hdfc report (Repaired)

8/7/2019 hdfc report (Repaired)

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A

SUMMER TRAININGPROJECT REPORT

ON

Emerging Investment Dynamics in Life Insurance

UNDER

Submitted To

Rajasthan Technical University, Kota

For Full Time Degree Course

Of

Master of Business Administration

2009-11

Prepared By

RAKESH KATARIA

M.J.R. Collage Of Engg. & Technology,

ACKNOWLEDGMENT

Achieving a milestone for any person is extremely difficultkind of support. Therefore, the persons who make my taskbecomes my humble and foremost duty to acknowledge all


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I am heartiest thankful to MR. Satya Prakash SinghDevelopment Manager), and my friends for giving meinformation, support and guidance during my project work.it would have not possible for me to work on this project.

I would like to express my gratitude to various Customers

BANK to whom I met during the project and also to HDFCJAIPUR and other members for giving help and support.

I am also thanking to all of persons who helped me directlyfor completing this report successfully.

PREFACEThe project work done on Emerging Investment Dynamics In Life

Insurance Industry, at HDFC Standard Life, Jaipur, focuses

assessing the future of the Insurance sector in India as seen through theeyes of HDFC. Evaluating the performance of this sector has been very

difficult because of the immense competition in this sector.Future of a particular service depends on the performance of that service

sector and evaluation of performance of Insurance sector is very difficult

task because performance is a multidimensional contract. It is important torecognize what good performance means. From strictly financialperspective, the management can achieve high yield performance

primarily through providing quality service to customers.

This project report is divided into two parts:In the first part, a detailed introduction about the company profile andproduct and services are given.

In the second part, research methodology, observation, and suggestion that


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had been given to the company based on the research study has been

given.

CONTENTS

Acknowledgement Company Certificate H.O.D. Certificate Preface

PART : 1Introduction

Indian Insurance Industry IRDAAct, 1999

History of HDFC Standard Life InsuranceThe partners

Company Profile The partnership

Incorporation of HDFC SLIC Our mission Our values product information Our vision Accolades and Recognition

PART : 2

Objective of Study Importance of Study

Scope of Study

Research Methodology Findings & Analysis1. Research2. Swot Analysis3. Conclusion

Private Market Share Retail : March June, 2008 Recommendation Bibliography Questionnaire Glossary


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PART 1

INDIAN INSURANCE INDUSTRY

The Indian Insurance sector has been going through a transition. With the

private sector companies making a foray into the market, the scenario hasstarted to change. Liberalization of the sector has helped in bringing about

several positive developments, including the expansion of the market size,introduction of new product, and development of new channel distribution

in the market. However, the most important development is that the

insurance companies have become more responsible towards customerneeds.

The first visible change can be found in the introduction of new products.

The most popular among the products are the Unit Linked Policies. Ridershave already been introduced and have become very popular. Some of the

new policies introduced are:

y Policies with reduced of premium for non-smokers

y Policies launched for the future benefit of children along with the

Coverage of the life of their parents.

y Policies for village artisans

y

Travel insurance scheme for students going abroad for higherstudies

y Weather insurance policies

y Retirement policies, and

y A group personal accident policy issued in the name of the school

for covering all the students of that school.

INSURANCE REGULATORY & DEVELOPMENT

ACT, 1999 (IRDA)

Role of IRDA:IRDA is a revolutionary piece of legislation. The IRDA was established toregulate, promote, and ensure orderly growth of the life and general

insurance industry.

The authority consists of the following members:

y A chairperson

y Not more than 5 whole time members

y Not more than 4 part time members


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The members would be appointed by the Central Government. The tenure

of the Chairperson and members would be 5 years.

Inaction of IRDA:

y To exercise all power and function of

controller of insurance

y Protection of the interests of the policy holders

y To issue, renew, modify, withdraw, or suspend certificate of

registration

y To specify requisite qualifications and training for insurance

intermediaries

y To promote and regulate professional organization connected withinsurance

y To conduct inspection/investigation, etc.

y To prescribe method of Insurance Accounting

y To regulate investment of funds and margins of solvency

y To adjudicate upon disputes

y To conduct inspection and audit of insurers, intermediaries, and

other organizations connected with insurance.

HISTORY OF HDFC SLICTHE PARTNERSHousing Development Finance Corporation Limited

Founded in 1977, HDFC today is the market leader in human finance inIndia and has extended financial assistance for more than 19 lakh homes.

HDFC has over 120 offices in India, presently. It has one international

office in Dubai and Service Associates in Bahrain, Kuwait,Qatar, Saudi

Arabia, and Sultanate of Oman. HDFCs asset base amounts to over Rs.21,450 crore. Its financial strength is reflected in highest safety ratings of


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FAAA and MAAA, awarded by CRISIL and ICRA two of Indias

leading credit rating agencies, respectively, for the last 7 years,

respectively. It has a depositor base of over 13 lakh depositors and depositagents force of over 50,000. Of the total deposits, 82% are sourced from

individual and trust depositors, which demonstrate the tremendousconfidence that retail investors have in the company.

HDFC-promoted companies have emerged to meet the investors andcustomers need:y HDFC Bank for commercial banking

y HDFC Mutual Funds for mutual fund products

y HDFC Life Insurance Company for life insurance and pensionproducts, and

y HDFC Chubb for general insurance products

Being an institution that is strongly committed to the highest standards ofquality and excellence, HDFC has won several accolades in the past few

years. One such award is the Ramakrishna Bajaj National Quality

Award for the year 1999. This award was instituted to award recognition

to Indian companies for business excellence and quality achievement.HDFC is the only company, so far, to receive this award in the service

category.

Standard Life Assurance Company (SLAC)

Founded in 1825, Standard Life has been at the forefront of the UKinsurance industry for 177 years by combining sound financial judgement

with integrity and reliability. The largest mutual life company in Europe, it

has operations in United Kingdom, Ireland, Spain,Germany,Austria, and

Canada with representative offices in Hong Kong and China.

One of its most recent successes was launch of Standard Life Bank on 1stJanuary, 1998. The introduction of its innovation mortgage product in

January 1999 had an immediate impact on the UK market, according for

11% of all new lending within the first operational year. The current

deposit base of the bank is US $7.1 billion. Standard Life has total assetsof over US $100 billion and new premium last year of US $9.2 billion. Its

US investment portfolio accounts for approximately 2% of all shares listedin London Stock Exchange. It is one of the few insurance companies in the

world to receive AA rating from two the leading international credit rating

agencies Moodys and S & P.

Not surprisingly, Standard Life is rated as one of the strongest companiesin the world. In financial terms, the quality and values Standard Lifebrings to this venture are immense. The companys reputation in the UK

market remains unrivalled. Besides being voted Company of the Yearfor overall service, for the third consecutive year, Standard Life has been

recently voted Company of the Decade by independent brokers.


