HDFC Insurance Project Final Checked

7/30/2019 HDFC Insurance Project Final Checked

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A

PROJECT REPORT

On

HDFC Standard Life Insurance Company Limited

Titled

MARKET AND COMPETITIVE ANALYSIS

Submitted In the Partial Fulfillment for award of Degree

BACHELOR OF BUSINESS ADMINISTRATION

2009-2010

.

Submitted to: Submitted by:

Mrs.SWATI JAIN MOHAMMED SHAHID

ASST.PROF. B.B.A. PART III


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SUBODH INSTITUTE OF MANAGEMENT & CAREER STUDIES, JAIPUR

I would like to thank my project guide, Mr. Dinesh Gangwani Sales Development

Manager HDFC Standard Life Insurance, Jaipur for guiding me through my summer internship

and research project. His encouragement, time and effort are greatly appreciated.

I would like to thank Prof. Man Chand Khandela-Director of S.I.M.C.S. & Mrs. Swati

Jain, my project supervisor for supporting me during this project and providing me anopportunity to learn outside the class room. It was a truly wonderful learning experience.

I would like to dedicate this project to my parents. Without their help and constant

support this project would not have been possible.

Lastly I would like to thank all the respondents who offered their opinions and

suggestions through the survey that was conducted by me in Jaipur.

(MOHAMMED SHAHID)

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PREFACE

BBA student gain theoretical knowledge only through their books.

Only theoretical knowledge is not sufficient for absolute mastery in any field.

Theoretical knowledge given its performance implementation. It has been experienced that

theoretical knowledge is volatile in nature however practical makes solid foundation our mind.

To accomplish this aspect, the Rajasthan University has include performance training is

compulsory for every student of every student of management college according to the

syllabus each student required to under go a practical training of 45 days. It is very difficult to

know about this INSURANCE Industry.

I am thankful to my teacher Mrs. Swati Jain.

But I am trying to write what I learnt in the HDFC STD. LIFE INSURANCE in training period.

In this report all data are collected from the research.

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DECLARATION

I, MOHAMMED SHAHID, Student ofBBA IIIrd Session 2009-2010, declares that

the present work titled MARKET AND COMPETITIVE ANALYSIS".

From HDFC STANDARD LIFE INSURANCE, JAIPUR is an original work. All the

data given in the report is true to the best of my knowledge and all references

whether of any person or organization can be cross checked.

(MOHAMMED SHAHID)

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Table of Contents

No Topic Page No.

01 Introduction to Insurance 5 - 10

02 Company Profile of HDFC SLIC 11 23

03 Company Profile of Tata AIG LIC 24 27

04 Research Design 28 31

05 Points of Parity and Difference b/w HDFC SLIC & TATA AIG 32 36

06 Competitive analysis 37 41

07 SWOT Analysis 42 44

08 Marketing Problems 45 46

09 Analysis and Interpretation 47 65

10 Conclusion 66 67

11 Recommendation & Suggestions 68 70

Appendix

Bibliography

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INDIANINSURANCE

INDUSTRYAN

OVERVIEW

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

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With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. Its a business growing at the rate of 32-34 per cent

annually and presently is of the order of US $ 41 billion (for the year 2009). Together with

banking services, it adds about 7% to the countrys Gross Domestic Product (GDP). The gross

premium collection is nearly 4.1% of GDP in the year 2009.

Even so nearly 80% of the Indian population is without life insurance cover while health

insurance and non-life insurance continues to be below international standards. A large part of

our population is also subject to weak social security and pension systems with hardly any old

age income security. This in itself is an indicator that growth potential for the insurance sector

in India is immense.

A well-developed and evolved insurance sector is needed for economic development as

it provides long term funds for infrastructure development and strengthens the risk taking

ability of individuals. It is estimated that over the next ten years India would require

investments of the order of one trillion US dollars. The Insurance sector, to some extent, can

enable investments in infrastructure development to sustain the economic growth of the

country. (Source: www.indiacore.com)

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a

means to provide for English Widows. Interestingly in those days a higher premium was

charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky

to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the

first company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance

business in India, on the other hand, can trace its roots to Triton Insurance Company Limited,

the first general insurance company established in the year 1850 in Calcutta by the British. Till

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the end of the nineteenth century insurance business was almost entirely in the hands of

overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance

Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's

and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that

provided strict State Control over the insurance business. The insurance business grew at a

faster pace after independence. Indian companies strengthened their hold on this business but

despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and

provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it would create

the much needed funds for rapid industrialization. This was in conformity with the

Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972.

Their operations were restricted to organized trade and industry in large cities. The general

insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated

and grouped into four companies- National Insurance Company, New India Assurance

Company, Oriental Insurance Company and United India Insurance Company. These were

subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

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

insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of

protecting the interests of the insuring public.

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

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

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

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body in April

2000 has fastidiously stuck to its schedule of framing regulations and registering the private

sector insurance companies. Since being set up as an independent statutory body the IRDAhas put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of the IRDA

online service for issue and renewal of licenses to agents. The approval of institutions for

imparting training to agents has also ensured that the insurance companies would have a

trained workforce of insurance agents in place to sell their products.

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PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry contributed 4.1 per cent to the GDP of the economy in 2009, a huge

rise since the sector was thrown open to the private sector in 1999. The sector has contributed

US$ 1.3 billion in foreign direct investment (FDI), even as the government is likely to

reintroduce the Insurance Bill on FDI cap to increase the cap from 26 per cent to 49 per cent in

the next Parliament session.

