A Marketing Research Project Report

On

Submitted in Partial Fulfillment of the Requirement for Post Graduate Diploma in Business Management

UNDER THE SUPERVISION OF

Mr. Mukesh Kumar Srivastava(Sales Development Manager HDFC SLIC)

SUBMITTED TO: SUBMITTED BY:Mr. Avnish Tyagi Vinay Kumar Dubey(Faculty)LIMT

LLOYD INSTITUTE OF MANAGEMENT & TECHNOLOGY GREATER NOIDA

PREFACE

There are number forces that make marketing an endlessly changing activity.

The constantly activity sociological, psychological and political environment

may represent the uncontrollable marketing factors. To understanding these

factors in better way marketing research is of utmost importance.

This Project Report has been completed in Partial fulfillment of my

Management Program, Post Graduate Diploma in Business Management

(PGDBM) in the company HDFC STANDARD LIFE INSURANCE. The objective

of my project was “TO KNOW THE PUBLIC AWARENESS OF FINANCIAL

PLANNING IN EMERGING INDIAN MARKET.”

HDFC STANDARD LIFE is the name which is working as one of the best private

insurance company in insurance sector.

With such large population and the untapped market of populations insurance

happens to be very big opportunity in India. Today it stands as a business

growing at the rate of 15-20 percent annually. Together with banking services,

It adds about 7 percent to the country’s GDP. In spite of all this growth the

statistics of the penetration of the insurance in the country is very poor. Nearly

80% of Indian populations are without Life Insurance cover and the Health

Insurance. This is an indicator that growth potential for the insurance sector is

immense in India.

CONTENTS

ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

PROJECT OBJECTIVE

RESEARCH METHODOLOGY

a) Type of Research

b) Data Collection

c) Sampling Unit & Size

d) Limitations

Section 1 : INDUSTRY PROFILE

1) Overview & Historical Perspective

2) Insurance Sector Reforms

3) Nature of Industry

4) Indian Insurance Industry

Regulatory Body : IRDA

5) Importance of Liberalization

Market share of various players

6) Current Scenario

7) SWOT Analysis of Industry

Section 2 : COMPANY’S PROFILE

HDFC Ltd. : 1) Introduction

2) Subsidiary & Associate Companies

HDFC STANDARD LIFE

1) Introduction

2) Key Personnel

3) Knowledge Management

Life Stages

4) Product Mix

5) Current Sales

6) Future Plans

Section 3 : MAIN SECTION

1) Financial Planning

2) 360º Financial Planning

3) Consumption Pattern

4) Objective & Sales Procedure

Section 4 : DATA ANALYSIS AND FINDINGS

Section 5 : CONCLUSIONS & RECOMMENDATIONS

APPENDICES

1) Questionnaire

2) Tables

3) Glossary

4) Bibliography

ACKNOWLEDGEMENT

On the successful completion of this project I would like to express my

gratitude to all the people who have helped me throughout the project.

At first, I owe my debt of thanks to HDFC Standard Life, which gave me an

opportunity to do this project work.

I wish to extend my deep and sincere gratitude to Mr. Mukesh Srivastava

(SDM) and Mrs. Shweta Dhanuka (SDM) who provided me with their

guidance from day one and also helped me whole heartedly to achieve the

ultimate goal of the project.

I am also indebted to the Institute, Lloyd Institute of Management &

Technology and its staff members for providing me with this learning

opportunity.

Vinay Kumar Dubey

DECLARATION

The summer project on “AWARENESS OF FINANCIAL PLANNING IN

EMERGING INDIAN MARKET” in “HDFC Standard Life Insurance” is the

original work done by me. This is the property of the institute and use of this

report without prior permission of the institute will be considered illegal and

actionable.

Date :

Place : Vinay Kumar Dubey

EXECUTIVE SUMMARY

Overall, the life insurance and pension sector is set for rapid changes and

growth in the years ahead. Delivering service, building trust and being

innovative are key areas in which any company will have to excel in order to

do well in the long road ahead. Different companies will take different

approaches and it would be myriad of solutions that will be found to delight

the Indian customer.

During the first part, I was given complete classroom training about the

various unit linked as well as the traditional plans and solutions which the

company offers.

Later, Market Research was done through various activities and tele-calling

which are discussed further in the report. Activities led to practical exposure

and taught me the aspects of customer dealing.

Finally, interesting conclusions were drawn out of the data collected regarding

the Awareness of Financial Planning among the people in today’s environment.

It was great experience because selling an insurance product

demands a great deal of confidence and product knowledge.

PROJECT OBJECTIVES

To study the awareness of Financial Planning among the people.