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COMPANY PROFILE

HDFC STANDARD LIFEAbout us

Board members

Our parentage

Our group companiesThe partnership

Incorporation of HDFC Standard Life Insurance Company

Our mission

Our valuesOur vision

Accolades and Recognition

About usHDFC Standard Life Insurance Company Ltd. is one of Indias leadingprivate 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 well known for their ethical dealings and financial strengthand are thus committed to being a long-term player in the life insurance

industry all important factors to consider when choosing your insurer.

Board members

Brief profile of the Board of Directors:

y Mr. Deepak S Parekh is the Chairman of the Company. He is alsothe 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 directorof 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 aFellow of the Institute of Chartered Accountants (England & Wales).y Mr. Keki M Mistry joined the Board of Directors of the Company

in December, 2000. He is currently the Managing Director of HDFCLimited. He joined HDFC Limited in 1981 and became an Executive

Director in 1993. He was appointed as its Managing Director in

November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered

Accountants of India and a member of the Michigan Association ofCertified Public Accountants.y Mr. Alexander M Crombie joined the Board of Directors of theCompany in April, 2002. He has been with the Standard Life Group for 34

years holding various senior management positions. He was appointedasthe Group Chief Executive of the Standard Life Group in March 2004 and

is also the Chief Executive of Standard Life Investments Limited. Mr.

Crombie is a fellow of the Faculty ofActuaries in Scotland.


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y Ms. Marcia D Campbell is currently the Group Operations Directorin The Standard Life Assurance Company and is responsible forGroupOperations,Asia Pacific Development, Strategy & Planning, Corporate

Responsibility and Shared Services Centre. Ms. Campbell joined the

Board of Directors in November 2005.y Mr. Keith N Skeoch is currently the Chief Executive in Standard

Life Investments Limited and is responsible for overseeing InvestmentProcess & Chief Executive Officer Function. Prior to this, Mr. Skeoch wasworking with M/s. James Capel & Co. holding the positions of UK

Economist, Chief Economist, Executive Director, Director of Controls and

Strategy HSBS Securities and Managing Director International Equities.

He was also responsible for Economic and Investment Strategy researchproduced on a worldwide basis. Mr. Skeoch joined the Board of Directors

in November 2005.y Mr. G N Bajpai was the former chairman of Life Insurance

Corporation of India and Securities and Exchange Board of India. Mr.

Bajpai retired from Life Insurance Corporation of India with more than 3decades of experience and further served SEBI as its chairman for 3

years, during which time he had strengthened the complianceenforcement in SEBI.

y Mr. Gautam R Divan is a practicing Chartered Accountant and is a

Fellow of the Institute of Chartered Accountants of India. Mr. Divan was

the Former Chairman and Managing Committee Member of MidsnellGroup International, an International Association of Independent

Accounting Firms and has authored several papers of professional interest.Mr. Divan has wide experience in auditing accounts of large public limited

companies and nationalised banks, financial and taxation planning of

individuals and limited companies and also has substantial experience in

structuring overseas investments to and from India.y

Mr. Ranjan Pant is a global Management Consultant advisingCEO/Boards on Strategy and Change Management. Mr. Pant, until 2002

was a Partner & Vice-President at Bain & Company, Inc.,Boston, where

he led the worldwide Utility Practice. He was also Director, CorporateBusiness Development at General Electric headquarters in Fairfield, USA.

Mr. Pant has an MBA from The Wharton School and BE (Honours) from

Birla Institute of Technology and Sciences.y Mr. Ravi Narain is the Managing Director & CEO of National

Stock Exchange of India Limited. Mr. Ravi Narain was a member of thecore team to set-up the Securities & Exchange Board of India (SEBI) and

isalso associated with various committees of SEBI and the Reserve Bank of

India (RBI).y Mr. Deepak M Satwalekar is the Managing Director and CEO of

the Company since November, 2000. Prior to this, he was the ManagingDirector of HDFC Limited since 1993. Mr. Satwalekar obtained a

Bachelors Degree in Technology from the Indian Institute of Technology,Bombay and a Masters Degree in Business Administration from The

American University, Washington DC.


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Our parentageHDFC Limitedy HDFC is Indias leading housing finance institution and has helpedbuild more than 23,00,000 houses since its incorporation in 1977.

y In Financial Year 2003-04 its assets under management crossedRs. 36,000 Cr.

y As at March 31, 2004, outstanding deposits stood at Rs.7,840crores. The depositor base now stands at around 1 million depositors.

y Rated AAA by CRISIL and ICRA for the 10th consecutive year

y Stable and experienced management

y High service standards

y Awarded The Economic Times Corporate Citizen of the year

Award for its long-standing commitment to community development.

y Presented the Dream Home award for the best housing finance

provider in 2004 at the third Annual Outlook Money Awards.

Standard Life Assurance Companyy Standard Life has been looking after the financial needs of

customers for more than 180 years.It currently has a customer

base of over 7 million people who rely on the company for theirinsurance, pension, investment, banking and health-care needs.y It currently manages over 90 billion in assets.

y Leader in the employee benefit market in both the UK and Canada.

y Rated by Standard & Poor's as 'strong' with a rating ofA+ and as

'good' with a rating of A1 by Moodys.

y Winner of numerous prestigious industry awards in the UK,

including:

- Company of the Year for the seventh successive year (Money

Marketing Awards)- Best Pension Provider (2004 and 2005 Money Marketing Awards)

- Best Pension Product (2003 -2005 Money facts Investment, Life &

Pension Awards)

Our group companies


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The partnership

HDFC and Standard Life first came together for a possible joint

venture when they entered the Life Insurance market in January in 1995. Itwas clear that both the companies shared similar values and belief and a

strong relation formed quickly. In October 1995, both the companies

signed a 3 year joint venture agreement.

Around this time, Standard Life purchased a 5% stake in HDFC, furtherstrengthening the relationship.

The next three years were filled with uncertainty, due to changes in

Government and Ongoing delays in getting the IRDA (Insurance

Regulatory and DevelopmentAuthority) Act passed in the parliament.Despite these, both the companies remained firmly committed to theventure.

In October 1998, the joint venture agreement was renewed and additionalresource made available. Around this time Standard Life purchased 2%

stake in Infrastructure Development Finance Co. Ltd. (IDFC). Standard

Life started to use the services of the HDFC Treasury Department toadvice upon their investments in India.


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Towards the end of 1999, the opening of the market looked very

promising. Both the companies agreed that the time was right to move the

operation to the level of action. Therefore, in January 2000, an expert teamfrom the UK joined a selected team from HDFC to form the core project

team, based in Mumbai.

Incorporation of HDFC Standard Life Insurance Company

The company was incorporated on 14th August, 2000 under the name of

Standard Life Insurance Company Limited.

HDFCs ambition from as far back as October 1995, was to be the firstprivate company to re-enter the Life Insurance market in India. On 23rd

September, 2000, this ambition was realized when HDFC Standard Lifewas the only company to be Granted a certificate of registration.