There are around 10 million registered vehicles in the country and the total insurance premium

collected in 2008-09 was US$ 6.62 billion.

The total number of life insurers registered with the Insurance Regulatory Development

Authority (IRDA) has gone up to 23, with registration of India First Life Insurance Company

Limited, a joint venture life insurance company promoted by Bank of Baroda and Andhra Bank,

India and Legal & General Middle East Limited, UK.

The new businesses of the life insurance companies grew 22 per cent to US$ 12 billion in

April-November 2009-10, compared to the US$ 9.8 billion in the corresponding period last

year, according to IRDA data. Buoyed by a steep rise in sale of single premium policies, the

industry clocked a 53.25 per cent rise in November 2009 alone.

The market share of Life Insurance Corporation (LIC) among 23 players in the sector jumped

to 66 per cent at US$ 7.9 billion during the first eight months of 2009-10, from US$ 5.5 billion

during the same period last fiscal. The 22 private insurers have collected US$ 4.1 billion first

year premium during April-November this fiscal, compared to US$ 4.35 billion during the same

period last year.

The life insurance industry had earlier been expected to grow by 15 per cent this fiscal and

cross the US$ 54.1 billion mark in total premium income by March-end, according to industry

body, Life Insurance Council. This growth in premium income includes new business as well

as renewals, driven by increasing awareness on the value of getting insured.

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Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than anyone

expected. Indians, who had always seen life insurance as a tax saving device, are now

suddenly turning to the private sector and snapping up the new innovative products on offer.

Some of these products include investment plans with insurance and good returns (unit linked

plans), multi purpose insurance plans, pension plans, child plans and money back plans.

(www.wikipedia.com)

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HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

INTRODUCTION

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has sinceemerged as the largest residential mortgage finance institution in the country. The corporation

has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium

income for the year ending March 31, 2009 stood at Rs. 5,564.69 Crores and We have

covered over 1.6 million individuals out of which over 5,00,000 lives have been covered

through our group business tie-ups.

HDFC operates through almost 450 locations throughout the country with its corporate

head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with

service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India

for the last 27 years.

SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail

investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial conglomerate

with holdings In:

HDFC Standard Life insurance Company- HDFC holds 78.07 %.

HDFC Asset Management Company HDFC holds 50.1%

HDFC Bank- HDFC holds 22.25%.

Intel net Global (Business Process Outsourcing) HDFC holds 50%.

HDFC Chubb General Insurance Company HDFC holds 74%.

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KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive

Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined

HDFC Limited in a senior management position in 1978. He was inducted as a whole-time

director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is

the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of

Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr.

Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of

Technology, Bombay and a Masters Degree in Business Administration from The American

University, Washington DC.

GROUP COMPANIES

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HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

STANDARD LIFE

Standard Life is Europes largest mutual life assurance company. Standard Life, which

has been in the life insurance business for the past 175 years is a modern company surviving

quite a few changes since selling its first policy in 1825. The company expanded in the 19 th

century from kits original Edinburgh premises, opening offices in other towns and acquitting

other similar businesses.

Standard Life Currently has assets exceeding over 70 billion under its management

and has the distinction of being accorded AAA rating consequently for the six years by

Standard and Poor.

SNAPSHOT

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Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europes largest mutual life insurer.

JOINT VENTURE

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

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

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

ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard and Poors. These

reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs.

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

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

HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a

staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life

Insurance Companies, which offers a range of individual and group insurance solutions. It is a

joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias

leading housing finance institution and the Standard Life Assurance Company, a leading

provider of financial services from the United Kingdom. Both the promoters are will known for

their ethical dealings and financial strength and are thus committed to being a long-term player

in the life insurance industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH

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Track Record so far

The gross premium income for the year ending March 31, 2009 stood at Rs. 5,564.69

Crores and We have covered over 1.6 million individuals out of which over 5, 00,000 lives have

been covered through our group business tie-ups.

KEY STRENGTH

Financial Expertise

As a joint venture of leading financial services groups. HDFC standard Life has the

financial expertise required to manage long-term investments safely and efficiently.

Range of Solutions

HDFC SLIC has a range of individual and group solutions, which can be easily

customized to specific needs. These group solutions have been designed to offer complete

flexibility combined with a low charging structure.

Strong Ethical Values:HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment

with the customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class

Magazine Business World for Integrity, Innovation and Customer Care.

CORPORATE OBJECTIVE

Vision

'The most successful and admired life insurance company, which means that we are the

most trusted company, the easiest to deal with, offer the best value for money, and set the

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standards in the industry'.

'The most obvious choice for all'.

Values

.Integrity

.Innovation

.Customer centric

.People Care One for all

.Teamwork

.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow --

they will help you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance plans are created

keeping in mind the changing needs of family. Its life insurance plans are designed to provide

you with flexible options that meet both protection and savings needs. It offers a full range of

transparent, flexible and value for money products. HDFC SLIC products are modern and

contemporary unitized products that offer unique customer benefits like flexibility to choose

cover levels, indexation and partial withdrawals. (Source: www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDSLIFE INSURANCE

Individual Products

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Protection Plans

A person can protect his family against the loss of his income or the burden of a loan in the

event of his unfortunate demise, disability or sickness. These plans offer valuable peace of

mind at a small price. Protection range includes ourTerm Assurance Plan & Loan CoverTerm Assurance Plan.