To study the importance of Insurance in today’s scenario.

Brand awareness of various private insurance companies.

Preference among different investment tools.

Purpose of buying insurance.

Preference in choosing channel for buying life insurance.

Quality of service provided by agents and clients satisfaction

level.

Customer’s perception of improvements brought in by entry of

Private Insurance Companies.

To generate leads for Unit Linked Insurance and the Unit Linked Pension Plans, by interacting with walking and existing customers of the company.

RESEARCH MEHODOLOGY

The study of awareness about Financial Planning among the people and

particularly the insurance sector covers data collection through observation,

questionnaire and interview of consumers.

Type of research:

EXPLORATORY :

Type of research carried out was EXPLORATORY in nature; the objective of

such research is to determine the approximate area where the drawback of

the company lies and also to identify the course of action to solve it. For this

purpose the information proved useful for giving right suggestion to the

company.

Data Collection:

Primary data

Secondary data

Data used for the research work was primary in nature.

Sample unit: -

The research process was done by interacting with number of customers

during the activities performed, which included, markets, cold calling,

canopies, etc. Sample Design consists of Random Sampling.

Sample size: - 100 people

Method of collection: -

Field procedure for gathering primary data included observation and interview

schedule in which the questionnaires were filed by the interviewer.

Personal interviews through self administered survey was done to collect the

data, market research was undertaken, that was accomplished by performing

various activities designed.

Research Instrument:

Questionnaire

The questionnaire was formulated by keep in mind the following Points: -

Giving the respondents clear comprehension of the question.

Inducing the respondents to co-operate.

Giving instructions as to what is wanted.

Identifying the needs to be known.

Limitations:

The following were the limitations that were there during the course of the

study:

1. Limited time period.

2. Less number of respondents.

3. Biasness of the respondents.

SECTION 1

INDUSTRY PROFILE

Overview

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

happens to be a mega opportunity in India. It’s a business growing at the rate

of 15-20 per cent annually.

Together with banking services, it adds about 7 percent to the country’s

GDP .In spite of all this growth the statistics of the penetration of the insurance

in the country is very poor. Nearly 80 per cent of Indian population is without

life insurance cover while health insurance and non-life insurance continues to

be below international standards. And this part of the population is also subject

to weak social security and pension systems with hardly any old age income

security. This it-self is an indicator that growth potential for the insurance

sector is immense.

Historical Perspective

The insurance came to India from UK; with the establishment of the Oriental

Life insurance Corporation in 1818.The Indian life insurance company act 1912

was the first statutory body that started to regulate the life insurance business

in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were

been established in India. Then the central government took over these

companies and as a result the LIC was formed. Since then LIC has worked

towards spreading life insurance and building a wide network across the length

and the breath of the country.

Important milestones in the life insurance business in India:

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

regulate the life insurance business.

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

by the central government and nationalized. LIC formed by an Act of

Parliament- LIC Act 1956- with a capital contribution of Rs.5 cr. from the

Government of India.

Important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up- the first company to

transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business

practices.

1972: The general insurance business in India nationalized through The

General Insurance Business (Nationalization) Act, 1972 with effect from 1st

January 1973. 107 insurers amalgamated and grouped into four companies-

the National Insurance Company Limited, the New India Assurance Company

Limited, the Oriental Insurance Company Ltd. and the United India Insurance

Company Ltd. GIC incorporated as a company.

Insurance Sector Reforms

Prior to liberalization of Insurance industry, Life insurance was

monopoly of LIC.

In 1993, Malhotra Committee- headed by former Finance Secretary and RBI

Governor R.N. Malhotra- was formed to evaluate the Indian insurance industry

and recommend its future direction. The Malhotra committee was set up with

the objective of complementing the reforms initiated in the financial sector.

The reforms were aimed at creating a more efficient and competitive financial

system suitable for the requirements of the economy keeping in mind the

structural changes currently underway and recognizing that insurance is an

important part of the overall financial system where it was necessary to

address the need for similar reforms. In 1994, the committee submitted the

report and some of the key recommendations included:

Structure

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

Government should take over the holdings of GIC and its subsidiaries so that

these subsidiaries can act as independent corporations.

Competition

Private Companies with a minimum paid up capital of Rs.1 billion

should be allowed to enter the sector. No Company should deal in both

Life and General Insurance through a single entity. Foreign companies

may be allowed to enter the industry in collaboration with the domestic

companies.

Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be

set up. Controller of Insurance- a part of the Finance Ministry- should be made

independent

Investments

Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than

5% in any company (there current holdings to be brought down to this level

over a period of time)

Customer Service

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

companies must be encouraged to set up unit linked pension plans.

