Final Project on HDFC

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A STUDY OF PRODUCT PROFILE OFHDFC STANDARD LIFE INSURANCE &

SALES PROMOTION

A PROJECT REPORT

In partial fulfillment for the award of the degree

Of

BACHELOR OF BUSINESS ADMINISTRATION

Submitted by: Project Guide:JYOTI DAHIYA Urvashi sharmaB.B.A V1 SEMENROLL NO-1262151708

CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES& SCHOOL OF LAW

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITYDWARKA,NEW DELHI

May 2011

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CERTIFICATE

This is to certify that Report entitled A STUDY OF PRODUCT PROFILE OF HDFC

STANDARD LIFE INSURANCE &SALES PROMOTION which is submitted by

JYOTI DAHIYA in partial fulfillment of the requirement for the award of degree

BACHELOR OF BUSINESS ADMINITRATION to GGSIP University, Dawarka, Delhi is

a record of the candidate own work carried out by her under my/our supervision. Thematter embodied in this is original and has not been submitted for the award of any other

degree

Date: PROJECT GUIDE:

(Dr Urvashi Sharmra)

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DECLARATION

I, hereby declare that the project report titled A STUDY OF PRODUCT PROFILE OF

HDFC STANDARD LIFE INSURANCE &SALES PROMOTION is my own original

research work and this report has not been submitted to any University/Institute for the

award of any professional degree or diploma.

(JYOTI DAHIYA) URVASHI SHARMA

(Project guide)

BBA 6th SEM Date:

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ACKNOWLEDGEMENT

With profound sense of gratitude and regard, I express my sincere thanks to my guideDr.

Urvashi Sharma for her valuable guidance and the confidence she instilled in me, that

helped me in the successful completion of this project report. Without her help, this project

would have been a distant affair. Her thorough understanding of the subject and the

professional guidance is indeed of immense help to me.

I convey my heartfelt affection to all those people who helped and supported me during the

course, for completion of my Project Report.

Many a name and incident I still remember and they have become a part apart of my and

those whom I cant recall to have enriched me directly or indirectly.

My heartfelt thanks go to all the executives who helped me gain knowledge about the

actual working and the processes involved in various departments.

JYOTI DAHIYA

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Table of Contents

Title P.g. No

Preface 7

Executive Summary 8

Research Objective. 9

Research Methodology 10-11 Type of Research..10 Data Collection..10 Sampling Unit and Size..10-11 Limitations..11

Chapter - 1 Industry Profile... 12 - 35 Overview and Historical perspective..13 Insurance sector reforms..14

Nature of Industry..17 Indian Insurance Industry..20 Importance of Liberalization..21 Current Scenario..25 SWOT Analysis..32 Conclusion...33

Chapter 2 Company Profile... 34 - 50 HDFC ltd:

I) Introduction..35II) Subsidiary & Associate Companies..37

HDFC StandardI) Introduction..38II) Key Personnel..40III) Knowledge Management..42IV) Product Mix..45V) Current Sales..48

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VI) Future Plans..50

Chapter -3 Financial Planning 51-57

Financial Planning..52 360` Financial Planning..52 Consumption Pattern..56 Objectives & Sales Procedure..57

Chapter 4 Data Analysis & Findings 60 - 68Chapter 5 Conclusion &Recommendation. 69- 73

Conclusion..70 Recommendation..72

Appendices 74 80

Questionnaire..75 Glossary..78 Bibliography..80

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PREFACE

There are number forces that make marketing an endlessly changing activity. Theconstantly 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 Research Report has been completed in fulfillment of my Management Program

Bachelor of Business Administration (in the company HDFC STANDARD LIFE

INSURANCE. The objective of my Research was TO KNOW THE PUBLIC

AWARENESS OF FINANCIAL PLANNING IN EMERGING INDIAN MARKET.

HDFC STANDARD LIFE 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 countrysGDP. 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

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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.

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.

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RESEARCH OBJECTIVES

To study the awareness of Financial Planning among the people.

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 LinkedPension Plans, by interacting with walking and existing customers of the company.