HDFC group is the main shareholder in HDFC Standard Life, with 81.4%ownership while Standard Life 18.6%. Given Standard Lifes existing

investment in HDFC group, this is the maximum investment allowed

under current regulations. HDFC and Standard Life have a long and closerelationship built upon single value and trust. The ambition of HDFC

Standard Life is to mirror and showcase the parent companies and to bethe yardstick by which all other insurance companies in India can be

measured.

Our mission

We aim to be the top new life insurance company in theThis does not just mean being the largest or the mostproductive/competitive in the market; rather it is a combination of several

things like:y Customer service of the highest order

y

Value for money for customery Professionalism in carrying out business

y Innovative products to cater to different needs of differentcustomer

y Use of technology to improve service standards

y Increase in market share

Our Values


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SECURITY:Providing long-term financial security to our policy holders is our

constant endeavor. We shall do this by offering life insurance and

pension products.

TRUST:We appreciate the trust placed by our policy holders in using our products.We will aim to manage their investments very carefully and live undertrust.

INNOVATION:Recognizing the different needs of our customers by offering them a wide

range of innovative products to meet their needs.

Our Vision

The most successful and admired life insurance company, which means

that we are the most trusted company, the easiest to deal with, offer thebest value for money, and set the standards in the

industry.

Our ValuesValues that we observe while we work:y Integrity

y Innovation

y Customer centric

y

People Care One for all and all for oney Team work

y Joy and Simplicity

`PRODUCT INFORMATION

Insurance: The con

Insurance is the comWhen insurance is purchased, the risk of financial loss due to happeningof that uncertain event is transferred from the policy holder to the

insurance company. When the claim arises, company pays a lump sum

amount to the policy holder or to her nominee that will be utilized to

generate income for them. It is important to note that we do not protect the

life of the policy holder but her income earning capacity. We offer plans

Terms of life are hard, but the terms of insurance are easy!!


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that cover the risk of income earning capacity on happening of specified

uncertain events.

Uncertain eventsUncertainty is part of our everyday life. However, all the uncertain events

cannot be insured. As is obvious from the preceding discussion, we focusonly on those uncertain events when income earning capacity is stopped,

which happens due to the following four major events:y Death

y Sickness

y Accident

y Retirement

Insurance products

Today there are many insurance products available in the market. Each

company has its set of products that it offers to the customers. This makesit difficult to keep track of all the products at the same time. A better way

to understand them is by way of classification. All insurance products canbe classified according to four basic categories:

P

I

P

S

This classification is based

categories are classififulfill that need, e.g. productgrowth over the period. Thus,various products but also help

HDFC Standard life insurance products1. Protection plany Term assurance plany Loan cover term assurance plan

2. Investment plany Single premium whole of life plan

3. Pension plany Personal pension plan

y Unit linked pension

PROTECTION INVESTMENT

PENSION SAVINGS


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y Unit linked pension plus

4. Saving plany Endowment assurance plan

y Unit linked endowment

y Unit linked endowment plus

y Mony back plan

y Childrens plan

Investment type of products

In investment type of products, the focus is on maximizing returns for thecustomer over a period of time. In a way, it is opposite to protection type

where the focus on maximizing the risk cover is very low. The objective isto put maximum amount in investment. The underlying principle is tocommit money for a certain period of time and get the benefits of real

long-term growth. The products are usually single-premium policieswhere the entire premium is collected in advance. Surrenders are

discouraged and there is a commitment for a certain minimum of years. Inthe event of death, the term value of the investment is returned.

Pension products

It is another very popular type of product. Along with the risk of an

untimely death or disability, we also have the risk of living too long tooutlive our source of income. In other words, one needs to ensure that shegets a decent income as long as she lives. This is where we have pension

products addressing the need for a comfortable retirement. One can opt foran immediate pension or for a pension at a future date (also called as

deferred pension) one can have a range of options when selecting apension plan. There is a great amount of flexibility when it comes toselecting a pension product. The important point to note is that pension is

a part of ones present income that forms the basis for future consumption.Every year income is accumulated and invested in a pension fund. The

lump sum accumulated then is used for purchasing on the vesting date.

Saving type of products

People like to save. Our saving rate is well above 20% of ourGDP for last

few years. They save for events like childs marriage, education, etc.Savings products aim to strike a good balance between risk cover as well

as returns. It acts as a protection on savings. Sum assured is usually

targeted savings that one looks for. She gets that amount at the end of the


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term along with the bonuses if it is a participating policy. On the

protection side, if any unfortunate event happens during the term, the Sum

assured (targeted savings) is still paid so it encourages a person to save foran event and at the same time it ensures that her savings are protected.

This is the unique advantage of savings through life insurance that noother financial product offers. We find very popular products like

endowment assurances, money back plans in this category.

Protection type of products

A typical protection type of product aims at protecting income earningcapacity of the customers on happening of uncertain events during the

term of the product. These are the pure risk product having no savingelement. Naturally, these products do not have any maturity benefits. High

risk cover at low cost is the unique of this type of product that makes this

category most attractive for those who want high insurance cover without

spending much for it. Usually offered for a definite term, all theseproducts come under 4 broad categories. To understand a product , it isessential to find out the category based on its features. Needless to say, it

will not be possible to compare one product category to another. Each

category is unique and caters to particular needs of the customers.

16 Dec 2003

'Unit-linked Plans are the Future'You have been operating here for a year now and your companys

portfolio is tilted towards unit-linked products. How successful have

products been?

Unit-linked plans are modern products that are consumer friendly and as

anywhere in the world, these are gaining popularity and finding wideacceptance in India as well.Unlike traditional insurance products, customers find unit-linked plansmore transparent, flexible and easy to understand. A customer who buys a

unit-linked policy can far more easily understand the charges he paystowards the savings component, the life cover, and the riders. And he has

the option to choose from different fund options for the investment

component depending on his appetite for risk.Are Indian consumers educated enough to understand the nuances of

a product?

While the concept of such a product is new, its features are easy tounderstand. So, when the concept is explained just once, customers see the

benefits. Also, it helps that mutual funds have been in the country for awhile now and so customers are already aware of units. Once a customer

understands the benefits of unit-linked insurance plans, he is also able tocompare these with traditional insurance products and see that the old

plans are not very transparent.While there is no specific type of person buying unit-linked products, theconsumer at any level is most comfortable if he can follow what is

happening with his investments or contributions. In case of life insurance

products, this is a long-term process of some 20-25 years. With such a


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gets a share of the bonus that the company earns. In this case , there is an

assured return that is benchmarked to the current bond rates (5 per cent

last year).

What has been the performance of unit-linked plans in other

markets?

In a country like Poland, where the markets were opened a little over a

decade ago, we are today the largest private insurance company. The

demand for our unit-linked products is high. Worldwide, the growth of

these products is high when compared to traditional products, anindication of where the market is headed.There are a few people who view unit-linked plans as pure investmentproducts that offer little cover. But this is a myth and customers realize

this when the benefit of these plans is explained to them.