Computerization of operations and updating of technology is to be carried out

in the insurance industry.

STATISTICS (INDIAN & GLOBAL)

This section gives the users important and detailed statistics of the Indian as

well as the Global insurance industry. These statistics would give important

insights of where the respective markets are headed for.

The global life insurance market stands at $1,521.2 billion while the

non-life insurance market is placed at $922.4 billion.

The United States itself accounts for about one-third of the $2443.6

billion global insurance market and Japan stands next with a 20.62%

share.

India takes the 23rd position with US $9.933 billion annual premium

collections and a meager 0.41% share.

Out of one billion people in India, only 35 million people are covered by

insurance.

India's life insurance premium as a percentage of GDP is just 1.77 per

cent.

The income derived by GIC and its subsidiary companies through

investment was Rs.2491.76 crore and the investable fund generated

was Rs.2843 crore in 1999-2000.

Indian insurance market is set to touch $25 billion by 2010, on the

assumption of a 7 per cent real annual growth in GDP.

NATURE OF INDUSTRY

The insurance industry provides protection against financial losses resulting

from a variety of perils. By purchasing insurance policies, individuals and

businesses can receive reimbursement for losses due to car accidents, theft of

property, and fire and storm damage; medical expenses; and loss of income

due to disability or death.

The insurance industry consists mainly of insurance carriers (or insurers)

and insurance agencies and brokerages. In general, insurance carriers are

large companies that provide insurance and assume the risks covered by the

policy. Insurance agencies and brokerages sell insurance policies for the

carriers.

Insurance companies assume the risk associated with annuities and insurance

policies and assign premiums to be paid for the policies. In the policy, the

companies states the length and conditions of the agreement, exactly which

losses it will provide compensation for, and how much will be awarded.

The premium charged for the policy is based primarily on the amount to be

awarded in case of loss, as well as the likelihood that the insurance carrier will

actually have to pay. In order to be able to compensate policyholders for their

losses, insurance companies invest the money they receive in premiums,

building up a portfolio of financial assets and income-producing real estate

which can then be used to pay off any future claims that may be brought.

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

Direct carriers are responsible for the initial underwriting of insurance

policies and annuities, while Reinsurance carriers assume all or part of the

risk associated with the existing insurance policies originally underwritten by

other insurance carriers.

Direct insurance carriers offer a variety of insurance policies.

Life insurance provides financial protection to beneficiaries—usually spouses

and dependent children—upon the death of the insured.

Disability insurance supplies a preset income to an insured person who is

unable to work due to injury or illness

Health insurance pays the expenses resulting from accidents and illness.

An Annuity (a contract or a group of contracts that furnishes a periodic

income at regular intervals for a specified period) provides a steady income

during retirement for the remainder of one’s life.

Property-casualty insurance protects against loss or damage to property

resulting from hazards such as fire, theft, and natural disasters.

Liability insurance shields policyholders from financial responsibility for

injuries to others or for damage to other people’s property. Most policies, such

as automobile and homeowner’s insurance, combine both property-casualty

and liability coverage. Companies that underwrite this kind of insurance are

called property-casualty carriers.

What is Life Insurance?

Human life is subject to risks of death and disability due to natural and

accidental causes. When human life is lost or a person is disabled permanently

or temporarily, there is a loss of income to the household. The family is put to

hardship. Risks are unpredictable. Death/disability may occur when one least

expects it. There are a number of life insurance products which offer protection

and also coupled with savings.

A Term insurance product provides a fixed amount of money on death during

the period of contract.

A Whole Life insurance product provides a fixed amount of money on death.

An Endowment Assurance product provided a fixed amount of money either

on death during the period of contract or at the expiry of contract if life

assured is alive.

A Money Back Assurance product provides not only fixed amounts which are

payable on specified dates during the period of contract, but also the full

amount of money assured on death during the period of contract.

An Annuity product provides a series of monthly payments on stipulated

dates provided that the life assured is alive on the stipulated dates.

A Linked product provides not only a fixed amount of money on death but

also sums of money which are linked with the underlying value of assets on

the desired dates.

There are a variety of life insurance products to suit to the needs of various

categories of people—children, youth, women, middle-aged persons, old

people; and also rural people, film actors and unorganized laborers.

Life insurance products could be purchased from registered life insurers

notified by the IRDA. Insurers appoint insurance agents to sell their products.

As per regulations, insurers have to give the various features of the products

at the point of sale. The insured should also go through the various terms and

conditions of the products and understand what they have bought and met

their insurance needs. They ought to understand the claim procedures so that

they know what to do in the event of a loss.