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RESEARCH MEHODOLOGY

The study of awareness about Financial Planning among the people 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.

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Sample size: - 100

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:

1. Limited time period.

2. Less number of respondents.

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3. Biasness of the respondents.

Chapter 1Industrys Profile

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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 withhardly 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.

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Important milestones in the life insurance business in India:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the

life insurance business.

1956: 245 Indian and foreign insurers and provident societies were taken over by the

central government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956-

with a capital contribution of Rs.5 cr. from the Government of India.

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 insurersamalgamated 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

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

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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:

Structure

Government stake in the insurance Companies to be brought down to 50%. Government

should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act

as independent corporations.

Competition

Private Companies with a minimum paid up capital ofRs.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.

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

Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from 75%

to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (there

current holdings to be brought down to this level over a period of time)

Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance companies must

be encouraged to set up unit linked pension plans. Computerization of operations and

updating of technology is to be carried out in the insurance industry.

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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.

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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 ofinsurance carriers (or insurers) and insurance

agencies and brokerages. In general, insurance carriers are large companies that provideinsurance 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.

There are two basic types of insurance carriers:Direct and Reinsurance.

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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.

AnAnnuity(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.

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.

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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 ondeath during the period of contract.

An Annuityproduct provides a series of monthly payments on stipulated dates provided

that the life assured is alive on the stipulated dates.

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..

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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 DevelopmentAuthority (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.

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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 theplayers 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 Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.

Below is the table that shows the market share of various players of the industry.

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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 3.11BIRLA SUNLIFE 2.32

TATA 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 newjob

opportunities. With private players now in the field, there will be innovative products,

better packaging, improved customer service, and, most importantly, greater employment

opportunities.

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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 policiesthrough 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.

Agents/Brokers:

Insurance agentsmay 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.

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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.

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CURRENT SCENARIO OF THE INDUSTRY

INSURANCE 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 SERVICE

Consumers remain the most important centre of the insurance sector. After the entry of the

foreign players the industry is seeing a lot of competition and thus improvement of the

customer service in the industry. Computerization of operations and updating of technology

has become imperative in the current scenario. Foreign players are bringing in international

best practices in service through use of latest technologies. The one time monopoly of the

LIC and its agents are now going through a through revision and training programs to catch

up with the other private players. Though lot is being done for the increased customer

service and adding technology to it but there is a long way to go and various customer

surveys indicate that the standards are still below customer expectation levels.

DISTRIBUTION CHANNELS

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Till date insurance agents still remain the main source through which insurance products

are sold. The concept is very well established in the country like India but still the

increasing use of other sources is 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

Banc assurance

DIRECT SELLING/RETAIL

Direct selling or retail business is carried out by Agents of the company. This is the main

distribution channel due to the complexity of most insurance products (Endowment,

Whole of Life, Unit Linked). This tends to be the focus of most companies due to its pastsuccess 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.

BANCASSURANCE

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Easy accesses for claims, as banks are a regular go.

Innovative and better product ranges

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 he or she will live.

The investment benefit is paid to the insured's beneficiaries after his death or it can be used

during the life as well. Life insurance policy owners can turn to the cash value of the policy

in case of a financial emergency when all avenues are either blocked or denied.

4) Enduring Elasticity

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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 FamilyThe 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.

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

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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 seenany 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.

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.

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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 assessee for

any amount paid as a premium.

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

STRENGTH1.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 SLIC 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.

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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Chapter 2

Companys Profile

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COMPANYS PROFILE

INTRODUCTION

Helping Indians experience the joy of home ownership.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. HDFC operates through 75 locations throughout the country with

its Corporate Headquarters in Mumbai, India.

OBJECTIVES AND BACKGROUND

Background

HDFC was 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 was promoted with an initial share capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the country

through the provision of housing finance in a systematic and professional manner, and topromote home ownership. Another objective 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 is a professionally managed organization with a board of directors consisting of

eminent persons who represent various fields including finance, taxation, construction andurban policy & development. The board primarily focuses on strategy formulation, policy

and control, designed to deliver increasing value to shareholders.