Investment Plans

HDFC SLICs Single Premium Whole of Life plan is well suited to meet long term

investment needs. This provides attractive long term returns through regular bonuses.

Pension Plans

Pension Plans help to secure financial independence even after retirement. Pension rangeincludes Personal Pension Plan, Unit Linked Pension,Unit Linked Pension Plus.

Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying a

dream home or fulfilling your childrens immediate and future needs.

Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit

Linked Endowment Plus,Unit Linked Endowment Plus II,Money Back,Unit Linked Enhanced Life Protection II,Children's Plan, Unit Linked Young Star,

Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

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

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

employees. It offers different products for different needs of employers ranging from term

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insurance plans for pure protection to voluntary plans such as superannuation and leave

encashment.

HDFC SLIC offers the following group products to esteemed corporate clients:

Group Term InsuranceGroup Variable Term InsuranceGroup Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with Gratuity,

Defined Benefit or Defined Contribution Superannuation orLeave Encashment

schemes of your companyAlso suitable for other employee benefit schemes such as salary saving schemes and

wealth management schemes

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members of a

Development Agency for a term of one year. On the death of any member of the group

insured during the year of cover, a lump sum is paid to those member beneficiaries to help

meet some of the immediate financial needs following their loss.

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Eligibility

Members of the development agency and their spouses with:

- Minimum age at the start of the policy 18 years last birthday

- Maximum age at the start of policy 50 years last birthday

Employees of the Development Agency are not eligible to join the group. The group to be

covered is only eligible if it contains more than 500 members.

Premium Payments

The premium to be paid will be quoted per member in the group and will be the same for all

members of the group.

The premium can only be paid by the Development Agency as a single lump sum that

includes all premiums for the group to be covered. Cover will not start until the premium and

all the member information in our specified format has been received.

Benefits

On the death of each member covered by the policy during the year of cover a lump sum

equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is

as a result of an accident, an additional lump sum will be paid equal to half the sum assured.

There are no benefits paid at the end of the year of cover and there is no surrender value

available at any time.

The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the premium

charged can be lower. These tasks would include:

Submission of member data in a specified computer format

Collection of premiums from group members

Recording changes in the details of group members

Disbursement of claim payments and the mortality rebate (if any) to group members

These tasks would be in addition to the usual duties of a policyholder such as:

Payment of premiums

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Reporting of claims

Keeping policy holder information up to date

Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development

Agency, the Development Agency may charge a Rs. 10 administration fee to their members.

Prohibition of rebates

Section 41 of the Insurance Act, 1938 states

No person shall allow or offer to allow, either directly or indirectly, as an inducement

to any person to take out or renew or continue an insurance in respect of any kind of

risk relating to lives or property in India, any rebate of the whole or part of the

commission payable or any rebate of the premium shown on the policy, nor shall any

person taking out or renewing or continuing a policy accept any rebate, except such

rebate as may be allowed in accordance with the published prospectus or tables of

the insurer.

If any person fails to comply with sub regulation (previous point) above, he shall be

liable to payment of a fine which may extend to rupees five hundred

INTROUCTION TO UNIT LINKED FUNDS

Unit linked plans are based on the component of the premium or the contribution of the

customer towards the plan. This contribution can be in different modes like yearly, half

yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection,

rider protection, savings, transparency, investment choices, liquidity and planning for

taxes. These plans work like mutual funds.

The premium is collected from the policy holder. He is allotted a certain number of units

based of his contribution. The Net Asset Value is the value of each unit of the fund. It is

found by subtracting the charges and current liabilities from the current assets and

investments and dividing this number by the total number of outstanding units.

Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The

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total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the

money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value

increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value

of every investor is now Rs. 12 and not Rs. 10.

UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

Parameters RBI Bonds Fixed Deposits Mutual Funds Unit linked

Safety High High Medium High

Liquidity None High High High

Returns Low Low High High

Life Cover 1 time amount 1 time amount 1 time amount 10 times

Tax benefits Tax free Taxed Taxed Tax free

We find that life insurance unit linked plans is a good area to invest money in as it

provides liquidity, safety, high returns, life cover and tax benefits in a single plan. HDFC

SLIC offers the option of indexation to beat inflation. Risk is reduced to a large extent as

the company invests in a diversified portfolio of stocks.

Tax Benefits

INCOME TAX

SECTION

GROSS ANNUAL

SALARY

HOW MUCH TAX

CAN YOU

SAVE?

HDFC STANDARD

LIFE PLANS

Sec. 80C Across All income

Slabs

Upto Rs. 33,990

saved on

investment ofRs. 1,00,000.

All the life insurance

plans.

Sec. 80 CCC Across all income

slabs.

Upto Rs. 33,990

saved on

Investment of

All the pension plans.

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Rs.1,00,000.

Sec. 80 D Across all income

slabs

Upto Rs. 3,399

saved on

Investment of

Rs. 10,000.

All the health

insurance riders

available with the

conventional plans.

TOTAL SAVINGS

POSSIBLE

Rs37,389

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

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely

tax-free, subject to the conditions laid down therein.

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COMPANY PROFILE

OF

TATA AIG LIFEINSURANCE

COMPANY LTD.

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TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction

Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,

formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life

combines the Tata Groups pre-eminent leadership position in India and AIGs global presence

as the worlds leading international insurance and financial services organization. The Tata

Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26

percent. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life

Insurance Company was licensed to operate in India on February 12, 2001 and started

operations on April 1, 2001.