INDIAN INSURANCE SECTOR

REGULATORY BODY

Insurance is a federal subject in India. The primary legislation that deals with

insurance business in India is: Insurance Act, 1938, and Insurance Regulatory

& Development Authority Act, 1999.

The Insurance Regulatory and Development Authority (IRDA)

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

Bill in Parliament in December 1999. The IRDA since its incorporation as a

statutory body in April 2000 has fastidiously stuck to its schedule of framing

regulations and registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to

the insurance sector and in particular the life insurance companies was the

launch of the IRDA’s online service for issue and renewal of licenses to agents.

Since being set up as an independent statutory body the IRDA has put in a

framework of globally compatible regulations.

MISSION-IRDA

“To protect the interests of the policyholders, to regulate, promote

and ensure orderly growth of the insurance industry and for matters

connected therewith or incidental thereto.”

IMPACT OF LIBERALISATION

The introduction of private players in the industry has added to the colors in

the dull industry. The initiatives taken by the private players are very

competitive and have given immense competition to the on time monopoly of

the market LIC. Since the advent of the private players in the market the

industry has seen new and innovative steps taken by the players in this sector.

The new players have improved the service quality of the insurance. As a

result LIC down the years have seen the declining phase in its career. The

market share was distributed among the private players. Though LIC still holds

the 79% of the insurance sector but the upcoming natures of these private

players are enough to give more competition to LIC in the near future. LIC

market share has decreased from 95% (2002-03) to 81 %( 2004-05).

LIC has the current market share of 79%.

Among the private players ICICI Prudential has the maximum of appx 5.60%

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

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

The following companies have the rest of the market share of the insurance industry.

COMPANY NAME MARKET SHARE

LIC 79.30

ICICI PRUDENTIAL 5.63

BAJAJ ALLIANZ 3.27

HDFC STANDARD LIFE 3.11

BIRLA SUNLIFE 2.32

TATA AIG 1.45

SBI LIFE 1.24

MAX NEWYORK 0.90

AVIVA LIFE 0.82

ING VYSYA 0.66

OM KOTAK LIFE 0.54

AMP SANMAR 0.38

METLIFE 0.33

RELIANCE LIFE 0.05

The liberalization of the Indian insurance sector has opened new doors to

private competition and the new and improved insurance sector today

promises several new job opportunities. With private players now in the

field, there will be innovative products, better packaging, improved customer

service, and, most importantly, greater employment opportunities.

There are a number of options to choose from for a career in Insurance. Ideally

an insurance company will have openings in the following fields:

Actuaries

Underwriter

Surveyor

Investment

Marketing & Distribution

Actuaries

Evaluates the risk for companies to be used for strategic management

decisions.

Actuaries use their analytical skills to predict the risk of writing

insurance policies through the use of mathematical, statistical and

economic models.

An actuary not only fixes the premium rates for new products, but also

revises both products and prices. They calculate costs to assume risk

Underwriters

Insurance underwriters review insurance applications and decide

whether they should be accepted or rejected based on the degree of

risks involved in insuring the people or objects of concern.

In the life insurance business, an underwriter is expected to filter the

"bad or substandard lives". Whereas, in the general insurance segment,

he takes care of risk management.

Agents/Brokers:

Insurance agents may work for one insurance company or as

independent agents selling for several companies.

Insurance agents and brokers can find openings in the health insurance

sector, financial planning services, retirement planning counseling or

even provide other services, for e.g. sell mutual funds, annuities etc.

Surveyor/Loss Assessor:

Surveyors are professionals who assess the loss or damage and serve as

a link between the insurer and the insured.

They usually function only in non life business.

Their job is to assess the actual loss and avoid false claims.

Sales/Marketing:

And who can forget the guys who make and break a brand. They would be

required in a large number in order to promote the number of products that

will be launched by numerous companies in the insurance sector.

CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge untapped

potential for players in the insurance industry. Saturation of markets in many

developed economies has made the Indian market even more attractive for

global insurance majors. The insurance sector in India has come to a position

of very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the

day. Indians, have always seen life insurance as a tax saving device, are now

suddenly turning to the private sector that are providing them new products

and variety for their choice. Life insurance industry is waiting for a big growth

as many Indian and foreign companies are waiting in the line for the green

signal to start their operations. The Indian consumer should be ready now

because the market is going to give them an array of products, different in

price, features and benefits. How the customer is going to make his choice will

determine the future of the industry.

