Chapter 1

INTRODUCTION

1

About the insurance industry

Insurance is a financial protection and it gives compensation against financial losses due to

Death, Accident (Disability), Sickness, Retirement (long life), it serves as an excellent risk-

management and wealth-preservation tool. Having the right kind of insurance is a critical

component of any good financial plan. Insurance allows individuals, businesses and other

entities to protect themselves against potential losses and financial losses at a reasonably

affordable rate.  Insurance is needed if we want to protect ourselves from any financial loss.

Let us take life insurance as an example. If a father is the only earning member in his house,

and if the earning member faces premature death then his family will come into trouble, this

concept is called financial hardship. It would be very difficult for his family to replace his

income, so the monthly premiums ensure that if he dies, his income will be replaced by the

insured amount. The same principle applies to many other forms of insurance.

Everyone that wants to protect themselves or someone else against financial hardship should

consider insurance. This may include: 

Protecting family after one's death from loss of income

Ensuring debt repayment after death

Protecting yourself against unforeseeable health expenses

Protecting your home against theft, fire, flood and other hazards

Protecting yourself in the event of disability

Protecting your car against theft or losses incurred because of accidents

 

Basically there are three types of Insurance

1. Life Insurance

2. Health Insurance

3. Vehicle Insurance

2

Life insurance:  It is a contract between the policy holder and the insurer, where the insurer

promises to pay a designated beneficiary a sum of money (a "Sum Assured”) upon the death

of the insured person. Depending on the contract, other events such as critical illness may

also trigger payment. In return, the policy holder agrees to pay an amount (“Premium”). In

some countries, death expenses such as funerals are included in the premium. The policy

owner will be free from tensions because he knows that if anything happens to him his family

will be safe because his family will get the Sum Assured from the Insurer.

Few companies do not provide insurance benefits to the policy holder if he has committed

suicide in the policy term and some companies provide insurance to those who commit

suicide but only if the policy holder commits the suicide after 1 year of the completion of 1 st

premium paid.

Health insurance:  It is an insurance which provides financial protection against the risk of

incurring medical expenses. By estimating the overall risk of health care expenses, an insurer

can develop a routine finance structure, such as a monthly premium, to ensure that money is

available to pay for the health care benefits specified in the insurance agreement. The benefit

is administered by a central organization such as a government agency, private business, or

not-for-profit organization.

Vehicle insurance: It is also known as auto insurance, car insurance, or motor insurance, it

is the insurance purchased for cars, trucks, and other road vehicles. Its primary use is to

provide protection against physical damage and/or body injury resulting from traffic

collisions and against liability that could also arise from it.

3

1.1 HISTORY OF INDIAN INSURANCE

Insurance has a long history in India. Life Insurance in its current form was introduced in

1818 when Oriental Life Insurance Company began its operations in India. General Insurance

was however a comparatively late entrant in 1850 when Triton Insurance company set up its

base in Kolkata.

Life Insurance was nationalized in 1956 by consolidating the operations of various insurance

companies .General Insurance followed suit and was nationalized in 1973. It was set up as the

controlling body with New India, United India, National and Oriental as its subsidiaries. The

process of opening up the insurance sector was initiated against the background of Economic

Reform process, which commenced from 1991.

In 1907, the Indian Mercantile Insurance Ltd was set up. This was the first company to

transact all classes of general insurance business. In 1957 we saw the formation of the

General Insurance Council, a wing of the Insurance Association of India. The General

Insurance Council framed a code of conduct for ensuring fair conduct and sound business

practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency

margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of

the General Insurance Business (Nationalization) Act, general insurance business was

nationalized with effect from 1st January, 1973. 

Reforms in Insurance Industry:

In 1993, the Government set up a committee under the chairmanship of RN

Malhotra, former Governor of RBI, to propose recommendations for reforms in the

insurance sector. The objective was to complement the reforms initiated in the

financial sector. 

The committee submitted its report in 1994 wherein it recommended that the

private sector should be permitted to enter the insurance industry. They stated that

foreign companies to be allowed to enter by floating Indian companies, preferably

a joint venture with Indian partners. So that foreign companies can act as support

system for the Indian companies.

4

Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry.

The IRDA was incorporated as a statutory body in April, 2000.

The key objectives of the IRDA include promotion of competition so as to enhance

customer satisfaction through increased consumer choice and lower premiums,

while ensuring the financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application

for registrations. Foreign companies were allowed ownership of up to 26%.

The Authority has the power to frame regulations under Section 114A of the

Insurance Act, 1938 and has from 2000 onwards framed various regulations

ranging from registration of companies for carrying on insurance business to

protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and at the same time GIC was

converted into a national re-insurer. Parliament passed a bill de-linking the four

subsidiaries from GIC in July, 2002.