With investment options regulated, one has to be prudent with the moneythat is contributed for the product and has to add value for the business to

be successful. I feel that both developed and developing markets

understand the great value proposition that unit-linked insurance plansoffer. Another factor that tilts the balance in favor of such products is the

tax treatment that the accumulated account attracts. Its tax-free, unlike amutual fund or any other investment, where the gains are taxed.

UNIT LINKED PRODUCTSUNIT LINKED YOUNG STAR PLAN

The HDFC Unit Linked Young Star gives you:

y An outstanding investment opportunity by providing a choice of

thoroughly researched and selected investmentsy Valuable protection to your child in case you are not around

y

Flexible benefit combinations and payment optionsy Flexible additional benefit options such as critical illness cover

y Access to your accumulated fund before maturity

4 EASY STEPS TO YOUR OWN PLAN

Step Choose the premium you wish to invest.


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Step 1 : Choose your regular premium

Minimum regular premium is Rs 10,000/- per year, can be paid:

y Monthly (using Standing Instructions or ECS mandate)

y Quarterly

y Half-yearly

y AnnuallyYou may also choose to pay adhoc Single Premium Top-Up or additional

regular premiums depending on your convenience.

Step 2 : Choose your level of protection

You can choose any amount of Sum Assured with:

y A minimum of 5 times your chosen annual regular premium

y A maximum of 40 times your chosen annual regular premium

Step 3 : Choose additional plan benefits

We offer a range of valuable protection options of secure your family.

You can choose any one of the following benefits:

Life Option Death BenefitLife & Health Option Death Benefit +Critical Illness Benefit

1

Step2

Choose the amount of protection (Sum Assured) you desire.

Step

3

Choose the additional plan benefits you desire.

Step

4

Choose the investment fund or funds you desire.


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LiquidFund

y Extremely

low capitalrisk

y Very stablereturns

10

0

- - Low

Secu

reManaged

Fund

y More capital

stabilitythan equityfunds

y Higherpotential

return than

Liquid Fund

- 100

-Low

Mod

erat

Defensive

Managed

Fund

y Access to

better long-term returns

through

equitiesy Significant

bong

exposurekeeps risks

down

-

70

%

to

85

%

1

5

%

t

o

3

0

Mod

erat

Bala

nced

ManagedFund

y Increased

equity

exposuregives better

long-termreturn

y Bond

exposureprovidessome

stability

-40

%

to

70

%

3

0

%

t

o

6

0

Hig

Equity

Managed

Fund

y Furtherincreased

exposure toequities to

give a better

long-termreturn

y A smaller

bond -0

to

6

0

Ver

high


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holding willaiddiversificati

on and

provide a

little

stability

40

%

%

t

o

1

0

0

%Gro

wthFund

y For thosewho wish to

maximizetheir returns

y 100%investment

in high

quality

Indian

equities

- - 1

0

0

%

Ver

high

Flexible Benefits

Premium

Payments

You can pay your regular premium up to 15 days

after the due date to fit in with your cash flows

Single PremiumTop-Up

Once we have issued your policy, you can investmore than your regular premium, subject to the

following conditions:y You have paid all your regular premiums to date

y Your total Single Premium Top-Ups at any time isnot more than 25% of your total regular premium

paid to date

y Each Single Premium Top-Up amount is at least

Rs. 5,000

PremiumChanges

You can increase, reduce, or stop your regularpremium at any time as long as your policy

maintains the minimum level of life cover. The

minimum increase in regular premium amount isonlyRs. 5,000/- per year and any changes to premiums

will take place from the next premium due date.Changing your

Investment

Decisions

You can change your investment fund choices in

two ways:Switching: You can move your accumulated funds

from one fund to another anytime.


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Flexible Options for your Childrens needs

ELIGIBILITYThe age and term limits for taking out a HDFC Unit Linked

are as shown below:

C

H

A

R

GES

y Premium Allocation Rate

y Fund Management Charge (FMC)

y Surrender Charge

y Other charges

TAX BENEFITS (Based on current tax laws)

Premium Redirection: You can pay your future

premiums into a different selection of funds, as peryour need.

Benefit

Options

Term Period Age at Entry Max A

at

Maturit

(Yrs.)Min Max Min Max

LifeOption 10 25 18 65

75

Life &Health

Option

10 25 18 5565


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Under Section 80C, you can save up to Rs. 33,660 from your tax each year

(calculated on the highest tax bracket) as premiums up to Rs. 1,00,000 are

allowed as a deduction from your taxable income.Under Section 10 (10D), the benefits you receive from this policy are

completely tax-free, subject to the exclusions.

UNIT LINKED PENSION PLAN

The HDFC Unit Linked Pension gives you:

y An outstanding investment opportunity by providing a choice of

thoroughly researched and selected investments

y Provides a post retirement income for life

y Gives you the flexibility to plan your retirement date

y Gives you the freedom to invest premiums as per your preference

3 EASY STEPS TO YOUR OWN PLAN

Step 1 : Choose your retirement age

You can select any age you wish to retire at (Vesting age), between 50years and 75 years.

Step 2 : Choose your premiumYou can choose either a Single Premium Policy or a RegularPremium

PolicyMinimum regular premium is Rs 10,000/- per year, can be paid:

y Monthly (using Standing Instructions or ECS mandate)

y Quarterly

Step

1

Choose your retirement age

Step2

Choose the premium you wish to invest, based on yourretirement needs

Step3

Choose the investment fund(s) you desire


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y Half-yearly

y Annually

The minimum premium for a Single Premium Policy is Rs. 25,000.

Step 3 : Choose your investment fundsIn this plan the investment risk in your chosen investment portfolio isborne by you, which means that the premiums you pay in this plan aresubject to investment risks associated with the capital markets.

We have 6 funds that balance your level of risk and return.

Fun

Details

Asset Class

Risk

&

Retu

rn

Rati

g

Ban

Dep

sits

&

Mon

eyMar

et

Govt

.

Secu

rities&

Bon

ds

E

q

u

it

y

Fund Composition

Liqu

idFund

y Extremely

low capitalrisk

y Verystable

returns

100

%

-

- Low

Secure

Man

agedFund

y

Morecapital

stabilitythan

equity

fundsy Higher

potentialreturn than

-

100

%

-Low

Mod

erate


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LiquidFund

Defe

nsiveMan

aged

Fund

y Access to

betterlong-term

returns

throughequities

y Significant

bong

exposure

keeps risksdown

- 70%

to85%

1

5%

t

o

3

0

Mod

erate

Balanced

Man

aged

Fund

y Increased

equity

exposuregives

betterlong-term

returny Bond

exposure

provides

somestability

-

40%

to

70%

3

0

%

t

o

6

0

High

Equity

Managed

Fund

y Further

increased

exposureto equities

to give abetter

long-term

returny A smaller

bondholdingwill aid

diversifica

tion and

provide alittle

stabilit

-0%

to

40%

6

0

%

t

o

1

00

%

Very

high


26/55

Flexible Options for you and your familys needs

GrowthFund

y For those

who wishto

maximizetheir

returnsy 100%

investmentin high

qualityIndian

e uities

-- 1

0

0%

Very

high

Flexible

Options

Benefits

Premium

Payments

You can pay your regular premium up to 15 days after

the due date to fit in with your cash flows

Single

Premium Top-

Up

Once we have issued your policy, you can invest morethan your regular premium, subject to the following

conditions:y You have paid all your regular premiums to date

y Each Single Premium Top-Up amount is at least Rs.