CUSTOMER SERVICE

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

the entry of the foreign players the industry is seeing a lot of competition and

thus improvement of the customer service in the industry. Computerization of

operations and updating of technology has become imperative in the current

scenario. Foreign players are bringing in international best practices in service

through use of latest technologies. The one time monopoly of the LIC and its

agents are now going through a through revision and training programs to

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

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

to go and various customer surveys indicate that the standards are still below

customer expectation levels.

DISTRIBUTION CHANNELS

Till date insurance agents still remain the main source through which

insurance products are sold. The concept is very well established in the

country like India but still the increasing use of other sources is imperative. It

therefore makes sense to look at well- balanced, alternative channels of

distribution.

LIC has already well established and have an extensive distribution channel

and presence. New players may find it expensive and time consuming to bring

up a distribution network to such standards. Therefore they are looking to the

diverse areas of distribution channel to have an advantage. At present the

distribution channels that are available in the market are:

• Direct selling/Retail

• Corporate agents

• Group selling

• Brokers and cooperative societies

• Bancassurance

DIRECT SELLING/RETAIL

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

is the main distribution channel due to the complexity of most

insurance products (Endowment, Whole of Life, Unit Linked). This tends to be

the focus of most companies due to its past success as well as its ability to

deliver the right advice. However, this channel can be expensive and it is a

time consuming sales process. An agent is the public face of an Insurance

company. Hence it is important that this face is always smiling and

presentable and the facts and figures at his/ her command are updated and

correct.

An agent should be a pleasing personality with complete knowledge about the

various plans and solutions which the company has to offer and must also

understand the customer’s psychology well to deal in an efficient manner.

BANCASSURANCE

Bancassurance is the distribution of insurance products through the bank's

distribution channel. It is a phenomenon wherein insurance products are

offered through the distribution channels of the banking services along with a

complete range of banking and investment products and services. To put it

simply, Bancassurance, tries to exploit synergies between both the insurance

companies and banks.

Advantages to banks

Productivity of the employees increases.

By providing customers with both the services under one roof, they can

improve overall customer satisfaction resulting in higher customer retention

levels.

Increase in return on assets by building fee income through the sale of

insurance products.

Can leverage on face-to-face contacts and awareness about the financial

conditions of customers to sell insurance products.

Banks can cross sell insurance products e.g.: Term insurance products with

loans.

Advantages to insurers

Insurers can exploit the banks' wide network of branches for distribution

of products. The penetration of banks' branches into the rural areas can

be utilized to sell products in those areas.

Customer database like customers' financial standing, spending habits,

investment and purchase capability can be used to customize products

and sell accordingly.

Since banks have already established relationship with customers,

conversion ratio of leads to sales is likely to be high. Further service

aspect can also be tackled easily.

Advantages to consumers

Comprehensive financial advisory services under one roof. i.e.,

insurance services along with other financial services such as banking,

mutual funds, personal loans etc.

Enhanced convenience on the part of the insured

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

Innovative and better product ranges

WHAT DOES LIFE INSURANCE HAVE TO OFFER?

Life insurance is many different things to many different people. For some, it is

a premium to be paid on time. For others it offers liquidity since cash can be

borrowed when needed. For the investment-minded, it denotes a constantly

growing capital account and numerous other benefits. 

The contractual guarantee is the promise to pay, backed by one of the oldest

and most stably regulated financial industry operating in the Indian sub-

continent today.

1) Insurance Buys Time and Money

People like to refer to life insurance as time insurance, the reason being that

life insurance proceeds are paid to the insured's beneficiaries in case of death.

The money proffered by life insurance helps buy time to adjust to the change

of circumstances. Insurance provides large amounts of cash that will keep the

lifestyle for the survivors the way it was before the insured's death.

2) Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete

peace of mind. He or she knows that the decision made by him will provide

sound benefits in the future, whether or not the individual may live to see it.

3) Multiple Applications

The future is uncertain for each and every one. No one knows how long he or

she will live. The investment benefit is paid to the insured's beneficiaries after

his death or it can be used during the life as well. Life insurance policy owners

can turn to the cash value of the policy in case of a financial emergency when

all avenues are either blocked or denied.

4) Enduring Elasticity

Since life insurance is flexible enough to serve several needs, the insured can

keep several long-term goals in mind once he or she invests in the insurance

plan. The cash value of the policy can be allocated towards augmenting the

monthly income during the retirement years. Leisure years should be turned

into pleasure years. Permanent life insurance is designed on the concepts of

long-term flexibility.

5) Financial Security

The insurance policy offers contractual guarantees to people looking for peace

of mind when they buy life insurance. Life insurance offers complete financial

security. The purchase of life insurance demonstrates concern for a family's

future financial well being.