List of Life Insurance Companies in India

LIC

HDFC STANDRD LIFE

ICICI PRUDENTIAL

KOTAK LIFE INSURANCE

METLIFE

TATA ING

MAX NEWYORK

BIRLA SUNLIFE

5

RELIANCE

BAJAJ ALLIANZ

SBI LIFE

MARKET SHARE OF INDIAN LIFE INSURANCE COMPANIES

6

1.2 COMPANY PROFILE

Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint venture

between Housing Development Finance Corporation Limited (HDFC Limited) - India's

leading housing finance institution, and a Group Company of the Standard Life Plc, UK.

HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity

in the joint venture, while the rest is held by others.

Since its inception in 1977, the company has maintained the good will of consistent growth

and hence it is the market leader in mortgages. HDFC has developed significant expertise in

retail mortgage loans to different market segments and also has a large corporate client base

for its housing related credit facilities. With its experience in the financial markets, a strong

market reputation, large shareholder base and unique consumer franchise, HDFC was ideally

positioned to promote a bank in the Indian environment. 

HDFC Standard Life offers a range of individual and group insurance solutions. HDFC

Standard Life's product portfolio comprises solutions, which meet various customer needs

such as Protection, Pension, Savings, Investment and Health. Customers have the added

advantage of customizing the plans, by adding optional benefits called riders, at a nominal

price. The company currently has 32 retail and 4 group products in its portfolio, along with

five optional rider benefits catering to the savings, investment, protection and retirement

needs of customers.

HDFC Standard Life continues to have one of the widest reaches among new insurance

companies with 568 branches servicing customer needs in over 700 cities and towns. The

company has a strong presence in its existing markets with a base of 2, 00,000 Financial

Consultants.

7

INCOROPATION OF HDFC LIFE

HDFC Limited

HDFC Limited, India's premier housing finance institution has assisted more than 3.8

million families own a home, since its inception in 1977 across 2400 cities and towns through

its network of over 289 offices. It has international offices in Dubai, London and Singapore

with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRI's and PIO's to

own a home back in India. On March 2011, the total asset size has crossed more than Rs. 1,

32,727crores. The corporation has a deposit base of over Rs. 24,625 crores, earning the trust

of nearly one million depositors. Customer Service and satisfaction has been the mainstay of

the organization. HDFC has set benchmarks for the Indian housing finance industry.

Standard Life

Standard Life is a U.K. based company established in 1825 provides life assurance, pensions

and investment management propositions to over 6 million customers worldwide. The

Standard Life Group has around 10,000 employees across the UK, Canada, Ireland,

Germany, Austria, India, USA, Hong Kong and mainland China. At the end of December

2010 the Group had total assets under administration of £170.1bn. Standard Life's diverse

business includes one of the largest life and pensions businesses in the UK with more than 4

million customers and Standard Life Investments, currently manages assets of over £138.7bn

globally. On 10 July 2006, after 80 years as a mutual company, Standard Life Assurance

Company demutualised and Standard Life plc was listed on the London Stock Exchange.

+ =

8

MISSION

To be the top life insurance company in the market.

This not only means being the largest or most productive company in the market but a

combination of several things like:

Customer service of highest order

Value for money for customers

Professionalism in carrying out the business

Increasing market share

Use of best technology for improved service standards

Innovative products to cater different needs of different customers.

VISION AND VALUES

The most successful and admired life insurance company, which mean that they are the most

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

standards in the industry.

Values that they observe while they work:

Integrity

Innovation

Customer centric

People Care “One for all and all for one”

Team work

Joy and Simplicity

9

GROUP COMPANIES

HDFC Bank

HDFC Home Loans

HDFC Sales

CIBIL: Credit Information Bureau India Limited

HDFC Deposits

HDFC Mutual Fund

HDFC ERGO

HDFC securities

HDFC Life

PRODUCTS OF HDFC LIFE

PROTECTION PLANS: Protection Plans helps to shield family from uncertainties in life

due to financial losses in terms of loss of income that may dawn upon them in case of your

untimely demise or critical illness.

HDFC Terms Assurance Plan

HDFC Premium Guarantee Plan

HDFC Loan Cover Term Assurance Plan

HDFC Home Loan Protection

RETIREMENT PLANS: Retirement Plans provide with financial security so that when

professional income starts to ebb, one can still live with pride without compromising on their

living standards.

HDFC Life Classic Pension Insurance Plan

10

HDFC Personal Pension Plan

HDFC Immediate Annuity

HDFC SL Pension Maximus

SAVINGS & INVESTMENT PLAN: It basically focuses on people who thinks to keep

their family happy and are dependent on them so future expenses of the family are need to be

taken care of.

HDFC Life Sampoorn Samridhi Insurance Plan

HDFC Endowment Assurance Plan

HDFC SL Crest

HDFC SL ProGrowth Super II

HDFC SL ProGrowth Flexi

HDFC SL ProGrowth Maximiser

HEALTH PLANS: Health plans give the financial security to meet health related

contingencies. Due to changing lifestyles, health issues have acquired completely new

dimension overtime, becoming more complex in nature.

HDFC Critical Care P lan

HDFC Surgi Care Plan

CHILDREN’S PLAN: Children's Plans helps to save so that one can fulfill their child's

dreams and aspirations. As a parent, one wish to provide their child with the very best that

life offers, the best possible education, marriage and life style.