5,000

Premium

Changes

You can increase, reduce, or stop your regular

premium at any time. The minimum increase inregular premium amount is only Rs. 5,000/- per year

and any changes to premiums will take place from the

next premium due date.

Changing your

InvestmentDecisions

You can change your investment fund choices in two

ways:Switching: You can move your accumulated funds

from one fund to another anytime.

Premium Redirection: You can pay your futurepremiums into a different selection of funds, as per

your need.


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ELIGIBILITYThe age and term limits for taking out a HDFC Unit Linked Pension,as shown below:

C

HA

R

GESy Premium Allocation Rate

y Fund Management Charge (FMC)

y Surrender Charge

y Other charges


y Under Section 80CCC, you can save up toRs. 33,660 from your

tax each year (calculated on the highest tax bracket) as premiums up to Rs.1,00,000 are allowed as a deduction from your taxable income.

CHILDRENS PLANHDFC Childrens Plan

The HDFC Childrens Plan gives you:

y Invaluable financial support to your child

y Helps you customize an ideal plan for your childy Provides you multiple options for multiple benefits

3 Easy Steps To Your Own Plan

Ben

efit

Opt

ons

Term Period

(Yrs.)

Age at Entry (Yrs.) Age at

Vesting(Yrs.)

Min Max Min Max Max Min

Regular

Premium

10 40 18 65 50 75

SinglePremium

5 40 18 70 50 75

Step

1

Choose the amount of targeted savings and policy term using

our Financial Planning ToolStep

2

Choose any one of the 3 plan options as per your childs

requirement


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Step 3 : Premium you need to pay

The table below shown the Indicative Premiums for a male life assuredpaying annual premiums for a Rs 5 lakh sum Assured policy with the

policy maturing when the child is 21 years old (i.e. 20 year term periodand current age of child is assumed to be 1 year).

Age of

Parent

(Yrs.)

Accelerated Benefit

Plan (Rs.)

Maturity Benefit

Plan

(Rs.)

Double Benefit

Plan (Rs.)

30 23,575 22,690 24,085

35 24,045 22,820 24,790

40 24,890 23,055 26,005


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ELIGIBILITY

The age and term limits for the insured parent for taking out the HDFC

Childrens Plan are as shown below:


y Under Section 80C, you can save up to Rs. 33,660 from your tax

each year (calculated on the highest tax bracket) as premiums up to Rs.

1,00,000 are allowed as a deduction from your taxable income.

y Under Section 10 (10D), the benefits you receive from this policy

are completely tax-free, subject to the exclusions.

Customer Service

Premium Payment

This section gives you all the details that you may require to pay your

premium and make it a hassle free experience. Along with variouspremium payment options currently available to you, we have also drawn

up a checklist of details that you will need in case you are paying throughcheque or demand draft.

6 Easy Ways to pay your premium:

Term Period (Yrs.) Age At Entry (Yrs.) Max Age

At

Maturity

(Yrs.)Min Max Min Max

10 25 18 60 75


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At any HDFC SLIC branches

You can deposit Cheque / Demand Draft drawn in favour of HDFC

SLIC at any of the braches during the following business hours:

Monday to Friday : 9.30 AM to 4.30 PM (For Cash)Monday to Friday : 9.30 AM to 5.00 PM (For Cheque)Saturday : 9.30 AM to 12.00 Noon (For Cash & Cheques)Closed on Sundays

Postage / Courier

You can send cheques and demand drafts drawn in favour of HDFC

SLIC to any of our branch offices

Online Payment

You can make online payment of premium anytime and from any location,

at a click of the mouse by using the Online payment facility. It is currentlyoffered to all the policyholders who are registered users of

billjunction.com or have net banking facility with any of the followingbanks - HDFC Bank, ICICI Bank, UTI Bank, State Bank of India,Punjab

National Bank, Union Bank of India.

Drop boxes

You can drop cheques and demand drafts drawn in favour of HDFC SLIC

into any of our drop boxes installed at various locations in various cities.

Electronic Clearing Service (ECS) or Auto Debit facility of

You can also pay renewal premiums through Electronic Clearing Service(ECS) of Reserve Bank of India (RBI) presently available in following 42

cities:

New Delhi, Chandigarh, Kanpur, Lucknow, Jaipur, Mumbai,Panjim,

Pune, Nagpur,Ahmedabad,Baroda, Surat, Indore,Bhopal, Hyderabad,Vijaywada, Vizag,Bangalore, Chennai, Coimbatore, Trivandrum,Kolkatta,Bhubaneswar,Guwahati, Ludhiana,Patna, Manglore,Amritsar,

Jalandhar,Allahabad, Varanasi,Agra, Rajkot, Kochi, Trichur, Jabalpur,Gwalior, Calicut, Jodhpur, Mysore, Raipur, Udaipur

Standing Instructions (SI) Mandate You can also pay your renewal premium through a Standing Instructions

Mandate if you have an account with HDFC Bank anywhere in India

Checklist while paying your renewal premium through

cheque/ demand draft


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y Please mention your policy number and name correctly on thereverse side of the cheque/ demand draft

y We do not accept Post Dated Cheques (PDCs) beyond the next

banking day from date of receipt

y In case of any overwriting on your cheque, please countersign the

same

y As per RBI guidelines, Non MICR Cheques may not be acceptableat few locations. In this scenario, please contact your nearest branch formore detailsy For Unit Linked Polices you can pay using Local Cheques/Demand Drafts

y For other policies you can pay using either Local or Outstation

cheques or Demand Drafts

PART : 2

OBJECTIVE OF STUDYIn the short span of time, since the insurance sector has opened up, HDFC

Standard Life Insurance has, literally, dictated the markets evolution.

Catering to all age and income segments, the company started out with thetraditional insurance policies that were easy to understand. The idea was

entice the customers used to LICs style of functioning.

Soon, HDFC SLIC (HDFC Standard Life Insurance Company) beganexploring new areas. It introduced new products like the market-linked

products where returns are linked to the market performance of the

underlying assets.

HDFC SLIC leads in virtually all parameters:y Size of agent force

y Number of policies sold

y Total sum assuredy Premium income, and

y Productivity of agents


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IMPORTANCE OF THE STUDYHDFC SLIC has grown exponentially over the past three years, making its

mark in a number of segments such as: retirement solutions, child plans,and market-linked plans. The success of the business, thus far, has

reaffirmed the commitment of both the partners HDFC Bank andStandard Life towards achieving the companys vision of being a leader

in life insurance business in India.