6) Regard for Family

The purchase of life insurance clearly displays care and concern for the people

the policy owner loves.

7) Insurance is Safer

No financial institution can do what life insurance does. No industry can back

its products with reserves and surplus as sound as those of the insurance

industry.

The proof of strength and safety that insurance companies have ensured even

under the most adverse of conditions is a matter of pride for the entire

insurance industry. For generation after generation, life insurance has been

acclaimed as the very benchmark of security against which the other

industries are measured.

OPPORTUNITIES FOR INSURANCE COMPANIES

In the now open sector on insurance, the following is what I feel will determine

the success of the company in particular and the industry in general:

A change in the attitude of the population

Indians have always been wary of employing their hard-earned money in a

venture that will pay them on their death. Insurance has always been used as

a Tax saving tool. No more, no less. It is upon the insurers to educate the

people to secure/insure their future against any unknown calamity and make a

shield around their families and businesses.  

An open and transparent environment created under the IRDA.

The reason for this being on the top of our understanding is that when ever we

have seen any sector open up in India there are always grey areas and unsure

policies. These are not exactly what any player, be it Indian or foreign, looks

for. It creates an air of uncertainty in all the decision making process.

Insurance as a sector requires players who are strong financially and are

willing to wait for returns. Their confidence can be bolstered only if there is an

open and a transparent policy guidelines. This will also help the consumers feel

safe that the regulatory is an active one and cares to do everything possible to

keep things under control and help the insurance environment grow maturely.

A well-established distribution network.

To cater to the largest democracy in the world is by no means a cakewalk.

Insurance profits are directly related to number of insured and this is in turn

related to the reach.

Trained professionals to build and sell the product.

It is said that the insurance agent is the best salesman in the world. He makes

you pay, regularly, an amount promising to pay back only on your death. Thus

the players will require an excellent sales team to sell their products in the

now competitive environment. 

Encouragement of new and better products and letting the

hackneyed ones die out.

This will itself ensure the market grows. And that every class/society gets a

product that best suits them.

 

SPECIAL PROVISIONS

The Income Tax Act and Life Insurance policies

Under Section 10(10D), any sum received under a Life Insurance policy (not

being a Key Man policy) is also exempt from taxation. But it is wise to

remember that Pensions received from Annuity plans are not exempted

from Income Tax.

Section 80C provides a deduction up to Rs.1,00,000/-  to an individual

assessee for any amount paid as a premium. 

POLICYHOLDERS GRIEVANCES

Policyholders may have complaints against insurers either in respect of their

policies or their claims. As per Regulations for Protection of policyholders’

interests, 2002, every insurer should have in place, a grievance redressal

system to address the complaints of policyholders. The IRDA has a Grievance

Redressal Cell which plays a facilitative role by taking up complaints against

insurers with the respective companies for speedy resolution. The IRDA

however does not adjudicate on complaints.

SWOT ANALYSIS OF INSURANCE INDUSTRY

STRENGTH

1. Best returns with the added advantage of 100% life insurance coverage.

2. Good option for new investors into the market as all the money is invested

by best fund managers so with less knowledge also they can earn good

returns.

3. Best commission charges paid to the agents which vary from 12% to 35%

which is much higher as compared to mutual funds i.e. , only 2-2.5%.

WEAKNESS

1. HDFC SLIC could not able to match LIC in remote areas services.

2. Misleading facts given by life advisors about the returns of ULIPs.

3. Hidden charges taken by the companies.

4. Less Promotional Campaigns.

OPPORTUNITY

1. 80 percent of Indian population is still under insured. So

there is a big opportunity for insurance companies.

2. As the stock market can be under the mark any time so it can bring loss to

the investors but as in ULIPs there is proper mixture of debt securities and

equity so the loss is incurred during dark trading days also.

3. Unit-linked products are exempted from tax and they provide life

insurance.

4. Increasing consumer awareness about Insurance and its use.

THREAT

1. Cannibalism within the industry by providing misleading figures to the

investors.

2. Govt.’s instability has a long term repercussions affecting company’s

policies and its growth.

CONCLUSION

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

happens to be a mega opportunity in India, which is growing at the rate of 15-

20 per cent annually.

Nearly 80 per cent of Indian population is without life insurance cover while

health insurance and non-life insurance continues to be below international

standards. And this part of the population is also subject to weak social

security and pension systems with hardly any old age income security.

And also the changing attitude and increasing awareness level of the

population is an indicator that growth potential for the insurance sector is

immense.