THE TATA GROUP

The Tata Group is one of India's largest and most respected business conglomerates,

with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per

cent of the country's GDP. Tata companies together employ some 215,000 people. The

Group's 32 publicly listed enterprises - among them standout names such as Tata Steel, Tata

Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalization that

is the highest among Indian business houses in the private sector, and a shareholder base ofover 2 million. The Tata Group has operations in more than 40 countries across six continents,

and its companies export products and services to 140 nations.

AIG

American International Group, Inc. (AIG), world leaders in insurance and financial

services, is the leading international insurance organization with operations in more than 130

countries and jurisdictions. AIG companies serve commercial, institutional and individual

customers through the most extensive worldwide property-casualty and life insurance networks

of any insurer. In addition, AIG companies are leading providers of retirement services,

financial services and asset management around the world. AIG's common stock is listed on

the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland

and Tokyo.

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Tata AIG has strong brand name and recall factor which most of its competitors lack in.

Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major

hold in the market share (of approximately 79%), the private players too are having more and

more

Opportunities to tighten their hold of the market. Of the private players, ICICI Prudential

comes first with an almost 4.50% of the market share followed by Tata AIG with about 2.10%

of the pie. The private players have everything to work for, especially with LIC not meeting the

needs of its clientele with respect to the services they need. This provides a prospect for the

private sector players to increase their share of the market. Companies with a familiarity suchas Tata AIG can especially achieve their targets due to the brand image that the Tata group

has.

(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of Consumer

Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear

winner in terms of customer satisfaction in the life insurance category. This is India's

first-ever customer satisfaction study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed brand name.

The ability to provide innovative and customer-focused service such as allowing the maximum

grace period for premium payment has not only further distinguished Tata AIG Life from other

life insurance companies but also appealed to consumers.

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PRODUCTS & SERVICES:

Corporate life insurance products:

Employee Benefits

Credit Life

Group Pensions

Workplace Solutions

Individual life insurance products:

Health First

Health Protector

Mahalife

Invest Assure II, Invest Assure Gold

Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to suit

the needs and requirements of all age groups viz, children, students, adults, retirees etc.

The SUPPORT arm of Tata AIG Life is constituted of Operations, Human Resources,

Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement obligations

(for the company) which occur in the form of cash outflows, for the maximum benefit of both

the employer and the departing employee.

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RESEARCH

DESIGN

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RESEARCH DESIGN

INTRODUCTION

A Research Design is the framework or plan for a study which is used as a guide in

collecting and analyzing the data collected. It is the blue print that is followed in completing the

study. The basic objective of research cannot be attained without a proper research design. It

specifies the methods and procedures for acquiring the information needed to conduct the

research effectively. It is the overall operational pattern of the project that stipulates what

information needs to be collected, from which sources and by what methods.

TITLE OF THE STUDY

To Compare the products of HDFC Standard Life Insurance Company Limited and Tata

AIG Life Insurance Company Limited for HDFC Standard Life Insurance Company Ltd.

STATEMENT OF THE PROBLEM

This study was undertaken to identify which type of insurance plans HDFC SLIC should

market to beat Tata AIG LIC in India. A survey was undertaken to understand the preferences

of Indian consumers with respect to insurance. While marketing policies the sole duty of an

advisor/ agent is to provide insurance plans as per customer requirements.

In effect plans (insurance products) should be flexible to suit individual requirements.

This research tries to analyze some key factors which influence the purchase of insurance like

the term of the policy, the type of company, the amount of annual premium payable (capacity

and willingness to spend), risk taking ability and the influence of advertising. Solutions and

recommendations are made based on qualitative and quantitative analysis of the data.

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OBJECTIVES OF THE STUDY

To analysis the product details of HDFC Standard life Insurance Company limited

and Tata AIG life Insurance Company Limited.

To find Points of Parity and Points of Difference of HDFC Standard Life Insurance

Company Limited and Tata AIG Life Insurance Company Limited.

To find out factors that influence customers to purchase insurance policies and give

suggestions for further improvement.

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data

is defined as data that is collected from original sources for a specific purpose. Secondary data

is data collected from indirect sources. (Source: Research Methodology, By C. R. Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the

personal interview methods of data collection.

SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the company

website, competitors websites etc, newspaper articles etc.

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SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view

to draw conclusions about that universe. A sample is a representative of the universe selected

for study.

SAMPLE SIZE

The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

10,00,000 which is approx population of Jodhpur excluding people below age of 18 years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also neatly

presented with the help of statistical tools such as graphs and pie charts. Percentages and

averages have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in Jaipur City. The areas covered were Shastri

Nagar, Ramgarh Mod, Subhash Chowk, City Area and C-Scheme.

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POINTS OF PARITY

AND

POINTS OF DIFFERENCE

BETWEEN

HDFC SLIC AND TATA AIG

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Points of Parity

Funds available with ULIP Plans

General Description Nature of Investments Risk Category

Equity FundsPrimarily invested in companystocks with the general aim of

capital appreciationHigh

Income, Fixed Interestand Bond Funds

Invested in corporate bonds,government securities and other

fixed income instrumentsMedium

Cash Funds

Sometimes known as Money

Market Funds invested in cash,bank deposits and money marketinstruments

Low

Balanced FundsCombining equity investmentwith fixed interest instruments

Medium

Generally all life insurance companies have three types of fund which are Equity fund,

Debt fund and Balance fund. These funds have different risk profile. Equity fund has high risk

but it gives high return, Debt fund has low risk so it gives low return and Balanced fund is

combination of both Equity and Debt fund so risk is medium and return is also low.

Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of

DebtEquity fund. These are liquid fund, stable managed fund, secure managed fund,

defensive managed fund, balanced managed fund, equity managed fund, growth fund.

Indexation

You have the option to increase your regular premiums by an indexation rate at any

policy anniversary to protect the real value of your investment against inflation. The rate of

indexation will be in line with the increase in the Whole Sale Price Index (or in the event that

this Index ceases to be published such other index as the Company may select for this

purpose). The base sum assured and sum assured of any attached rider would also be

increased by the corresponding indexation increase.

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Charges, Fees and Deductions in ULIP

Premium Allocation Charge

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

term.

Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund

Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from

the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the

policy term.

Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and

1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily

basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA.

Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will

be deducted monthly by cancellation of units from the accumulation unit account. If premiums

are discontinued, this charge would reduce to 60% of the charge applicable for the premium

paying policies

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Surrender Charge

This is the charge that applies when the policy is surrendered. It is equal to 50% of the

difference between regular premiums expected and those paid in the first year of the contract.

Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961.

Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity ofthe policy are also tax free.

Riders and Bonuses

HDFC Standard Life

InsuranceTata AIG Life

Insurance

Free Look Period 15 days 15 days

Reversionary BonusBased on company's

performance

Based on company's

performance

Terminal BonusBased on company's

performanceBased on company's

performanceTOP UP Minimum Rs. 5000 Minimum Rs. 5000

Riders

Critical Illness (CI) BenefitGives on diagnosis of

anyoneof 6 critical illness

Gives on diagnosis ofanyone

of 12 critical illnessAdditional Term Benefit

(ATB)Provides Provides

Accidental Death Benefit(ADB)

Provides Provides

Double Benefit Provides Does not provideTriple Benefit Provides Does not provide

Payer Benefit Rider (PBR) Does not provide ProvidesWaiver of Premium (WOP)

BenefitProvides Provides

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Points of Difference

HDFC Standard Life

InsuranceTata AIG Life

Insurance

Grace Period 15 days 31 days

Policy AdministrationCharge

Rs. 60 per month Rs. 55 per month

Guaranteed Bonus Does not give10% on sum-assured

after 10 year

Loyalty Bonus 0.1% every year0.25% after every 4th

year

Fund Switching Charge

Total 24 free switches in apolicy

after this Rs. 100 per

Switch

4 free switches per yearafter this

Rs. 250 per switch

Guaranteed Surrendervalue

50% of all premiumpaid excluding 1st premium

30% of all premiumpaid excluding 1st

premium

Fund Management Charge0.80% per annumon the fund value

1.75% per annumon the fund value

Premium RedirectionCharge

Total 12 free PremiumRedirection

in a policy after this Rs.250 per Premium

Redirection

First 2 PremiumRedirection in a

year is free after thisRs. 1000

per PremiumRedirection

Last Year Return 42.70% 72%

We see that both the life insurance companies products are almost same. They have same charges,

fees and deductions. There is slightly difference in charges and maximum limits of all charges are fixed by

IRDA. Before buying any life insurance policy one should check charges and fees on policy and companys

overall performance and return given to its consumer.

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COMPETITIVE

ANALYSIS

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COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of partial

survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after

5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with accrued

bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20

years and the balance 40% plus the accrued bonus becomes payable at the 25 th year. An

important feature of these types of policies is that in the event of the death of the policy holder

at any time within the policy term the death claim comprises of full sum assured without

deducting any of the survival benefit amounts which have already been paid. The bonus is also

calculated on the full sum assured.

HDFC SLIC does not have a money back policy. It could offer a money back plan and

capture some portion of this market. While marketing insurance products I found that many

customers wanted to purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions whole life

plans, term assurance plans, money back plan for women, child plans, plans for the

handicapped individuals, endowment assurance plans, plans for high worth individuals,

pension plans, unit linked plans, special plans, social security schemes diversified portfolio of

products. HDFC SLIC could diversify its product portfolio. It could add more plans for high

worth individuals and women.

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ICICI PRUDENTIAL

ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between

ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life

insurance company.

The company has an investment plan which is market related Invest Shield Life. In

this plan even if the market falls, the premium will be returned to investors. It is a guaranteed

plan which ensures the company carefully invests your money. The stock market performance

of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were

46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher

returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies,

television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand

ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the

minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35%

during the first year, 15% in the next year and 3% from the third year onwards. Also a higher

minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower

strata of the society. (Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya BirlaGroup, one of the largest business houses in India and Sun Life Financial Inc., a leading

international financial services organization. The local knowledge of the Aditya Birla Group

combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your

future. (Source: www.birlasunlife.com)

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The AUM of BSLI stood at Rs. 8165 coros as on February 28, 2009, while as on March

31, 2009, the company has a robust capital base of Rs. 2000 coros. It has over 1,75,000employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla.

Some of the key organizations within the group are Hindalco and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets worldwide,

including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan,

Indonesia, India, China and Bermuda. The company is a leading player in the life insurance

market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build

world class processing capabilities. BSLI has covered more than a million lives since inception

and its customer base is spread across more than 1000 towns and cities in India. All this has

assisted the company in cementing its place amongst the leaders in the industry in terms of

new business premium income.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years

of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from

the eleventh policy year onwards. However the charges are very high. The initial charges for

the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ

Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in

over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the

Indian market. Together they are committed to offering you financial solutions that provide all

the security you need for your family and yourself. Bajaj Allianz is the number one private life

insurer for the year 2005 2006. It is leading by 78 crores. It has experienced a whopping

growth of 216% in the last financial year.