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FOUNDER Mr. Hasmukhbhai Parekh

BOARD OF DIRECTORS

Mr. D S Parekh Chairman

Mr. Keshub Mahindra Vice Chairman

Ms. Rene S. Karnad Executive Director

Mr. K M Mistry Managing Director

Mr. Shirish B. Patel

Mr. B S Mehta

Mr. D M Sukthankar

Mr. D N Ghosh

Dr. S A Dave

Mr. S Venketaraman

Dr. Ram S. Tarneja

Mr. N M Munjee

Mr. D M Satwalekar

HDFC has a staff strength of 1029, which includes professionals from the fields of finance,

law, accountancy, engineering and marketing.

SUBSIDIARY & ASSOCIATE COMPANIES

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HDFC Bank

HDFC Mutual Fund

HDFC Standard Life

Intelenet Global Services Ltd.

HDFC Chubb General Insurance Company Ltd.

HDFC Reality

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.

HDFC Developers Ltd.

HDFC Venture Capital Ltd.

HDFC Ventures Trustee Company Ltd.

HDFC Investments Ltd.

HDFC Holdings Ltd.

Home Loan Services India Pvt. Ltd.

Credit Information Bureau (India) Ltd

HDFC STANDARD LIFE INSURANCE

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INTRODUCTION

HDFC Standard Life Insurance Company Limited was one of the first companies to be

granted license by the IRDA to operate in life insurance sector. Each of the JV player is

highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL

and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and

Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset

base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.

HDFC is 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.

THE PARTNERSHIP:

HDFC and Standard Life first came together for a possible joint venture, to enter the Life

Insurance market, in January 1995. It was clear from the outset that both companies shared

similar values and beliefs and a 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 HDFC, 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

Treasury department to advise them upon their investments in India.Towards the end of

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1999, the opening of the market looked very promising and both companies agreed the

time was right to move the operation to the next level. Therefore, in January 2000 an expert

team from the UK joined a hand picked team from HDFC to form the core project team,

based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC

and a 5% stake in HDFC Bank.

COMPANYS MISSION:

To be the top life insurance company in the market.This not only means being the largestor 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 beour 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.

KEY MANAGEMENT PERSONNEL

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Chairman

Mr. Deepak S. Parekh

Board Of Directors

Mr. K. M. Mistry

Ms. Renu S. Karnad

Mr. A. M. Crombie

Ms. Marcia D. Campbell

Mr. Norman Keith Skeoch

Mr. G. R. DivanMr. G. N. Bajpai

Mr. Ranjan Pant

Mr. Ravi Narain

Managing Director & CEO

Mr. D. M. Satwalekar

AUDIT COMMITTEE

Haribhakti & Company

Chartered Accountants

B.K. Khare & Co.

Chartered Accountants

Bankers

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HDFC Bank Ltd.

Union Bank of India

Indian Bank

The Saraswat Co-operative Bank Ltd.

Federal Bank

KNOWLEDGE MANAGEMENT

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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 differentinsurance need/cover for you. In this section, we have drawn up the basic life stages and

help you analyze various insurance needs accordingly.

Stage 1 : Young and Single

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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 wedding

oTax Planning

oSave for Golden years

Stage 2 - Just Married

Marriage 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 vacation

o Save for your first child

Stage 3 - Proud Parents

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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 education

o Safeguarding family against loan liabilities

o 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 retirement

o Immediate Tax benefits

o Lead a secure, independent and comfortable

life style after retirement

PRODUCT MIX

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At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need. They

cater to both, individuals as well as to companies looking to provide benefits to their

employees. For 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

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

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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 Youngstar,

Unit Linked Youngstar Plus .

GROUP PLANS

HDFC Standard Life has the most comprehensive list of products for progressive

employers who wish to provide the best and most innovative employee benefit solutions to

their employees. They offer different products for different needs of employers ranging

from term insurance plans for pure protection to voluntary plans such as superannuation

and leave encashment.