HDFC SLIC is the leading private sector life insurance company in India.In December 2003, it crossed the Rs. 1000 crore total premium mark, the

first private life insurer to do so.

So, the research work is important in respect of understanding the

changing insurance sector with special reference to HDFC SLIC. Thestudy is about:y Products of leading private insurer

y Their mode of recruiting financial advisors (FCs), and

y Their approach which made them customer-centric

SCOPE OF STUDY

HDFC SLIC has increased its market share among private life insurers to

nearly 40% from 33% as of end-December. The companys first-year

premium income in the April-March period stood at Rs. 464.6 crore,accounting for 39.3% of the Rs. 1,364 crore premium booked by all

private life insurers together.

Considering the entire life insurance market, including the Rs. 9,780 crore

booked by LIC, HDFC SLICs market share works out to be around

4.17%. The life insurance market continues to be dominated by LIC whichhas about 87.8% of the shares. This is only a marginal dip from its 88.2%

share in end-December. These comparisons are only for the first year ornew business premium.

The gap between HDFC SLIC and the second-in-line private insurer is

vast. In fact, this status has led some analysts to wonder if the company is

not a trifle too aggressive. But other say this has more to do with thecompanys customer-centric focus, its pan-India presence, and superior

risk-management and investment strategies. HDFC SLIC is not, however,


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resting on its laurels.

Companys customer-centric approach is studied during the training

period and the findings of the research work will definitely focus on thepresent condition and future requirement (if any) relating to products of

the company.

RESEARCH METHODOLOGYUNIVERSE OF STUDY

THE SAMPLE

DESCRIPTIVE RESEARCH

DATA COLLECTION

SAMPLE DESIGN USED

TOOLS AND TECHNIQUES

1. UNIVERSE OF STUDY

Jaipur2. THE SAMPLE

The study is based on the data collected from some selected locations injaipur. I have taken a sample of 300 customers. The aim is to know the

views of the people. Due to shortage of time, the sample taken is small

represent the views of all the people. Thus, for the present study, the

sample can be said to be representative of all the people of jaipur.

DESCRIPTIVE RESEARCH

Descriptive research studies are those studies which are concerned with

describing the characteristics of a particular individual, or of a group. In

descriptive research studies, the researcher must be able to define clearlywhat he wants to measure and must find adequate method for measuring it

along with a clear-cut definition of the population he wants to study.Since the aim is to obtain complete and accurate information, the

procedure to be used must be carefully planned. So, I have planned myresearch work, accordingly.

DATA COLLECTION

I have used the following data collection methods during my researchstudy:

y

PRIMARY DATA, andy SECONDARY DATA

PRIMARY DATA: Primary data is that data which is taken directly from

the survey method

SECONDARY DATA: Secondary data is that data which is taken from

manuals, books, journals, and business magazines, and HDFC standardlife insurance, etc. It is also called second-hand data.


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SAMPLE DESIGN USED

Although there are many methods of sampling which can be applied in

research studies, but during the survey, I have applied two methods, whichare as follows:

a) CLUSTER SAMPLING METHOD:

It is difficult and even impossible to identify uniquely each member of thepopulation. Yet it may be possible to identify certain sub-groups with

relative cases.

The cluster is a geographical or social unit; though it may be defined by

other properties. Typical clusters are city blocks, households, familyorganizations, farms, etc.Thus, for example, in a survey of city population, no up-to-date lists of the

residents are available but a map showing blocks and then sample of each

block may be drawn. Count may be taken of those who live in theseblocks. Using cluster sampling for my research work, I have divided thewhole city of New Delhi, from where I have started my survey, which is

Connaught Place, into clusters like first,second, third, and fourth.

b) RANDOM SAMPLING METHOD:

A sampling procedure for which possible combination of two or more

elements have equal chance of being selected is called Simple Random

Sampling.

In general, a simple random sampling procedure of n elements from thepopulation has equal chance of being selected.

Simple random sampling has an important property related to variability

of estimates obtained from such samples which decrease as sample size

increase.During my survey, I adopted random sampling method where I haveselected the customer randomly and asked questions.

TOOLS AND TECHNIQUES:

As we know that collection of data is very necessary for completion of any

research work, so in my survey I have used Questionnaire method forcollecting data.

SWOT ANALYSIS

STRENGTHSThe strengths are:


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y HDFC SLIC is the third largest player in the insurance industry

in India

y It is the largest home loan financing institution in India

y Standard Life is a 100 years old company (founded in UK)

y HDFC enjoys the highest AAA credit rating, which ensures

highest safety of moneyy Mutual Fund

y Personal Loan

WEAKNESSES

The weaknesses are:

y Some customers are not satisfied with the service of HDFC SLIC

y Only 24 branches all over India

y High insurance-period duration

y

High premiumy Low awareness of HDFC SLIC in rural areas

OPPORTUNITYThe opportunities are:

y Huge opportunity in insurance market

y Better products as compared to other industriesy Due to increase in literacy rates, literate people prefer HDFC SLIC

y HDFC SLIC gives opportunity to other businesses to grow in themarket

THREATSThe threats are:

y Tough competition from LIC, ICICI,BAJAJ ALLIANCE, and

BIRLA SUN LIFEy Due to low premium, rural markets prefer LIC

y Threat for HDFC SLIC because over 21 new companies are

entering the market

y Currently, HDFC SLIC is the 3rd player in the market, and themajor threat is to sustain that position in the face of competition


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RESEARCH FINDINGS AND ANALYSISSURVEY FOR AWARENESS OF LIFE INSURANCE

RESEARCH METHODOLOGYThe technique of finding facts from raw data is known as sampling.

SAMPLING:

Sampling is simply the process of learning about the population on thebasis of the sample drawn for it. Under this method, small group of the

universe is taken as the representative of the whole mass and the resultsare drawn. It is a method to make social investigation practicable and easy.

SAMPLE:

A static sample is a miniature picture or cross section of an entire group

or an aggregate from which the sample is taken. A sample is the reflectionof the universe.I have taken a total of 300 samples from the jaipur population.

CLUSTER SAMPLING

Under this method, the total population is divided into some recognizable

sub-division which are termed as clusters and a simple random selection

of these clusters is made and then the survey of each and every unit in the

selected cluster is done.