HDFC Children’s Plan

HDFC SL Young Star Super II

HDFC SL Young Star Super Premium

11

SWOT ANALYSIS

STRENGTHS:

HDFC Standard life insurance offers a range of individual and group insurance

solutions

HDFC Standard Life has wide network to service customer needs

All Investment made in graded assets with rating “AA”

It has a disciplined process

Free switching options online informing customers about the performance of their

investment by sending monthly reports and statements

Training provided to all people so that they themselves have product knowledge and

make people choose best plans as per their needs

First private company to get registered under IRDA

HDFC Standard Life was one of the first private life insurers to disclose the

embedded value of its business

WEAKNESSES:

They are unable to target rural areas as compared to LIC

Negligence to customers after the investment is sold

Customer rarely believes on private insurance companies as they prefer Government

Company

Retention of Employees and agents becomes difficult in this company

12

OPPORTUNITIES:

Life insurance has captured its mere15 – 20% growth therefore a wide open untapped

market is open to the company to develop, grow and measure its success

Strong brand helps to boost up the sales

THREATS:

People are hesitant to invest and put their money to the private life insurance company

with the fear of getting lost

Alternative financial services such as mutual fund, banking services, share and

securities also pose problems and threats to the working of the life insurance sector

Entry of more of Private Players in the market

Faster rate of employee attrition

Awards and Honor

HDFC Standard Life has been adjudged one of the Best Companies to Work for in

India in 2010

'Young Star Super' Voted 'Product of the Year 2010'

Ranked India's Most Trusted Private Life Insurance Brand in 2010 in a survey

Conducted by Economic Times-Brand Equity and the Nielsen Company

Financial and Operational highlights of HDFC LIFE for year ended March, 2011

A robust 17% growth in individual new business (regular premium)

Focus on single premium polices results in growth of 120%

High quality of existing business & continued focus on persistency led to 36%

Increase in renewal premium

A growth of 29% in total premium

One of the very few private insurers to achieve positive growth in FY11

13

HDFC LIFE is fastest growing amongst the top 15 private players

Highest market share gain of 4.2% in private space in FY11 over same period last

year

Management action on cost containment and productivity enhancement programmes

has seen operating expense ratio reduce over the last 3 years

Solvency Ratio as at 31st Mar 2011 was 172% as against regulatory requirement of

150%

31% growth in assets under management over March 31, 2010

Strong inflows due to robust persistency has led to increase in Assets Under

Management

Ethical policies at HDFC LIFE

Fair Dealing

Working with Honesty & Integrity

The Board Members and Senior Management shall not engage in any business,

relationship or activity, which may be in conflict of interest with the business of the

Company

Senior Management of the Company is expected to devote their full time and efforts

during normal working hours to the service of the Company. No Discrimination and

Harassment

Compliance with Laws, Rules and Regulations

14

CORPORATE SOCIAL RESPONSIBILITY

HDFC has made consistent efforts towards social upliftment by maintaining an active Social

Initiatives portfolio. The credit for crossing the confines of a mere profit making entity to

embracing interrelated social concerns rests on the vision and leadership of our founder

Chairman Mr. H. T. Parekh.

Through the year, HDFC continued partnering with development organizations for a variety

of programs in the social sphere. The projects are supported by HDFC through the Shelter

Assistance Reserve.

SHELTER ASSISTANCE RESERVE

During FY 2010-11 through the Shelter Assistance Reserve around 190 social and

development initiatives were supported. The overall utilization from the Reserve stood at Rs.

8.88 crores.

The segment-wise break-up of the utilization of reserve:

15

Some of development projects supported under the Shelter Assistance Reserve during 2010-

11:

DEEDS

In India, there are 5 million hearing impaired individuals with over 20,000 babies. DEEDS

works with hearing impaired individuals by making them financially self-reliant.

DEEDS are the 'First ever catering institute for the Deaf in India'. One-year Diploma Course

in Catering can be done by the Students who have successfully completed their tenth standard

examinations and it is certified by the Maharashtra State Vocation Board.

Project Chirag

Students of Mumbai's H.R. College of Commerce & Economics have come up with a 5-point

Rural Transformation Model titled Project Chirag which deals with five areas - Environment,

Education, Healthcare & Sanitation, Social Upliftment, and Economic Empowerment, with

the aim of truly "lighting up rural lives in India".

For this the primary requirement was electricity and thus Phase 1 of the project was taken up

to light up dark villages through Solar lanterns which were made by physically & mentally

challenged individuals from economically backward communities. In phase 2 economic

upliftment activities was carried out by establishing public kitchens, improving educational

infrastructure and aids, adult literacy programmes as well as other skill set enhancement

training programs. For this the organization approached HDFC to partner lighting of villages

in Wada Taluka, Thane District.

