007
UNIT PRICE AS ON 30/08/2007
Fund Name Offer Prices (Rs)Bid Price
(Rs)Liquid Fund 24.5661 24.5661Secure Managed Fund 22.6666 22.6666Defensive Managed Fund 27.3346 27.3346
Balanced Managed Fund 36.2603 36.2603
Equity Managed Fund 46.2655 46.2655Growth Fund 59.0512 59.0512
FUTURE PLANS
HDFC STANDARD LIFE INSURANCEhas always been market-oriented
and dynamic with respect to resource mobilization as well as its lending
program. This renders it more than capable to meet the new challenges
that have emerged. Over the years, HDFC STANDARD LIFE
INSURANCEhas developed a vast client base of borrowers, depositors,
shareholders and agents, and it hopes to capitalize on this 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.
HDFC STANDARD LIFE INSURANCEhas developed a network of
institutions through partnerships with some of the best institutions in the
world, for providing specialized financial services. Each institution is being
fine-tuned for a specific market, while offering the entire HDFC
STANDARD LIFE INSURANCEcustomer base the highest standards of
quality in product design, facilities and service.
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SECTION 3
FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies,
tax, corporate/trust structures, estate planning, legal issues, family law,
asset allocation, asset protection and investment advice.
Financial Planning takes into account:
Desired asset allocation, risk profile and return expectations.
Building cash flows correlating all expenses and income. Inflation
and outflows due to loans are considering in building the financial plan.
Future goals like retirement, housing and children's education /
marriage or other needs.
Why do you need Financial Planning?
You may have many dreams, needs and desires. For example, you could
be dreaming of:
Owning a new car,
Buying a dream house,
Providing your children with the best education,
Planning a grand wedding for your children
Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how
many of these dreams can you hope to turn into reality? By planning well,
you can utilize your limited resources to the fullest.
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EXPERIENCE THE POWER 360 FINANCIAL PLANNING
The only thing permanent in life is change. Times change. People
change. So does life. You expect life to be much better tomorrow than it is
today. Tomorrow, you hope to fulfill all your dreams and aspirations. But
what happens if things take an untoward turn? Or, if there is an
eventuality? Perhaps it's time for you to change the way you plan your
investments...
How will 360 Financial Planning help?
Instead of investing in an ad-hoc
manner, 360 Financial Planning helps
you take a holistic, all-round view. Briefly, 360 Financial Planning
comprises:
Investment Planning Cash Flow Planning Tax Planning Insurance Planning Children Future Planning Retirement Planning
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INVESTMENT PLANNING: To make your wealth grow
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.
Investment Planning Service includes:
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.
Cash flow planning refers to the process of identifying the major
expenditures in future (both short-term and long-term) and making
planned investments so that the required amount is accumulated within
the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should be carried out religiously.
According to the Income Tax Act, 1961, one will be eligible for Tax
Benefits under Section 80C and Section 10(10D) of the act.
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One has to compare the advantages of several tax saving schemes and
depending upon your age, social liabilities, tax slabs and personal
preferences, decide upon a right mix of investments, which shall reduce
your tax liability to zero or the minimum possible.
INSURANCE PLANNING: To protect yourself, your family and your Assets.
"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.
It is extremely important that every person, especially the breadwinner,
covers the risks to his life, so that his family's quality of life does not
undergo any drastic change in case of an unfortunate eventuality.
Insurance Planning is concerned with ensuring adequate coverage
against insurable risks.
CHILDREN'S FUTURE PLANNING: To give your children a financially secure future
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.
The purpose of Children's Future Planning is to create a corpus for foreseeable expenditures such as those on higher education and wedding, and to provide for an adequate security cover during their growing years.
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FIRST CONVERSATION
APPOINTMENT
FILLING THE PROPOSAL FORM
COLLECT THE REQUIRED DOCUMENTS AND THE FIRST PREMIUM
Follow Up Follow Up
RETIREMENT PLANNING: Because retirement is a time to relax, not to get worried
Some like it. Some dont. But retirement is a reality for every working
person. Most young people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish to
retain your financial independence and maintain a comfortable standard
of living even when you are no longer earning. This is extremely
important, because, unlike developed nations, India does not have a
social security net.