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The company has sold 13, 00,000 policies and is backed by 550 offices across India. It

offers travel insurance, motor insurance, home insurance, health and corporate insurance. The

mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow

even new born babies to be insured. (Source: www.bajajallianz.com)

TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group

Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500

per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical

illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges

are relatively low compared to HDFC SLIC for some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy

term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of

something happening to you. These plans are very flexible and HDFC SLIC could adopt this

idea of insuring individuals for short periods of time. For example; there is a family of four. The

only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to

repay the loan with his current salary in 15 years. The problem arises if something were to

happen to him within these fifteen years. Not only will the family face the emotional and

financial loss of their father but they will also have to repay the home loan or risk being

homeless. (Source: www.tataaig.com)

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SWOT

ANALYSIS

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SWOT ANALYSIS

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.

STRENGTH:

1. Domestic image of HDFC supported by Prudentials international image is strength of

the company.

2. Strong and well spread network of qualified intermediaries and sales person.

3. Strong capital and reserve base.

4. The company provides customer service of the highest order.

5. Huge Basket of product range which are suitable to all age and income groups.

6. Large pool of technically skilled manpower with in depth Knowledge and understanding

of the market.

7. The company also provides innovative products toe cater to different needs of different

customers.

WEAKNESS:

1. Heavy management expenses and administrative costs.

2. Low customer confidence on the private players.

3. Vertical hierarchical reporting structure with many designations and cadres leading to

power politics at all levels without any exception.

4. Poor retention percentage of tied up agents.

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OPPORTUNITIES:

1. Insurable population According to ING only 10% of the population is insured, which

represents around 30% of the insurable population. This suggests more than 3000

people, with the potential to buy insurance, remain uninsured.

2. There will be inflow of managerial and financial expertise from the worlds leading

insurance markets. Further the burden of educating consumers will also be shared

among many players.

3. International companies will help in building world class expertise in local market by

introducing the best global practices.

4. Insurance liberalization in India is expected to result in a wider choice of major

commercial insurance covers, such as fire, export credit.

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MARKETING

PROBLEMS

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MARKETING PROBLEMS

The old and out dated technique of tale marketing is used to prospect customers. More

modern techniques must be adopted. The company must sponsor shows and give

presentations in corporate houses. The financial health check must be performed for every

prospect to assess his/her true financial position and needs. Some of the advisors skip this

vital step and the prospect ends up with a plan they do not appreciate and soon surrender or

discontinue.

Some of the main problems in marketing the policies are:

Large amount of competition (18 players in the market)

Other brands are well advertised and have higher recall value

LIC is considered a safer option

Face competition from banks and mutual funds

High premium policies are difficult to market

Incorrect perception about insurance

Interested prospects might have a lack of time and postpone investments

Customers get defensive if you cold call

Short term plans are available only at large premium

Customers do not have risk appetite to invest in shares

Some prospects have already invested and are not interested in further investments

Consumers dont want to undertake medical examinations

Large amount of documentation

Customers do not like their money locked up for many years

Lack of awareness about the unit linked funds in the market

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No money back plan present in the product portfolio

ANALYSIS

&

INTERPRETATION

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ANALYSIS & INTERPRETATION

A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents

18 - 25 years 127

26 - 35 years 67

36 - 49 years 46

50 - 60 years 24

More than 60 years 6

CHART 1:

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Analysis:

From the chart above we find that 47% of the respondents fall in the age group of 18

25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49

years.

Therefore most of the respondents are relatively young (below 26 years of age). These

individuals could be induced to purchase insurance plans on the basis of its tax saving nature

and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with

this and this fact has to be conveyed to the consumer. As of now many consumers have a

false perception that insurance is only meant for people above the age of 50. Contrary to

popular belief the younger you are the more insurance you need as your loss will mean a greatfinancial loss to your family, spouse and children (in case the individual is married) who are

financially dependent on you.

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GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2:

Particulars No. of Respondents

Male 193

Female 77

CHART 2:

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CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:

Customer profile No. of respondents

Student 62

Housewife 5

Working Professional 116

Business 49

Self Employed 24

Government service employee 14

CHART 3:

Analysis:

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From the chart above it can clearly be seen that 43% of the respondents are working

professionals, 23% are students and 18% are into business. Therefore the target market would

be working individuals in the age group of 18 25 years having surplus income, interested in

good returns on their investment and saving income tax.

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN

THEIR NAME

TABLE 4:

Person who have life insurance policy

Yes 103No 167

CHART 4:

ANALYSIS :

This graph shows that out of total 270 respondents only 103 or 38% respondents havelife insurance policy in their name. Rest all dont have a single policy in their name. So there is

a very big scope for life insurance companies to cover these people. So in future business of

life insurace will gro further.

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MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

LIFE INSURER NUMBER OF POLICIES

HDFC STANDARD LIFE 4

BIRLA SUN LIFE 3

AVIVA LIFE INSURANCE 6

BAJAJ ALLIANZ 7LIC 55

TATA AIG 6

ICICI PRUDENTIAL 12

ING VYSYA 6

BHARTI AXA 2

OTHERS 2

CHART 5:

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Analysis:

In India, the largest life insurance company is Life Insurance Corporation of India. It has

been in existence in India since 1956 and is completely owned by the Government of India.

Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of

over 340000 crore INR.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) No. of respondents

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Rs. 5000 - Rs. 10000 40

Rs. 10001 - Rs. 15000 26

Rs. 15001 - Rs. 24900 18

Rs. 25000 - Rs. 50000 10

Rs. 50001 - Rs. 60000 4

Rs.60001 - Rs. 80000 2

Rs. 80001 - Rs. 100000 3

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

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Analysis:

From the chart above we find that, 39% of the respondents surveyed pay an annual

premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual

premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence

we can safely say that HDFC SLIC would be able to capture the market better if it introduced

products/plans where the minimum premium starts at Rs. 5000 per annum.

Only 19% of the respondents pay more than Rs. 25000 as premium and most products

sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They shouldintroduce more products like Easy Life Plus and Safe Guard where the minimum premium is

Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share

as more individuals would be able to afford the policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan No. of Respondents

Term Insurance Plans 105

Endowment Plans 122

Pension Plans 16

Child Plans 8

Tax Saving Plans 19

CHART 7:

POPULAR LIFE INSURANCE PLANS

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Analysis:

From the chart given above we can clearly see that 45% of the respondents hold

endowment plans and 39% of the respondents hold term insurance plans. Endowment plans

are very popular and serve two purposes life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit

that is, sum assured and accumulated bonus. On survival the policy holder receives the

survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a

higher sum assured. Term insurance is the cheapest form of insurance and helps the policy

holder insure himself for a relatively low premium. For the returns sensitive investor term plans

do not find favor as they do not offer a return in case the individual does not die during the

policy term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:

Awareness of Unit Linked Plans No. of Respondents

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Yes 154

No 116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis:

From the chart given above we find that 57% of the respondents are aware of unit

linked life insurance plans and 43% are not aware of such plans. These plans should be

promoted through advertising. The company can advertise through television, radio,

newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity

in the minds of the consumer which would enable the company to market its products more

effectively.

Unit linked plans are those where the benefits are expressed in terms of number of units and

unit price. They can be viewed as a combination of insurance and mutual funds. The number

of units a customer would get would depend on the unit price when they pay the premium.When the policy matures the individual gets his fund value. The value of his fund is calculated

by multiplying the net asset value and number of units held by them on that day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

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TABLE 9:

Willingness to spend on

premium

No. of

respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Analysis:

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From the graph above, we can clearly see that 41% of the respondents would be willing

to spend between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to spend

between Rs. 6001 Rs. 10000 per annum. Only 15% would be willing to spend more than Rs.

25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs.

25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI

Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance

companies in India inclusive of LIC. Hence to capture a larger part of the market the company

could introduce more reasonable plans with lesser premium payable per annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 10:

Ideal policy term No. of respondents

3 - 5 years 516 - 9 years 41

10 - 15 years 95

16 - 20 years 38

21 - 25 years 24

26 - 30 years 5

More than 30 years 3

Whole life Policy 13

CHART 10:

CHART SHOWING IDEAL POLICY TERM

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Analysis:

From the chart given above it can be seen that 35% of the respondents prefer a

policy term of 10 15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9

years. This means that HDFC SLIC could introduce more plans wherein the premium paying

term is less than 15 years.

The outlook of insurance as a product should be changed from something which you

pay for your whole life (whole life policy) and do not receive any benefit (the nominee only

receives the benefit in case of your death) to an extremely useful investment opportunity with

the prospects of good returns on savings, tax saving opportunities as well as providing for

every milestone in your life like marriage, education, children and retirement.

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FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASEINSURANCE

TABLE 11:

Parameter No. of Respondents

Advertisements 35

High returns 84

Advice from friends 46

Family responsibilities 89

Others 16

CHART 11:

Analysis:

From the chart above it can be seen that 33% of the respondents purchase life

insurance to secure their families, 33% take life insurance to get high returns, 17% purchase

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insurance on the advice of their friends and 13% purchase insurance because of the influence

of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to

the family in case of the uncertain death of the policy holder. But now a day this trend is

changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the

option to choose where their money will be invested. They can invest their money in the equity

market, debt market, money market or a combination of these. The debt and money markets

usually have low risk attached whereas the equity market is a high risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 12:

Type of Company No. of Respondents PercentageGovernment OwnedCompany 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 12:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

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Analysis:

From the graph above we find that 60% of the respondents preferred to purchase

insurance from a government owned company, 29% of the respondents preferred to purchase

insurance from a public limited company and only 4% of the respondents preferred a foreign

based company. Heavy advertising through television, newspapers, magazines and radio is

required.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 13:

Expected Returns No. of respondents

Less than 5% 5

5% - 10% 39

11% - 15% 46

16% - 20% 49

21% - 25% 46

26% - 30% 27

31% - 40% 2241% - 50% 14

More than 50% 22

CHART 13:

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Analysis:

From the chart above it can clearly been seen that 18% of the respondents would like

16 20% returns, 17% would like returns between 21 25% and 17% would like returns of 11

15% on their investments. Therefore the average return on investment should be at least 16

20 %.

Most consumers are willing to adapt to some amount of risk but still want some

guaranteed returns. Therefore the bulk of investment should be made in the balanced fund

with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these

involve investment is government securities and the debt market. But the returns on these

instruments are low (8 10%). If the company invests in shares, returns are higher (39%) but

correspondingly risk borne by the policy holder is also higher. Therefore a good combination of

the two instruments is often a wise choice.