Plans: Group Term Insurance with Riders

Group Term Insurance with Profit-ShareGroup Unit-Linked Plan

For Gratuity

For Defined Benefit Superannuation

For Defined Contribution Superannuation

Group Leave Encashment Plan

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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 STD> LIFE has

plans like:

Plans : Bima Bachat Yojana.

Super Bachat Yojana

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

HDFC STANDARD LIFE PACING AHEAD

The Financial Express 15th May 2006

HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period

April-March 2005-06, in comparison to the same period 2004-05, 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 cr from Rs 436 crore.

HDFC Standard Life'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 2005-06 from Rs 17,000 in

2004-05.

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

2004-05

(Rs. Cr)

April-March

2005-06

(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) 436.08 887.30 103.47

Group Business Premium

(EPI) 49.40 135.15 173.58

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FUTURE PLANS

HDFC has always been market-oriented and dynamic with respect to resource mobilizationas well as its lending program. This renders it more than capable to meet the new

challenges that have emerged. Over the years, HDFC has 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 has 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 customer base the

highest standards of quality in product design, facilities and service.

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Chapter 3

Financial Planning

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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

INVESTMENT PLANNING: To make your wealth grow

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Everyone needs to save for a rainy day. Once you have saved enough to take care of

emergencies, you should start thinking about investing and to make your money grow.

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

requirementsIn 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.

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.

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"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 andsecurity, 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.

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, Indiadoes not have a social security net.

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CONSUMPTION PATTERN

*Source-Business world magazine 2nd week April 2008

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 themoney 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.

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 & Grocery

Home Textiles

Personal Care

Saving & Investment

Clothing

Consumer Durable

Vacation

Eating out

Footwear

Movies & Theater

Entertainment

Accessories

Books & Music

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FIRSTCONVERSATION

APPOINTMENT

FILLING THEPROPOSAL FORM

COLLECT THEREQUIRED

DOCUMENTS AND

THE FIRSTPREMIUM

Follow Up

Follow Up

OBJECTIVE: To generate leads for various Unit Linked Plans offered

by 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 ORAN UNKNOWN CUSTOMER

This is the first time, when you interact with a person and try to get the information fromhim 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 theawareness about Financial Planning among the customers and this was done by getting aquestionnaire filled by the people. The various activities performed were:

1) DELHI METRO : Here we interacted with the commuters &

collectedthe data.

2) MARKETS : (Cannaught Place & Karol Bagh) During this

activity, we interacted with the shopkeepers as well as the walking

people regarding their views about the industry.

3) CANOPY AT NOIDA : This activity was designed to target the peopleworking 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.

STEP 2: APPOINTMENT

All the potential and interested customers of all the activities performed are then followed

up and an appointment is fixed for further details.

The motive is to explain the customer in detail, about the various plans offered by the

company. The customer is informed about the procedure and the options he can opt for

like:

1) Choose the premium he wish to invest

2) Select the Premium Payment Option i.e. annual mode, half yearly

mode, quarterly mode, or monthly mode.

3) Choose the amount of protection i.e. the sum assured, he desires.

4) With Maturity Benefit, choose the additional benefits like:

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a) Life option Death Benefitb) Life & Health option Death Benefit + Accidental Death

Benefitc) Extra Life & Health option Death Benefit + CriticalIllness

Benefit + Accidental Death Benefit5) Choose the Investment funds or funds one desires.

The various funds available are:

Liquid Fund

Secure Managed Fund

Defensive Managed Fund

Balanced Managed Fund

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 DOCUMENTSOnce 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.

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Within 15 days, the policy documents reach the customers place, and the customer is

required to read the documents carefully.

Chapter 4

AnalysisAnd

Finding

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SAMPLE SIZE: 100

Sample was collected on Random Basis

AGE DISTRIBUTION

AGEDISTRIBUTION(yrs.)

35%

41%

24%Below30

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 isunemployed.

MARITAL STATUS

MARITALSTATUS

19

4

16

3724

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Below30 31- 45 Above45

AGE(yrs)

SINGLE MARRIED

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98% of the respondents were aware about Financial Planning.