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FIRST CONVERSATION
APPOINTMENT
FILLING THE PROPOSAL FORM
COLLECT THE REQUIRED DOCUMENTS AND THE FIRST PREMIUM
Follow Up Follow Up
CONSUMPTION PATTERN
*Source-Business world magazine 2nd week April 2006
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.
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40.10%
4.10%8.80%
6.90%
6.60%
3.90%
10.80%
2.30%
7.60%2.10%0.80%
1.60%4.60%
Food & GroceryHome TextilesPersonal CareSaving & InvestmentClothingConsumer DurableVacationEating outFootwearMovies & TheaterEntertainmentAccessoriesBooks & Music
FIRST CONVERSATION
APPOINTMENT
FILLING THE PROPOSAL FORM
COLLECT THE REQUIRED DOCUMENTS AND THE FIRST PREMIUM
Follow Up Follow Up
OBJECTIVE: To generate leads for various Unit Linked Plans offeredby the company, by interacting with walking and existing customers and
to know the awareness level of Financial Planning among them.
SALES PROCEDURE:
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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 customers insight i.e. what actually does a customer expects from the
companies.
The objective was to know the awareness about Financial Planning
among the customers and this was done by getting a questionnaire filled
by the people. The various activities performed were:
1) KRISHNA PLAZA: Here we interacted with the commuters & collected the data.
2) MARKETS: (GOAL MARKET & BHAGAT SINGH MARKET) during this activity, we interacted with the shopkeepers as well as
the walking people regarding their views about the industry.
3) CANOPY AT MEERUT: This activity was designed to target the people working in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base provided by the company and the aim was to collect
information from them.
5) CORPORATE PRESENTATION: A presentation was arranged for the employees of VED RAM AND SONS (Paras), to make them
aware about the importance of Financial Planning in todays
unpredictable environment.
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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 invest2) 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:
a) Life option Death Benefit
b) Life & Health option Death Benefit + Accidental Death Benefit
c) Extra Life & Health option Death Benefit + Critical Illness Benefit + Accidental Death Benefit
5) Choose the Investment funds or funds one desires. The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund
Equity Managed Fund
Growth Fund
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6) Other information like:a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.
STEP 3: FILLING THE PROPOSAL FORM
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
d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
STEP 4 : COLLECTING THE DOCUMENTS
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.
(66)
SECTION 4
DATA ANALYSIS
SAMPLE SIZE: 100
Sample was collected on Random Basis
(67)
AGE DISTRIBUTION
AGE DISTRIBUTION(yrs.)
35%
41%
24%Below 30
31 - 45
Above 45
Highest number of Respondents (41%) from Age group 31 to 45
yrs.
35% respondents are of age below 30 yrs, small percentage of
which is unemployed.
(68)
MARITAL STATUS
MARITAL STATUS
19
4
16
37 24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Below 30 31 - 45 Above 45AGE(yrs)
SINGLE MARRIED
Total number of single respondents 23
Total number of married respondents 77
(69)
INCOME DISTRIBUTION
INCOME DISTRIBUTION(Annual in Rs.appx.)
16
13
5
1
7
12
12
10
0
6
12
6
5 lacs
INC
OM
E
Below 30 31 - 45 Above 45
Highest, 16 respondents in income bracket below 1.5 lacs, 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.
(70)
ARE YOU AWARE ABOUT FINANCIAL PLANNING ?
98%
2%
0
10
20
30
40
50
60
70
80
90
100
NO
OF
PEO
PLE
DO YOU KNOW WHAT IS FINANCIAL PLANNING ?
YES
NO
98% of the respondents were aware about Financial Planning.