SNEHA

HDFC partnered SNEHA in its initiative of providing solutions to issues of nutrition and

health in urban slum communities. SNEHA was founded in 1999 by a group of dedicated

doctors and social workers led by neonatologist and former dean of Lokmanya Tilak

Municipal General Hospital and Medical College in Dharavi, Mumbai to address the

concerns of unhealthy newborn babies and mothers to improve quality of care through

innovative solutions to problems in nutrition, education and health in urban communities. The

16

program is run in 9 wards of Mumbai specifically with health posts covering a population of

approximately 100,000 and with maternity homes/tertiary hospitals covering a radius of 6-7

kms.

UNIT LINKED INSURANCE PLAN

Unit Linked Insurance Plan (ULIP) is a life insurance solution that provides for the benefits

of protection and flexibility in investment. The investment is denoted as units and is

represented by the value that is called Net Asset Value (NAV). ULIPs combine the benefits

of an insurance policy and market-linked investment.

ULIP came into play in the 1960s and in 1971 the Unit Trust of India offered the Unit Linked

Insurance Plan. Unit Linked guidelines was notified by IRDA on 21st December, 2005 in

India to ensure that they lead to transparency and understanding of the products among the

insured.

Out of premium amount a part is utilized to provide life cover and rest is invested in units.

Different options such as 100% equity, balanced, debt etc are available to invest a part of

premium amount in units. The return and risk vary as per the option selected. ULIPs have

gained high acceptance due to attractive features they offer like flexibility, transparency,

liquidity. Unit linked plans are suitable for all customer profiles; however as a general belief

the risk averse investors tend to choose traditional plans and an informed customer prefers a

ULIP. In ULIP , the invested amount of premium after deducting all the charges and

premium for risk cover under all policies in a particular fund as chosen by the holder are

pooled together to form a unit fund. The entire risk is borne by the policy holder.

17

STRUCTURE OF ULIPs

ULIPs offered by different insurers have varying charge structures. The different types of

fees and charges are as follows. The insurers have the right to revise or cancel the fees and

charges over period of time.

Premium Allocation Charges: This is a percentage of premiums appropriated towards

charges before allocating the units under the policy.

Administration Charges: These are the fees for management of the plan and levied by

cancellation of the units.

Mortality Charges: These are the charges to offer for the cost of the insurance coverage

under the plan. It depends upon number of factors such as age, state of health etc.

Fund Management Charges: These are the fees levied for the management of funds and

are deducted before arriving at Net Asset Value.

Surrender Charges: Surrender charges may be deducted for premature partial or full

encashment of units.

Fund Switching Charges: A limited number of fund switches may be allowed each year

without charges, with subsequent switches, subject to a charge.

Service Tax Deduction: Before allotment of units the applicable service tax is deducted

from the risk portion of the premium.

18

TYPES OF FUNDS UNDER ULIPs

FUND DETAILS RISK & RETURN RATING

Short Term Fund Low capital risk as exposure

is only the short-term

securities

Low

Income Fund High potential return due to

higher duration & credit

exposure

Moderate

Balanced Fund Dynamic Equity exposure to

enhance returns

Moderate to High

Blue Chip Fund Exposure to large-cap equities

& equity related securities

Very High

Opportunities Fund Exposure to mid-cap equities

& equity related securities

Very High

19

ADVANTAGES OF ULIPs

ULIPs distinguish it through multiple benefits that it provides to customers. The plan is one

stop solution for everything customer wants. ULIPs are different from traditional plans purely

because they are much transparent, charges are shared with the customers before sale of

products so as to enable customer to make an informed decision. Customers have the

flexibility to choose their life cover. Also they have the choice of multiple fund options based

on risk appetite, thereby enabling the investors to make desired returns.

Some of the advantages of ULIPs:

Life protection

Flexibility

Investment and saving

Tax planning

Transparency

Riders

Wealth creation

Partial withdrawal

20

LIFE PROTECTION

SAVING and INVESTMENT

WEALTH CREATION

PARTIAL WITHDRAWL

RIDERS

TRANSPARENCY

ADVANTAGES

OF

ULIPS

ADVANTAGES

OF

ULIPS

TAX PLANNING

FLEXIBILITY

BUSINESS FIGURES FOR THE MONTH OF April 2011

Sales of ULIPs constitute a huge chunk of the business of life insurance companies.

Insurance agents used to pitch ULIPs plans to prospective buyers due to high commissions on

ULIPs. After the release of new guidelines on Unit-linked insurance plans (Ulips) in

September last year, life insurance companies have had to restructure their Ulips plans and

the scenario has changed to a certain extent. Now as the commissions on ULIPs have been

slashed, agents do not find it as lucrative as earlier. Its impact can been in the business figures

for the month of May 2011 that had been submitted by Life insurance companies in India

to Insurance Regulatory and Development Authority (IRDA) looks a little bleak when

compared with last year’s business figures .

Out of 22 operational private life insurance companies, 16 companies have collected lesser

premiums in April this year as compared to their collections in April last year.

The 6 private life insurance companies that are an exception to this are SBI Life, Star Union

Dai-chi, India First Life, AEGON Religare, Tata AIG and DLF Pramerica; which have

shown improvement in their collections in May 2011 over that in May 2010.