BRAND RECALL

100 % respondents mentioned first name to be LIC

Among private players, ICICI Prudential has the highest

Brand Recall i.e. 96%

HDFC Standard life has Brand Recall of 92%

INVESTMENT PREFERENCE

63

BRAND RECALL

100

96

92

8286

72

64

75

71

6051

LIC

ICICI Prudential

HDFCStd Life

TATAAIG

BIRLASUNLIFE

KOTAKMAHINDRA

SBI LIFE

AVIVA

MAX NEWYORK

METLIFE

INGVYSYA

INVESTMENTPREFERENCE

11%18%

21%

9%

20%

21%

Banks &Post

office

Share Market

Insurance

Bonds

Mutual Funds

Real Estate


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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 tomention that majority of respondents are in age group of above 30 years and peoplewith high income bracket prefers to invest in Real Estate.

INSURED PERCENTAGE

87 % of respondents were insured on own life and on life of their family

members.

So we had 13 % of potential customers to approach.

64

ARE YOU INSURED?

87%

13%

YES

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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.

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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.

PURPOSE OF BUYING INSURANCE

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PURPOSE OF BUYINGINSURANCE

52%

11%

23%

14%

0 10 20 30 40 50 60

Risk Cover

Investment

Tax Benefit

Retirement

Planning

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

DISTRIBUTION CHANNEL PREFERENCE

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CHANNEL PREFERENCE

56 17 14 9 4

0 20 40 60 80 100 120

1

Known/Current Advisor Friends & RelativesGroup Insurance Banccassurance

Telesales/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

THE BARRIERS FACED DURING THE PROCESS:

The Attitudinal Barriers To Purchasing ..

Death - a taboo topic for discussion

Its quite ashubh talking about death

The belief in karma destiny

Jo kismet me likha hai wohi hoga, hum kya kar sakte hai

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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

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Chapter 5

Conclusion&

Recommendations

CONCLUSION

The various conclusions drawn from the project are:

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.

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The opening up of the insurance sector has changed the whole look of the industry. While

the LIC, in order to face the competition is coming up with new strategies. New private

players are leading the sector due to their strategic management and tailored made projects.

From the research, we also conclude that though the awareness and people opting for LIC

plans are more as compared to other private players but the latter are gaining momentum

in the market day by day.

The demand for insurance is likely to increase with rising per-capita income, rising literacy

rates, and growth of service sector. In-fact opening up of the insurance sector is an integral

part of the liberalization process being pursued by many developing countries.

Life insurance as a form of protection is the single-most important financial product any

earning member of a family must have. Having said this, a well-diversified portfolio is one

of the first rules of financial planning, and as such one should consider differentinstruments as the ability to save increases.

Possible investment options range from bank deposits and government small saving

schemes to mutual funds, stocks and property.

Certainly ULIPs successfully combine the first and most important need of protection, with

savings, and hence are an excellent addition to your portfolio.

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.

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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.

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

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Fears relating to claims: Need to promote trust. Demonstrating claim

testimonials, positioning as worry free.

Low returns: Reposition insurance as a risk cover, security instrument rather than

a financial investment.

Lack of understanding: Training of Channels

To provide quality advice on products best suited

Lack of Knowledge: Ease of Process, simplifying the

product and the procedure

Need to promote the quality of awareness

The benefits:

Leverage on Risk Protection or Returns oriented or both

The product: catering

to life stages

Need for Branding in Insurance: Branding is more relevant in the Insurance

market which not only faces the problem of securing and retaining customers in an

increasingly competitive marketplace but also experiences the need for heightened

relevance of the brand proposition in a world where brand has been termed the new

religion.

In rural India, the LIC is especially synonymous with insurance. But in the

wake of competition insurance companies have to do a considerable brand

building exercise at least in urban India. Adequate time, investment and

longer-term management of the brand are essential, not only for success but also

survival. All brands need to be built around well-differentiated and

credible positioning that springs from the organizations history. The brand

must not only be believed but lived by management and employees.