(71)
BRAND RECALL
BRAND RECALL
100
96
92
828672
64
75
71
6051
LICICICI PrudentialHDFC Std LifeTATA AIGBIRLA SUN LIFEKOTAK MAHINDRASBI LIFEAVIVAMAX NEW YORKMETLIFEINGVYSYA
100 % respondents mentioned first name to be LIC
Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC STANDARD LIFE INSURANCElife has Brand Recall of 92%
(72)
INVESTMENT PREFERENCE
INVESTMENT PREFERENCE
11%18%
21%
9%
20%
21%
Banks & PostofficeShare Market
Insurance
Bonds
Mutual Funds
Real Estate
21% respondents prefer banks and post office schemes as an
investment tool preference.
Respondents of age group below 30 years prefer Mutual 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 with high income bracket
prefers to invest in Real Estate.
(73)
INSURED PERCENTAGE
ARE YOU INSURED?
87%
13%
YES
NO
87 % of respondents were insured on own life and on life of their family members.
So we had 13 % of potential customers to approach.
(74)
COMPANY PREFERENCE
COMPANY PREFERENCE(in %)
55% 30% 15%
0 20 40 60 80 100 120
1
ONLY LIC BOTH ONLY PVT. COs
55% of respondents have insurance cover provided by LIC only
15% of respondents have insurance cover provided by Private Cos. only
Whereas 30% have got insurance from both LIC and Private Companies.
Total number of LIC policies sums up to 85% and total number of Pvt. Companies policies sold sums up to 45%.
Data provides that though LIC is still got a maximum market share but Private Companies are making a fast move in the market.
(75)
TYPE OF PLAN BOUGHT
TYPE OF PLAN
26, 29%
20, 23%
24, 28%
17, 20% MONEY BACK
ENDOWMENT
PENSION PLAN
ULIPs
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.
(76)
PURPOSE OF BUYING INSURANCE
PURPOSE OF BUYING INSURANCE
52%
11%
23%
14%
0 10 20 30 40 50 60
Risk Cover
Investment
Tax Benefit
RetirementPlanning
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 market
share.
ULIPs are responsible for increasing popularity of insurance as an
investment tool
(77)
DISTRIBUTION CHANNEL PREFERENCE
CHANNEL PREFERENCE
56 17 14 9 4
0 20 40 60 80 100 120
1
Known/Current Advisor Friends & RelativesGroup Insurance BanccassuranceTelesales/unknown Advisor
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
(78)
(79)
SECTION 5
FINDINGS
THE BARRIERS FACED DURING THE PROCESS: The Attitudinal Barriers To Purchasing ..
Death - a taboo topic for discussionIts quite ashubh talking about death
The belief in karma destinyJo kismet me likha hai wohi hoga, hum kya kar sakte hai
The Product/ Service Barriers
Liquidity
What if I need my money urgently for some medical illness?
Service quality of the Agent
He disappears after he takes the first premium
Sanctity of the contract
What if my dependents do not get the money once I die?
Charges
Its better to invest in Mutual Funds, the charges there are very less
The Other Barriers.
Unsure about Pvt. Companies
Low rate of return
Better to put my money in PPF, at least I get fixed returns
Money gets tied up
High premiums
(80)
SECTION 6
CONCLUSION
(81)
CONCLUSION1. There is slight variation in the age wise distribution of insurance
policies.
2. Majority of respondents insured & preference for lic.
3. Money back policies as a source of tax source & financial planning was
most popular.
4. Middle income group was found most interested in insurance.
5. Public sector lic most popular in insurance sector
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.
(82)
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.
All financial products have a certain amount of risk and charges, be it a
mutual fund, property, or even a bank deposit. It would be unrealistic to
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.
There is no right or wrong in this. The success of marketing insurance
depends on understanding the social and cultural needs of the target
population, and matching the market segment with the suitable
intermediary segment. All intermediaries cant 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.
(83)
SECTION 7
RECOMMENDATION
(84)
RECOMMENDATION
Positioning insurance as a means to fulfilling ones duties during
ones lifetime.
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.
(85)
Adequate time, investment and longer-term management of the
brand are essential, not only for success but also survival. All
brands need to be bu