21

UNIT LINKED INSURANCE PLANS (ULIPs) OF DIFFERENT

COMPANIES

HDFC LIFE

HDFC LIFE offers following ULIPs:

HDFC SL CREST

HDFC SL Young Star Super II

Unit Linked Pension Maximus

22

HDFC SL CREST

HDFC SL Young Star Super II

23

Min entry age 18

Max entry age 65

Max Maturity age 75

Min premium 15000

Max premium No Limit

Death Benefit

Sum Assured is given

to the family, future

premiums are waived

& company pays 50%

of the premiums to the

beneficiary on annually

& fund value on

maturity

Maturity Benefit Fund Value

Fund Allocation

Charges

4% for year 1-7

1% for year 8+

Premium Payment

Term

10 – 20 years

UNIT LINKED PENSION MAXIMUS (SP)

Min entry age 30

Max entry age

70

Max Maturity age 80

Min premium 50000

Max Premium No Limit

Death Benefit Fund Value+ Sum Assured of Rs. 1000

Maturity Benefit Higher of Fund Value or Guarantee Vesting

Value

Fund Allocation Charges 2.5 %

Premium payment term 10

24

ICICI PRUDENTIAL LIFE INSURANCE

ICICI PRUDENTIAL Offers following types of ULIPs:

ICICI Pru Pinnacle Super

ICICI Pru Smart Kid

ICICI Pru Life Link Pension SP

25

ICICI Pru Pinnacle Super

Min entry age

18

Max entry age

65

Max Maturity age

75

Min premium 50000

Max Premium NO LIMIT

Death Benefit Sum Assured + Fund Value

Maturity Benefit Guaranteed NAV of Rs. 10

Fund Allocation Charges 6% for year 1

5% for year 2

3% for year 3-5

Premium payment term 5 years

26

ICICI Pru Smart Kid ICICI Pru Life Link Pension SP

27

Min entry age 35

Max entry age 70

Max Maturity age 80

Min premium Rs. 200000

Max Premium No Limit

Death Benefit Fund Value

Maturity Benefit Higher of

guaranteed NAV

and NAV on date

of maturity

Fund Allocation

Charges

5%

Premium payment term 10

COMPARATIVE ANALYSIS

ICICI Pru Pinnacle Super and HDFC SL CREST

Fund allocation charge is higher in ICICI Pru Pinnacle Super whereas HDFC SL

CREST has a maximum charge of 4%.

In ICICI Pru Pinnacle Super, on the death of the policy holder, company pays Sum

Assured+ Fund Value where as in CREST, company pays higher of two but the

mortality charges of Pinnacle Super is higher than CREST due to which the total of

Sum Assured+ Fund Value results less than the total of CREST’s Sum Assured and

Fund Value.

In CREST there is Guarantee NAV of Rs. 15 where as in Pinnacle Super it is Rs. 10.

ICICI Pru Smart Kid and HDFC SL Young Star Super II

Minimum and Maximum age at entry is 18-65 in Young Star Super II where as in

ICICI Pru Smart Kid it is 20-60.

Minimum Premium in Young Star Super II is only Rs.15000 as against in ICICI Pru

Smart Kid it is Rs.18000.

In Young Star Super II, there is no maximum limit for premium as against in ICICI

Pru Smart Kid it is Rs. 100000.

In ICICI Pru Smart Kid the product is offered only to those who have at least one

child whereas in Young Star Super II, it is not mandatory to have a child.

ICICI Pru Life Link Pension (SP) and UNIT LINKED PENSION MAXIMUS

(SP)

Minimum age at entry is 35 in ICICI Pru Life Link Pension (SP) whereas in Unit

Linked Pension Maximus (SP) its 30 years.

Minimum premium amount is Rs. 200000 in case of ICICI Pru Life Link Pension

(SP) whereas it’s Rs. 50000 in case of Unit Linked Pension Maximus (SP).

28

In case of ICICI Pru Life Link Pension (SP) Fund Allocation Charges is 5% whereas

it’s 2.5% in case of Unit Linked Pension Maximus (SP).

AVIVA LIFE INSURANCE

AVIVA LIFE offers following types of ULIPs:

AVIVA Wealth Protect

AVIVA Young Scholar Advantage

AVIVA does not offer any ULIP pension plans.

29

AVIVA Young Scholar Advantage AVIVA Wealth Protect

30

Min entry age 8

Max entry age 65

Max Maturity age 75

Min premium 60000

Max Premium No limit

Death Benefit Sum Assured or

Fund Value

whichever is

higher

Maturity Benefit Guaranteed

maturity value or

Fund Value

whichever is higher

Fund Allocation

Charges

15% for year 1

2% for year 2 to 5

Premium Payment

Term

5 years

COMPARATIVE ANALYSIS

Aviva Wealth Protect and HDFC SL CREST

Minimum Premium is higher in AVIVA Wealth Protect where as CREST has

minimum Premium amount of Rs. 50000.