SECTION 2

COMPANY’S PROFILE

INTRODUCTION

Helping Indians experience the joy of home ownership.

Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since

emerged as the largest residential mortgage finance institution in the country.

The corporation has had a series of share issues raising its capital to Rs. 119

crores. HDFC operates through 75 locations throughout the country with its

Corporate Headquarters in Mumbai, India.

OBJECTIVES AND BACKGROUND

Background

HDFC was incorporated in 1977 with the primary objective of meeting a social

need – that of promoting home ownership by providing long-term finance to

households for their housing needs. HDFC was promoted with an initial share

capital of Rs. 100 million.

Business Objectives

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

country through the provision of housing finance in a systematic and

professional manner, and to promote home ownership. Another objective is to

increase the flow of resources to the housing sector by integrating the housing

finance sector with the overall domestic financial markets..

ORGANIZATION AND MANAGEMENT

HDFC is a professionally managed organization with a board of directors

consisting of eminent persons who represent various fields including finance,

taxation, construction and urban policy & development. The board primarily

focuses on strategy formulation, policy and control, designed to deliver

increasing value to shareholders.

FOUNDER – Mr. Hasmukhbhai Parekh

BOARD OF DIRECTORS

Mr. D S Parekh – Chairman

Mr. Keshub Mahindra – Vice Chairman

Ms. Rene S. Karnad – Executive Director

Mr. K M Mistry – Managing Director

Mr. Shirish B. Patel

Mr. B S Mehta

Mr. D M Sukthankar

Mr. D N Ghosh

Dr. S A Dave

Mr. S Venketaraman

Dr. Ram S. Tarneja

Mr. N M Munjee

Mr. D M Satwalekar

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

of finance, law, accountancy, engineering and marketing.

SUBSIDIARY & ASSOCIATE COMPANIES

HDFC Bank

HDFC Mutual Fund

HDFC Standard Life

Intelenet Global Services Ltd.

HDFC Chubb General Insurance Company Ltd.

HDFC Reality

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.

HDFC Developers Ltd.

HDFC Venture Capital Ltd.

HDFC Ventures Trustee Company Ltd.

HDFC Investments Ltd.

HDFC Holdings Ltd.

Home Loan Services India Pvt. Ltd.

Credit Information Bureau (India) Ltd

HDFC STANDARD LIFE INSURANCE

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

to be granted license by the IRDA to operate in life insurance sector. Each of

the JV player is highly rated and been conferred with many awards. HDFC is

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

both by Moody's and Standard and Poors. These reflect the efficiency with

which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and

Rs. 600,000 Cr respectively.

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

2000. HDFC is the majority stakeholder in the insurance JV with 81.4 % stake

and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and

CEO of the venture.

THE PARTNERSHIP :

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

enter the Life Insurance market, in January 1995. It was clear from the outset

that both companies shared similar values and beliefs and a strong

relationship quickly formed. In October 1995 the companies signed a 3 year

joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further

strengthening the relationship.

In October 1998, the joint venture agreement was renewed and additional

resource made available. Around this time Standard Life purchased 2% of

Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also

started to use the services of the HDFC Treasury department to advise them

upon their investments in India.

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

and both companies agreed the time was right to move the operation to the

next level. Therefore, in January 2000 an expert team from the UK joined a

hand picked team from HDFC to form the core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a

5% stake in HDFC Bank.

COMPANY’S MISSION:

To be the top life insurance company in the market.

This not only means being the largest or the most productive company in the market, but a combination of several things like-

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

COMPANY’S VALUES:

SECURITY: Providing long term financial security to our policy holders

will be our constant endeavor. This is done by offering life insurance and

pension products.

TRUST: Company appreciates the trust placed by our policy holders in

us. Hence, company will aim to manage their investments very carefully

and live up to this trust.

INNOVATION: Recognizing the different needs of our customers,

company will be offering a range of innovative products to meet these

needs.

Company’s mission is to be the best new life insurance company in India and

these are the values that will guide us in this.

KEY MANAGEMENT PERSONNEL

Chairman

Mr. Deepak S. Parekh

Board Of Directors

Mr. K. M. Mistry

Ms. Renu S. Karnad

Mr. A. M. Crombie

Ms. Marcia D. Campbell

Mr. Norman Keith Skeoch

Mr. G. R. Divan

Mr. G. N. Bajpai

Mr. Ranjan Pant

Mr. Ravi Narain

Managing Director & CEO

Mr. D. M. Satwalekar

AUDIT COMMITTEE

Haribhakti & Company

Chartered Accountants

B.K. Khare & Co.