Focus on different segments to survive and thrive in a competitive environment.

Each company has to choose its own unique positioning based on its unique strengths.

Below-mentioned positioning alternatives can be worth considering.

VARIETY-BASED POSITIONING

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This type of positioning is based on varieties in products and services rather than

customer segments. It is a sensible strategy for those companies who have distinctive

advantages or strengths in offering certain products and services. In the insurance

industry too, it is possible to achieve a unique position by focusing on certain category

of products.

NEEDS-BASED POSITIONING

This is the most commonly understood positioning and is based on the differing needs

of different groups of consumers. This can be done successfully if a company has

unique strengths to service a group of customer needs better than others.

The insurance needs of customers vary significantly for different groups of customers.

The insurance needs of young family with small children will be quite different fromthat of a family in which the income-earner is close to retirement. However, in India

most of the life insurance companies have a wide variety of products tailored for

different customer needs and there is no company focusing on a particular customer

need.

ACCESS-BASED POSITIONING

Positioning of customers can also be done by the way they are accessible. That is

different groups of customers may be accessible in different ways even though they

may have similar needs. Access is typically a function of customer geography or

customer scale. There is excellent opportunity in the insurance industry to employ

access-based positioning by targeting the rural insurance sector.

The rural market for life insurance is very different from the urban market in terms of

needs, income levels and distribution (seasonality, for example), penetration of media

and so on. Rural market can be a highly profitable position if one is able to carefully

plan and tailor an entire set of low-cost activities of advertising, distribution, and

product design etc. to successfully exploit the potential.

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Appendices

Questionnaire

Glossary

Bibliography

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QUESTIONNAIRE

Awareness of Financial Planning and Consumers Perception about InsuranceIndustry

Name:________________________

Age:______

Gender: M F F

Marital Status: Married SingleOccupation : ___________________

Contact No : __________________

Annual Income (appx. in Rs.)

Upto 1.50 lacs 1.50 lacs-3 lacs

3 lacs-5 lacs Above 5 lacs

Q1) Are you aware about what is financial planning?

YES NO

Q2) Mention the names of Life insurance companies you have heard of:

1) ________________ 4) ________________ 2) ________________ 5) ________________3) ________________ 6) ________________

Q3) How much do you save approximately of your annual income?

Q4) Where do you invest/would like to invest your savings?(Rank in order of preference, 1 being most preferable)

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Banks Share Market

Insurance Bonds & Securities

Mutual Funds Real Estate/Property

Q5) Have you taken any life insurance policy on your own life or on life of anyof your family member?

YES NO

(If no, switch to Q 9 )

Q6) Which company(s) policy(s) you have?

LIC ICICI PRUDENTIAL

BIRLA SUNLIFE ING VYSYA

BAJAJ ALLIANZ SBI LIFE

HDFC STD. LIFE TATA AIG

MAX NEW YORK LIFE AVIVA

RELIANCE KOTAK MAHINDRA

MET LIFE OTHER ____________ (specify)

Q7) Which type of plan did you buy?

Money Back PlanEndowment Plan

Pension Plan

ULIP

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Q8) What was your purpose/will be your likely purpose of taking insurance?RANK THEM (1 being most ideal)

a) PROTECTIONOF FAMILY

b) TAX BENEFIT

c) INVESTMENT

d) RETIREMENTPLANNING

Q9) Have you ever been approached for Life insurance by any of the following(please ), also Rank according to your preference from whom you are mostlikely to buy insurance?

( here) (Rank) 1) Known/Current Advisor

2) Advisors referred by friends/family

3) Telesales and subsequent visit by unknown Advisor

4) Schemes offered by your bank (Bancassurance)

5) Group Insurance Policies offered by your employer

Q10) Do you feel opening up of the sector has created more insurance awarenessamong the public?

YES NO

Q11) How many dependents do you have?

6

Q12) Do you really think insurance cover in todays scenario is notessential?