PRINCIPLE OF CLUSTER SAMPLINGThe principles that are basic to cluster sampling are:

y Clusters should be drawn from a sample which is in tune with the

cost and other limitations of the survey

y The number of sampling unit in each cluster should be

approximately same

Details about cluster sampling from the project:

Age No. of Samples

25-35 10035-45 100

45-55 10055 & above 100


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CONTENTS OF SURVEY

Awareness in Different Age Group

Group No. of Samples

25-35 100

35-45 10045-55 100

55 & above 100

Purpose of Insurance

Group No. of Samples

Businessmen 100Government employees 50

Private employees 50

Degree of Awareness in Different Gender of Society

Male 100

Female 50

FINDINGS OF AGE GROUP (25-35)

Total no. of samples : 50

Area of survey : JAIPUR

Findings

y This age group is having the second highest number of policyholders among all age groups

y Second highest awareness of insurance among people of this agegroup


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Feedback from people

K.I.N.P. : Know about insurance but not taken

any policy

T.P. : Taken policy

N.A.I. : Not aware of insurance

U.T. : Useless thingFINDINGS OF AGE GROUP (35-45)



Findings y This age group is having highest number of policy holders among

all age groups

y Highest awareness of insurance among people


K.I.N.P. : Know about insurance but not takenany policy

T.P. : Taken policy


U.T. : Useless thing

FINDINGS OF AGE GROUP (45-55)


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Area of survey : New Delhi

Findings

y This age group is having the lowest number of policy holdersamong all age groups

y Lowest awareness of insurance among people


K.I.N.P. : Know about insurance but not taken any policy

T.P. : Taken policy



FINDINGS OF AGE GROUP (55 & ABOVE)



Findings


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y This age group is having low number of policyholders among allage groups

y Low awareness of insurance among people


K.I.N.P. : Know about insurance but not taken any

policy

T.P. : Taken policy



PURPOSE OF INSURANCE (BUSINESS CLASS)

Total no. of sample : 5Area of survey : JAIPUR

Findings

The major finding of this part of the research study is that business class

treat insurance mainly as a tool of Investment and Tax Savings. They

spend less on Pension and Life Plans.


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PURPOSE OF INSURANCE(PRIVATE EMPLOYEES)

Total no. of sample : 50


Findings

The major finding of this part of the research study is that Private

employees use insurance mainly as an age old tool of Security and they

spend equally on Child Life, their life and Tax saving.

PURPOSE OF INSURANCE (GOVERNMENT EMPLOYEES)

Total no. of sample : 50

Area of survey : New Delhi

Findings

The major finding of this part of the research study is that Government

employees spend more on their life and Child Life compared to othersections of the society.


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DEGREE OF AWARENESS

AMONG DIFFERENT GENDERS

OF THE SOCIETY

MALE:

No. of sample : 50Area of survey : JAIPUR

FEMALE:


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No. of sample : 50

Area of survey : jaipur

Our Performance vis--vis Competitors

The performance analysis is to present how HDFC SL Unit Linked Funds

are performing against the Benchmark and our Competitor Funds.

We have illustrated how our unit-linked funds available to our Retail Life

Business have performed so far.The products for which these funds are available:

I. HDFC Unit Linked Endowment PlanII.HDFC Unit Linked Young Star Plan

PRIVATE MARKET SHARE RETAIL:

MARCH JUNE, 2008


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(if Yes, name company______________________)

6. Generally, where do you invest your savings?

Preferences Name

y In Banks y In Insurance

y In Mutual Funds

y In Shares

7. Who made the path of investment easy for you?(Name and Contact

No.________________________________________)

8. Do you think Mutual Funds together with Life Insurance, are morehelpful?

Yes/No

9. Are you aware about private life insurance companies?Yes/No

CONCLUSION

PEOPLE HAVING HDFC STANDARD LIFE POLICY


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According to the survey, 22% customers do not have HDFC SLICproducts and 78% customers have HDFC SLIC products. As HDFC SLICrecently entered the insurance sector, in 4 years it has captured a big

market, which is a great achievement for HDFC SLIC.

People buy HDFC SLIC products because it gives them dual benefits. It

ensures the money that people invested in it and gives good rate of return,and secondly, it enables them to sell its products much more effectively in

a short span of time.

GRAPH SHOWING SATISFACTION WITH

HDFC SLIC PREMIUM POLICY

Approximately, 82% customers are satisfied with the premium policy ofHDFC SLIC. It means that bulks of the policy holders are satisfied with

the premium policy of HDFC SLIC. Only a meager percentage of 28%customers are not satisfied with the premium policy.


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This does not have any negative impact on the creditworthiness of the

organization.

SATISFIED WITH REGULAR SERVICE OF

HDFC STANDARD LIFE

According to the survey, 85% of the customers are satisfied with the

regular service of HDFC SLIC, and 15% customers are not satisfied. Theservices such as intimation for payment of due premium in time, and about

other related documents of the policies, fall under this category

MARKET EXPANSION

There has been an overall expansion in the market. This has been possibledue to increased awareness levels, thanks to the large number of

advertising campaigns launched by the players. The scope for expansion is


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still unlimited as virtually all the players are concentrating on large cities

and towns, except for LIC, which made a significant effort to tap the rural

market.

NEW PRODUCT OFFERING

There has been a plethora of new and innovative products offered by thenew players, mainly due to the stability of the customers of the

international partners which range from a large variety of products frompure terms (risk) insurance to unit-linked investment products. Customers

are offered unbundled products with a variety of benefits as riders, fromwhich they are to choose. More and more customers are buying products

and services based on their true needs and not just traditional money back

policies, which are considered very appropriate for long-term protectionand saving. However, there are still some key products to be introduced,

such as, health products.

CHANNELS OF DISTRIBUTION

Till the last two years, the only mode of distribution of life insurance

products was the insurance agents. While agents still continue to be thepredominant distribution channel, today a number of innovative

alternative channels of distribution are being offered to the customer.

Some of them are banc assurance partners, brokers, and direct marketing.

The widespread reach of bank branch network in India could lead to banc

assurance emerging as a significant distribution mechanism.

RECOMMENDATION

VARIETY BASED POSITIONING

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

rather than customer segments. It is a sensible strategy in offering certainproducts and services. In the insurance industry also it is possible toachieve a unique position by focusing on certain category of products. One

such example is Birla Sun Life Insurance, which has been focusing oninvestment related products since its launch in India. Through its superior

fund management capabilities, the insurance company can deliver betterreturns on the investment related products, and, thereby, carve a niche for

itself in a leading position in this segment.

NEED BASED POSITIONING


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This type of positioning is based on the different needs of different groups

of customer. This can be done successfully if a company has uniquestrength to offer particular service to a group of customers to satisfy their

needs better than others.

The insurance needs of customers vary significantly among differentgroups of customers. The insurance needs of young families with small

children will be different than the families in which the bread winner isclose to retirement. However, in India, most of the life insurance

companies have a wide variety of products tailored for different needs ofthe customers, and there is no company known to focus on a particular

customer need

ACCESS BASED POSITIONING

Positioning of customer can also be done in the way by which they are

accessible. Different groups of customers may be accessible by differentways even though they may have similar needs. Access is simply afunction of customer geography or customer scale.

There is excellent opportunity in the insurance industry to employ accessbased positioning by targeting the rural insurance sector. The rural market

for insurance is very different than urban market in terms of needs, income

levels, and penetration of media, and so on. So far, except for LIC, no

player has paid attention or focus on the rural sector.