In AVIVA Wealth Protect, total fund allocation charges are 17% where as in CREST

its 15%.

In AVIVA Wealth Protect there is no guarantee of Minimum NAV at maturity. Only

highest NAV would be given recorded in 7 yrs whereas in CREST, policy holder gets

the benefit of minimum guaranteed NAV of Rs. 15 at maturity with Daily NAV

tracking.

Aviva Young Scholar Advantage and HDFC SL Young Star Super II

Fund allocation charge is higher in Aviva Young Scholar Advantage where as Young

Star Super II has a maximum charge of 4%.

In Aviva Young Scholar Advantage, fund value is not paid on maturity in case of

unfortunate death of the policy holder while in Young Star Super II, Fund Value is

paid on the maturity date to the beneficiary in case of unfortunate death of policy

holder.

In Aviva Young Scholar Advantage the product is offered only to those who have at

least one child whereas in Young Star Super II, it is not mandatory to have a child so

as to invest. You can plan the future of your child to be born.

In Aviva Young Scholar Advantage, minimum premium is Rs. 20000 whereas in

Young Star Super II its Rs. 15000.

In Aviva Young Scholar Advantage option of partial withdrawal is not available

whereas in Young Star Super II, one can make lump sum partial withdrawals of

minimum Rs. 10,000 after the 5th year of policy.

31

OBJECTIVE

The objective of the project is to make a comparative study of UNIT LINKED INSURANCE

PLANS (ULIPs) of HDFC LIFE with that of some major selected players in the insurance

industry and study the consumer perception towards the ULIPS and various insurance

companies. The comparative analysis is based on the data collected from Delhi-NCR.

OBJECTIVES OF THE PROJECT

To identify the strength and the weaknesses of the HDFC LIFE.

To identify the awareness among consumers about the ULIPs.

To study the consumer perception towards various insurance companies.

32

CHAPTER 2

RESEARCH

METHODLOGY

33

RESEARCH METHODOLOGY

Research is an art of scientific investigation through search for new facts in any branch of

knowledge. It is a moment from known to unknown. Research always starts with a question

or a problem. Its purpose is to find answers to questions through the application of the

scientific method. It is a systematic and intensive study directed towards a more complete

knowledge of the subject studied. As marketing does not address itself to basic or

fundamental question, it

Does not qualify as basic research. On the contrary, it tackles problems, which seem to have

immediate commercial potential. In view of the major consideration, marketing research

should be regarded as applied research. We may also say that marketing research is of both

types problem solving and problem oriented. Marketing research is as systematic and

objectives study of the problems pertaining to the marketing of the goods and services. It may

be emphasized

that it is not restricted to any particular area of marketing, but is applied to all the phases and

aspects.

34

2.1 RESEARCH OBJECTIVES

To study the awareness about ULIPs among people

To find out what factors people consider while making an investment and whose

opinions do they consider while investing

To find out their perception about HDFC’s Unit Linked Insurance Plans.

35

2.2 RESEARCH DESIGN

Research design is a framework for conducting project. Research design in this case is a

Descriptive Research.

TYPE OF RESEARCH

This study is quantitative in nature as all the data collected with the help o the questionnaire

has been analyzed in the form of percentages and depicted in the form of pie charts.

36

2.3 DATA COLLECTION

1) Data to be collected.

Data includes facts and figures, which are required to be collected to achieve the objectives of

the project, that is, to determine the present position and satisfaction of customer of HDFC

Life.

a) Primary Data

The data that is being collected for the first time or to particularly fulfill the objectives of the

project is known as primary data.

These types of data were,

- Responses of consumer.

- Identifying pros and cons of the brand.

The above primary data were collected through responses of consumer was conducted

through questionnaires prepared for them.

b) Secondary Data

Secondary data are that type of data, which are already assembled and need not to collected

from outside. These types of data were

i) Company Profile

ii) Product Profile

iii) Competitors Profile

The aforesaid data were collected through Internet and company s financial report.

2) Data Collection Method

For the given project, the primary data was gathered through Survey technique, which is the

most popular and effective technique for data collection. The survey was completed with the

use of questionnaire.

37

3) Sampling

Sample is the small group taken under consideration from the total group. This small group

represents the total group. The customer list was taken from HDFC Life Insurance customer

database.

SAMPLE SIZE

The sample size of the survey was 100. Out of these 70 were male and 30 were female.

The sample of respondents was carefully selected covering people in all age groups and

with different occupations. . I have selected people of age group from 21 and above.

AGE GROUP NUMBER OF PEOPLE

21-30 32

31-40 44

41 and Above 24

SAMPLING TECHNIQUE

Probability random sampling technique was used for the selection of respondents. Within

Probability random sampling convenient sampling was adopted.

ULIPs which are focused on in Research are:

Children Plan

Saving and Investment Plan

Retirement Plan

38

Target Respondent

The study shall focus on the following focus groups in order to get an overall perception from

people.