_____________________________________________________

_____________________________________________________

THANK YOU FOR YOUR CONTRIBUTION

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GLOSSARY

Accident BenefitAn add-on with a life policy. It compensates a policyholder in the event

of death or injury by accident

AnnuityAn investment option that makes a series of regular payments to an individual in

exchange for a premium or a series of premium.

Asset allocationHow your investments are spread across various asset classes

BonusThe amount paid as return in a with-profit policy. The bonus, expressed as a

percentage of the sum assured, is generally declared every year. The amount is linked to

the profits earned by the insurer. Depending on the time of withdrawal, there are two kinds

of bonuses reversionary and cash. A reversionary bonus can be encashed only on

maturity of the policy; a cash bonus can be withdrawn when declaredCapital gainProfit earned from the sale of stocks, mutual fund units and real estate. Long-

term capital gains arise from assets owned for more than a year while short-term capital

gains are made from assets owned for less than a year.

CorpusThe amount of money available with a scheme for investing. If already invested,

the corpus is the current value of the schemes portfolio.

CoverAnother word for insurance; it also refers to the amount of insurance.

Critical illness riderA rider that provides a policyholder financial protection in the event

of a critical illness

Death benefitThe amount payable to the nominee on death of the policyholder. The

amount paid is the sum assured plus benefits applicable (if any) less outstanding loans.

Endowment plansAn insurance plan that provides a policyholder risk cover and some

return on investment. Usually suitable for the risk-averse

ELSS (equity-linked savings schemes)Diversified equity funds that additionally offer a

tax deduction under Section 80C on investments up to Rs.1 lakh.

Financial planningIt covers the essential elements of a persons financial affairs and is

aimed at achieving a persons financial goals.

Group InsuranceAn insurance policy taken out by employers to provide life cover to

their employees. Usually the cheapest form of insurance.

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InsuredThe policyholder: The person who buys an insurance policy

InsurerThe insurance company

InvestmentsAssets like fixed deposits, post office savings, bonds and stocks that are

acquired for the purpose of earning a return

LiquidityThe quality of assets that can be easily and quickly converted into cash without

any, or significant, loss in value.

Lock-in periodThe period of time for which investments made in an investment option

cannot be withdrawn.

Maturity dateThe date on which a policy term or fixed-income investment like fixed

deposit or bond comes to an end.

Money-back plansA variant of endowment plans in which survival benefits are disbursed

through the policy term, rather than in a lump sum at the end.Net asset value (NAV)The simplest measure of how a scheme is performing, it tells how

much each unit of it is worth at any point in time. A schemes NAV is its net assets (the

market value of the financial securities it owns minus whatever it owes) divided by the

number of units it has issued.

NomineeThe person(s) nominated by the policyholder to receive the policy benefits in the

event of his death.

Pension PlanInvestment products offered by insurance companies and mutual funds that

required the investor to make defined contributions over regular periods, mostly every year.

The contributions are invested according to a pre-decided investment plan. At retirement,

the accumulation is paid out through regular pay-out options.

PolicyThe legal document issued by an insurance company to a policyholder that states the

terms and conditions of an insurance contract.

Policy termThe period for which an insurance policy provides cover

Post office schemesAlso known as Small Savings schemes, they are offered at post offices

and carry the highest returns among fixed income instruments. Government backing makes

these instruments like Public Provident Fund (PPF), National Savings Certificate (NSC),

Kisan Vikas Patra (KVP) and Post Office Monthly Income Scheme (POMIS) risk-free

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BIBLIOGRAPHY

Websites

www.rbi.org.inwww.irdaindia.orgwww.banknetindia.comwww.hdfcinsurance.comwww.businessworldonline.comwww.google.com (search engine)

Other References:

Brochures of various plans

Business week
http://www.rbi.org.in/http://www.irdaindia.org/http://www.banknetindia.com/http://www.hdfcinsurance.com/http://www.businessworldonline.com/http://www.google.com/http://www.rbi.org.in/http://www.irdaindia.org/http://www.banknetindia.com/http://www.hdfcinsurance.com/http://www.businessworldonline.com/http://www.google.com/

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