OSING THE RIGHT STRATEGYCHO

The right strategy is not a matter of positioning choice alone. It involves

the very way the company organizes itself to do business. It is a

configuration of the entire value chain of the organization through a

different set of activities to deliver unique products and services to thecustomer. The set of activities cover all upstream and downstream

activities, from the selection of the product mix, the way the products arepriced, promoted, the type of distribution mechanism used, the waycustomers are services, and so on.

Some life insurance companies focusing on rural market has adopted

innovative means of distribution. Instead of appointing agents as is donetypically, they have used gram sevaks in different villages across the

country to promote life insurance and act as their sales arm. This enabledthem to tap the knowledge of the local people, establish the concept of the

product in their mental filter and ultimately striking a deal.


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BIBLIOGRAPHY

y PHILIP KOTLER (MARKETING)

C.R. KOTHARI (RESEARCH METHODOLOGY)

y TIMES OF INDIA (MAY-JULY, 2008)

y ECONOMIC TIMES (MAY-JULY, 2008)

y www.hdfcinsurance.com

y INSURANCE JOURNALS:

1) IRDA 2007-082) IRDA 2006-07

GLOSSARY

Accident

The accident is defined in the policy document as follows The accident must be caused by violent, external, and visible means and

the cause of injury/injuries is solely independent of any other means.

Accident death benefitBenefit is that which provides for the payment of an additional sum(usually equal to the sum assured of the basic policy) in the event of death

by an accident.

Amount PayableThis refers to the amount that is payable according to the terms and

conditions of the insurance policy to the legal heir. This includes payment


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of agreed payments at regular intervals from a fixed date. This continues

until the death of the individual, on whose life the annuity is bought.

Annuity

An investment option that makes a series of regular payments to an

individual in exchange for a premium or a series of premia.

Asset

Everything owned or due to a person

Balanced Fund

A fund that maintains a balanced portfolio, generally, 60% bonds or

preferred stocks and 40% common stocks.

Bonus

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

as a percentage of the sum assured, is generally declared every year. The

amount is linked

to the profits earned by the insurer. Depending on the time of withdrawal,there are two kinds of bonuses reversionary and cash. A reversionary

bonus can be encased only on maturity of the policy; a cash bonus can be

withdrawn when declaredCapital gainsProfit earned from the sale of stocks, mutual fund units and real estate.

Long-term capital gains arise from assets owned for more than a yearwhile short-term capital gains are made from assets owned for less than a

year.

Claim

Written request by an insured for the insurance company to cover anincurred loss, usually submitted on the companys standard form.

Compound Interest

Interest computed on principal plus interest accrued during the previousperiods of the investment

Date of commencementThe date on which insurance cover begins, following acceptance of the

risk by the insurer.

Death benefit

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

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

Declining term cover

A type of pure life protection insurance policy where the premia remain

the same while the life coverage keeps declining. They are typically used


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to cover the life of a person with a pending loan repayment , like home

loan.

Deferred annuity

An annuity plan where the first annuity payment becomes payable after a

chosen period that exceeds one year.

Dividends

Payments made by companies and mutual funds to shareholders and unit-

holders, respectively, from the income generated by it.

Down payment

The money that a home buyer has to contribute, often at least 15 per cent

of the value of the house, when he is taking a home loan.

Death benefit payable

The amount payable, as stated in a life insurance policy, to the designated

beneficiary(ies) upon the death of the insured. The amount paid is the face

value plus any riders that are applicable, less any outstanding loans.Emergency fund

The money, in the form of liquid investments in bank savings accounts,two-in-one accounts and liquid funds, you need, to take care of

emergencies like a job loss that your insurance policies wouldnt cover

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

on investment. Usually suitable for the risk-averse

Effective rate of interest

The true rate as against the nominal rate, which may be incorrect.

Estate

All assets of a person, both financial-like stocks, bonds, mutual funds andfixed deposits and physical-like a house and gold that can be passed on to

his heirs.

Estate planning

A financial plan to ensure the transfer of all your assets-both financial,such as fixed deposits and stocks and physical, such as home, after your

death to your heirs without any delay or loss.

ELSS (equity-linked savings schemes)

Diversified equity funds that additionally offer a tax deduction underSection 80C on investments up to Rs.1 lakh.EMI (equated monthly installment)

A borrower must make this payment each month towards repayment ofinterest and principal of a loan taken by him.

Equity


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The actual ownership interest in a specific asset or group of assets

EndowmentA type of insurance policy which provides for the face value stated in the

contract to be payable in a fixed date or on the life insurers early death.

EquityA stock or the interest in capital gains received from the ownership of astock.

Financial planning

It covers the essential elements of a persons financial affairs and is aimedat achieving a persons financial goals.

Fixed deposit

Funds placed on deposit in a bank, company or post office at a fixed rateof interest.

Floating rate loanInterest rate charged on a loan benchmarked to a particular lending rate.

The rate gets adjusted during the tenure of the loan as the benchmarkinterest rate changes.

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

employees. Usually the cheapest form of insurance.

Guaranteed additions

The amount paid as returns in assured-return insurance plans. Guaranteedadditions are expressed as a percentage of the sum assured, with the

amount payable being stated by the insurer at the outset.

Hospital cash benefit rider

A rider that provides cover for hospitalization

Immediate annuity

An annuity that starts payments immediately after, or soon after, the first

premium is paid

Insurance

A fund that primarily seeks current income, than growth of capital. It willtend to invest in stocks and bonds that normally pay higher dividends andinterest.

Investments

Assets like fixed deposits, post office savings, bonds and stocks that areacquired for the purpose of earning a return

Investment risks


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The risks that your investments face. These include the risk of interest rate

fluctuations impacting your debt investments or the prices of equities

going down.Level term cover rider

A rider that increases the life cover in non-term plans, up to a maximum of

the sum assured on the base policy. The rider offers death benefit along,

and serves the need for extra protection for a specified time period.

Loyalty additions

Additional benefits (other than guaranteed additions/bonus) paid to

policyholders on maturity of certain investment-based insurance plans for

staying on through its term. Loyalty additions are paid as a percentage of

the sum assured, with the amount depending on the insurers financialperformance.

Money-back plans

A variant of endowment plans in which survival benefits are disbursedthrough the policy term, rather than in a lump sum at the end.

Net asset value (NAV)

The simplest measure of how a scheme is performing, it tells how mucheach unit of it is worth at any point in time. A schemes NAV is its net

assets (the market value of the financial securities it owns minus whatever

it owes) divided by the number of units it has issued.

Nominee

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

in the event of his death.

DECLARATIONThis is to certify that the project entitled Emerging Investment

In Life Insurance Industry at HDFC Standard Life, Jaipur is my

indigenous and original work and that it has not been used for the purposeof awarding any degree or diploma in any other university.

Date:

Place:

RAKESH KATARIA

Date post:	08-Apr-2018
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hdfc report (Repaired)

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