People employed in private services

Government Employee

Self employed

Retired people

39

CHAPTER 3

DATA ANALYSIS

40

AGE:

21 – 30 ccc 31 – 40 41 and above

The sample of respondents was heterogeneous with people of Among 100

respondents, 32 were from the age group of 21-30, 44 from the age group of 31-40

and 24 were from the age group of 41 and above.

various occupations right from government service to ones who were self

employed. Out of these, people who were working in private companies constituted

around 60%.

41

OCCUPATION:

1. Business

2. Govt. Service

3. Retired

4. Private Company

5. Others (Please specify)

The sample of respondents was heterogeneous with people of various occupations

right from government service to ones who were self employed. Out of these, people

who were working in private companies constituted around 60%.

42

IN WHICH INSTRUMENT DO YOU INVEST?

1. Mutual Funds

2. Fixed Deposits

3. Shares and Stocks

4. Insurance

5. Others (please specify)

Out of the various forms of investment identified as mutual funds, stocks and

shares, insurance products and government bonds, around 22% preferred stocks

and shares and around 34% preferred insurance products. The rest of the

respondents preferred other products.

43

WHAT DO YOU CONSIDER WHILE MAKING AN INVESTMENT DECISION?

1. Friends Opinion

2. Broker’s Opinion

3. Family Opinion

4. Own Decision

5. Others

While making investment decisions around 45% of the respondents considered their

own decision and another 40% respondents considered their family’s opinion, 5%

gives importance to the broker’s advice and only 3% of them consider factors such

as market share of the company. The remaining 7% took advice of people other

than those mentioned above.

44

ACCORDING TO YOU WHAT IS THE AMOUNT OF RISK INVOLVED IN ULIPs?

1. High risk  

2. Moderate risk

3.   Low Risk

4. They are Safe 

Among the people who own ULIPs, 54% of them had a view that moderate risk is

involved in ULIPs

45

WHEN DID YOU INVEST IN ULIP?

1. Last year

2. 2-3 years back

3. 4-5 years back

4. More than 5 years

Among the people who owns ULIPs of HDFC, 50% of them have invested 2-3

years back.

46

WHILE INVESTING, DID YOU COMPARE IT WITH THE OTHER COMPANY’s

PLAN?

1. Yes 2. No

If yes what features did you compared?

1. Annual Premium

2. Maturity Benefit

3. Min- Max Age at Entry

4. Death Benefit

5. Policy Term

6. Premium Allocation Charge

7. Others (Please specify in the box below)

Out of the respondents who invest in HDFC ULIPs, 62% compare the features of

products with that of other company products. Maturity benefit is compared by 30%

of the respondents and entry age is least compared i.e. only by 4%

47

DID THE AGENT EXPLAIN ABOUT THE POLICY TERMS AND CONDITIONS?

Yes

No

Out of the respondents who invest in HDFC ULIPs 80% are completely aware

about the policy terms and conditions and the rest 20% are not completely aware.

48

HOW WAS THE AGENTS BEHAVIOUR TOWARDS YOUR QUESTIONS?

Excellent

Good

Satisfactory

Bad

60% of the customers who invested in HDFC ULIPs feel that the behavior of the

insurance agents was Excellent towards their questions and collected proper

feedback from them, 30% of the customers feel that the behavior of agents was

satisfactory and the remaining 10% feel that the behavior was not up to the mark.

49

DO YOU THINK THERE IS TRANSPARENCY IN THE APPROACH OF HDFC

STANDARD LIFE AGENTS

Yes

No

85% of the customers feel that there is transparency in the approach of HDFC

Standard Life Insurance and 15% of customers feel that the approach used is not

transparent.

50

DO YOU THINK THE PRODUCTS AND SERVICES OF HDFC ARE MORE

LUCRATIVE THAN THE COMPETITORS?

Yes

No

80% of the HDFC customers feel that the offers given by them are more lucrative

than the competitors and the rest prefer other brands over HDFC.

51

RATE THE AFTER SALES SERVICES OFFERED BY HDFC STANDARD LIFE

INSURANCE.

Excellent

Not up to the mark

86% of the customers feel that the after sales services offered by HDFC Bank are

Excellent and the rest 14% feel that the after sales service are not up to the mark.

52

ARE THE UNIT LINKED INSURANCE PLANS PROVIDED BY HDFC BANK

VALUE FOR MONEY.

Yes

No

95% of the customers feel that HDFC Standard Life is Value for Money and the rest

5% feel that it is not.

53

CHAPTER 4

FINDINGS

54

FINDINGS

Majority of the respondents were aware about ULIPs.

HDFC Standard life is one of the most trusted private insurance companies.

Almost half of the respondents take decision on their own while making an

investment while Family Opinion is the second most important factor considered by

the respondents.

Majority of the respondents consider Maturity Benefit as the most important factor

while making investment in ULIPs.

Majority of the customers feel that HDFC ULIPs provide value for money.

Most of the customers were extremely happy with the behavior of the insurance

agents.

A large majority of the customers feel that HDFC Life Insurance policies are value for

money.