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CONCLUSION

CONCLUSION

HDFC standard life insurance is first life insurance Company in India. It has businesses

spread out across the globe. It was registered on 23 rdDecember, 2000. It currently ranks

number 4 amongst the insurers in India (Source: annual premium provided by the company)

The company faces a large amount of competition. To sustain itself it must promote itsproducts through advertising and improve its selling techniques. Consumers must be aware of

the new plans available at HDFC SLIC. The medium of advertising used could be television

since most of its competitors use this tool to promote their products. The company must be

promoted as an Indian company since consumers seem to have more trust in investing in

Indian firms.

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The unit linked concept must be specifically promoted. The general perception of life

insurance has to change in India before progress is made in this field. People should not be

afraid to invest money in insurance and must use it as an effective tool for tax planning and

long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.

There are individuals who are willing to pay small amounts as premium but the plans do not

accept premiums below a certain amount. It was usually found that a large number of males

were insured compared to females. Individuals below the age of 30 (mostly male) were

interested in investment plans. This was a general conclusion drawn during prospecting

clients.

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Recommendation

&

Suggestions

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RECOMMENDATION AND SUGGESTION

As the people think that saving and investment is a tool to protect their family & a tax

saving device.They are aware of the fact & realizing its, importance. The company should try to expand &

build up its infrastructure because there is a large potential for more investment

opportunities in India.

As seen from the survey that at present 30% of the customer are having insurance

policy out Of which 87.5% of the customer are planning for new investments. So it can be

a good potential for the company and they should make an attempt to trap these

customers. But if they should provide good and unique products and services. The

company should try to convince these customers and get them in its favor.

SUGGESTIONS FOR IMPROVEMENT

Advertise about the company and its products it motivates individuals to purchase

insurance

Create a positive perception about insurance

Speak about the good features a plan offers like high returns, life cover, tax benefits,

indexation, accident cover while prospecting customers

Try to sell the product/plan which the consumer requires and not the plan where the

advisors benefit is higher

Improve the efficiency in operations

Bring out policies with small premiums payable for short periods of time Rs. 5000

Rs. 10000 per annum for 10 years

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Attract the youth of India with higher returns on investment as returns are the motivating

factor which influence purchase of insurance

Promote insurance in colleges and corporate houses

Promote HDFC SLIC as an Indian Company to build trust

HDFC SLIC could have a brand ambassador or a mascot to promote its services

Should have partial withdrawals from the first year onwards

Tap the rural market where there is large potential

Diversify product portfolio

Make products more straight forward reduce complexities

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A SURVEY ON INSURANCE INDUSTRY

Dear Sir/Madam,

I am a student of Subodh Institute of Management & Career Studies, Jaipur. As part ofthe requirements for my Under Graduation Degree in Management I am required to do aresearch based project. Kindly spend a few minutes of your valuable time and fill in thisquestionnaire.

Do you have a life insurance policy/investment plan in your name?

o Yes o No

If yes which companys insurance policies do you hold?

o HDFC Standard Life

Insuranceo Birla Sun Life Insurance

o Aviva Life Insurance

o Bajaj Allianz Life Insurance

o LIC

o Tata AIG Life Insurance

o ICICI Prudential LifeInsurance

o ING Vysya Life Insurance

o Bharti Axa Life Insurance

o Others (specify name)

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

o Rs. 5,000 Rs. 10,000o Rs. 10,001 Rs. 15,000

o Rs. 15,001 Rs. 25,000

o Rs. 25,001 Rs. 50,000

o Rs. 50,001 Rs. 60,000o Rs. 60,001 Rs. 80,000

o Rs. 80,001 Rs. 1,00,000

o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in your current stage of

life?

o Life Insurance

o Life Insurance and Investment

Plans

o Pension Plans

o Child Plans

o Tax saving plans

Are you aware of the new unit linked insurance plans in the market?

o Yes o No

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How much would you be willing to spend per annum if you were to go foran investment/insurance plan?

o Less than Rs. 6,000

o Rs. 6,001 Rs. 10,000

o Rs. 10,001 Rs. 25,000

o Rs. 25,001 Rs. 50,000

o Rs. 50,000 Rs. 1,00,000

o More than Rs. 1,00,000

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

o 3 to 5 years

o

6 to 9 yearso 10 to 15 years

o 16 to 20 years

o 21 to 25 years

o

26 to 30 yearso More than 30 years

o Whole life policy

What motivates you to purchase insurance/investment plans?

o Advertisements

o High Returnso Advice from friends

o Family responsibilities

o Others (specify)

In which kind of company would you prefer to make a purchase ofinsurance?

o Government owned company

o Public Limited Companyo Private Company

o Foreign based company

Typically what kind of returns would you look at from your investments?(Please note: Higher returns involve greater risk)

o Less than 5%

o 6% - 10 %

o 11% - 15 %

o 16% - 20 %

o 21% - 25%

o 26% - 30%

o 31% - 40%

o 41% - 50%

o More than 50%

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Personal Details:

Name:

Address:

Age: Contact No. :

Profile of respondent:

Student

Housewife

Working Professional

Business

Self Employed

Government Service

Employee

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BIBLIOGRAPHY

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

Magazine

Insurance World

The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

Books

Kothari C.R.: Research Methodology Management, 2nd Edition.

Kotler Philip: Marketing Management 9th Revised Edition.

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http://www.hdfcslic.com/http://www.tata-aig-life.com/http://www.irdaindia.com/http://www.hdfcslic.com/http://www.tata-aig-life.com/http://www.irdaindia.com/


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