Majority of the customers feel that HDFC staff provide good after sales services.

Majority of the customers feel that the offers provided by HDFC Life are more

lucrative than the competitors.

55

CHAPTER 5

CONCLUSION

56

CONCLUSION

I have learnt to explain the products to customers in the possible easiest way by preparing a

flow of the basic details of the plans.

I have learnt to identify the needs and want of the customers and suggesting them the best

product that satisfies their needs.

I have learnt to modify the benefits of the products as per the customers’ requirement.

I have learnt to communicate well and convince people to listen me through cold callings.

I have leant about various insurance products which will be helpful for me to suggest my near

and dear ones while making an investment.

57

CHAPTER 6

RECOMMENDATIONS

RECOMMENDATIONS

58

HDFC Life should create more awareness among people about the ULIPs through

advertisements.

HDFC Life should provide better services even after the plan is taken by customer

like the Financial Consultants can guide the customer in switching the fund option so

that he/she can get maximum return. This will not only be beneficial for the customer

but it will result in positive image of the company in the mind of the customer.

HDFC Life must understand the challenges that it is facing from the competitors and

must use the strengths to overcome the threats it is facing.

Lastly, when it comes to looking into the future of the insurance companies it will be

more and more competitive for all as almost all the products and services are same,

therefore HDFC Life should devise more unique strategies to win over their

customers, to retain them and to attract more customers.

59

CHAPTER 7

LIMITATIONS

Limitations of the Research

60

Due to limited time the study was conducted in a limited area (Delhi), because of

which the customer responses obtained may have some biasness specific to the

region.

The sample size also had to be kept small because of time constraint again and thus

may not be sufficient to find out the appropriate results.

The quality of the data collected may have been affected by reluctant nature of

respondents to respond clearly to some of the questions.

BIBLIOGRAPHY

Books:

61

Armstrong, Gary; Marketing: An Introduction, 7/e, Pearson Education 2008

Kotler, Philip; Marketing Management (the Millennium Edition), Manohar Publishers &

Distributors 2009

Kothari, C.R; Research Methodology: Research Methodology-An Introduction, second

Edition, New Delhi, New Age International Limited 2011

Website and Links

www.hdfclife.com

http://www.myinsuranceclub.com/insurance-news/are-life-insurance-companies-missing-the-

good-old-ulips

http://www.hdfc.com/others/social_initiatives.asp

62

ANNEXURE

Questionnaire

63

RESPONDENT’S PROFILE

NAME:

AGE:

21 – 30 cc 31 – 40 41 and above

GENDER:

Male Female

OCCUPATION:

1. Business

2. Govt. Service

3. Retired

4. Private Company

5. Others (Please specify)

1. IN WHICH INSTRUMENT DO YOU INVEST?

1. Mutual Funds

64

2. Fixed Deposits

3. Shares and Stocks

4. Insurance

5. Others (please specify)

2. ACCORDING TO YOU WHAT IS THE AMOUNT OF RISK INVOLVED IN ULIPs?

1. High risk  

2. Moderate risk

3.   Low Risk

4. They are Safe 

3. WHEN DID YOU INVEST IN ULIP?

1. Last year

2. 2-3 years back

3. 4-5 years back

4. More than 5 years

4. WHAT DO YOU CONSIDER WHILE MAKING AN INVESTMENT DECISION?

1. Friends Opinion

65

2. Broker’s Opinion

3. Family Opinion

4. Own Decision

5. Others

5. WHILE INVESTING, DID YOU COMPARE IT WITH THE OTHER COMPANY’s

PLAN?

1. Yes 2. No

If yes what features did you compared?

1. Annual Premium

2. Maturity Benefit

3. Min- Max Age at Entry

4. Death Benefit

5. Policy Term

6. Premium Allocation Charge

7. Others (Please specify in the box below)

6. DID THE AGENT EXPLAIN ABOUT THE POLICY TERMS AND CONDITIONS?

Yes

66

No

7. HOW WAS THE AGENTS BEHAVIOUR TOWARDS YOUR QUESTIONS?

Excellent

Good

Satisfactory

Bad

8. DO YOU THINK THERE IS TRANSPARENCY IN THE APPROACH OF HDFC

STANDARD LIFE AGENTS

Yes

No

9. DO YOU THINK THE PRODUCTS AND SERVICES OF HDFC ARE MORE

LUCRATIVE THAN THE COMPETITORS?

67

Yes

No

10. DOES THE BANK INFORM YOU ABOUT THE DUE DATE OF THE NEXT

PREMIUM ON TIME?

Yes

No

11. DOES THE BANK INFORM YOU ABOUT NEW SCHEMES INRODUCED BY

IT ?

Yes

No

12. RATE THE AFTER SALES SERVICES OFFERED BY HDFC STANDARD LIFE

INSURANCE.

Excellent

68

Not up to the mark

13. ARE THE UNIT LINKED INSURANCE PLANS PROVIDED BY HDFC BANK

VALUE FOR MONEY.

Yes

No

69

70