Chartered Accountants

Bankers

HDFC Bank Ltd.

Union Bank of India

Indian Bank

The Saraswat Co-operative Bank Ltd.

Federal Bank

KNOWLEDGE MANAGEMENT

When Should One Go For Insurance?

Your insurance need will change as your life does, from starting to work to

enjoying your golden years and all the stages in between. Each one of these

stages may pose a different insurance need/cover for you. In this section, we

have drawn up the basic life stages and help you analyze various insurance

needs accordingly.

Stage 1 : Young and Single

This is an important stage where one lays down the foundation of a successful

life ahead. Take advantage of the time and power of compounding to ensure

that you build up your dreams, so start saving early.

Your needs:

o Save for a home and wedding

o Tax Planning

o Save for Golden years

Stage 2 - Just Married

Marriage brings about a significant change. New dreams and new

opportunities also bring in additional responsibilities. While both of you look

forward to a happy and secure life , it is equally important to ensure that

eventualities don’t come in the way of shaping your dreams.

Your needs:

o Planning for home / securing your home loan

liability

o Save for vacation

o Save for your first child

Stage 3 - Proud Parents

Once you have children, your need for life insurance is even more. You need to

protect your family from an untoward incident. Ensure your protection

umbrella takes into account the future cost of securing your child’s dream. You

will want life to go on for your loved ones, and having enough life insurance is

a way to help ensure that.

Your needs:

o Provide for children’s education

o Safeguarding family against loan liabilities

o Savings for post-retirement

Stage 4 - Planning for Retirement

While you are busy climbing the ladder of success today, it is important for you

to take time and plan for your life after retirement. Having an early start for

retirement planning can make a significant difference to your savings. Think

about your golden years even before you have reached them. The key is to

think ahead and plan well using your time and money.

Your needs:

o Provide for regular income post retirement

o Immediate Tax benefits

o Lead a secure, independent and comfortable

life style after retirement

PRODUCT MIX

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

need. They cater to both, individuals as well as to companies looking to

provide benefits to their employees.

For individuals, they have a range of protection, investment, pension and

savings plans that assist and nurture dreams apart from providing protection.

One can choose from a range of products to suit one’s life-stage and needs.

For organizations they have customized solutions that range from Group Term

Insurance, Gratuity, Leave Encashment and Superannuation Products.

PRODUCTS FOR INDIVIDUALS

PROTECTION - You can protect your family against the loss of your income or

the burden of a loan in the event of your unfortunate demise, disability or

sickness. These plans offer valuable peace of mind at a small price.

Plans : Term Assurance Plan

Loan Cover Term Assurance Plan.

INVESTMENT - This includes a plan that is well suited to meet your long term

investment needs. We provide you with attractive long term returns through

regular bonuses.

Plan : Single Premium Whole Of Life

PENSION - Our Pension Plans help you secure your financial independence

even after retirement and live a relaxed retired life.

Plans : Personal Pension Plan

Unit Linked Pension

Unit Linked Pension Plus

SAVING - Our Savings Plans offer you flexible options to build savings for your

future needs such as buying a dream home or fulfilling your children’s

immediate and future needs.

Plans : Endowment Assurance Plan,

Unit Linked Endowment,

Unit Linked Endowment Plus,

Money Back Plan,

Children’s Plan,

Unit Linked Youngstar,

Unit Linked Youngstar Plus .

GROUP PLANS

HDFC Standard Life has the most comprehensive list of products for

progressive employers who wish to provide the best and most innovative

employee benefit solutions to their employees. They offer different products

for different needs of employers ranging from term insurance plans for pure

protection to voluntary plans such as superannuation and leave encashment.

Plans: Group Term Insurance with Riders

Group Term Insurance with Profit-Share

Group Unit-Linked Plan

For Gratuity

For Defined Benefit Superannuation

For Defined Contribution Superannuation

Group Leave Encashment Plan

RURAL CUSTOMER - According to research findings, there is keenness

among rural customers to invest in savings cum protection plan with a term of

five years, especially, if the premium amount is low and affordable. Keeping

this in view, HDFC STD> LIFE has plans like:

Plans : Bima Bachat Yojana.

Super Bachat Yojana

DISTRIBUTION OFFICES

In addition to the corporate office at Mumbai, your Company had 169 offices in

over 135 cities/towns in the country. It has a widespread network of Financial

Consultants, Corporate Agents and Brokers servicing customers in these cities

and towns.

FINANCIAL CONSULTANTS

The number of licensed Financial Consultants appointed by your Company

increased from over 23,000 in the previous year to over 33,000 in the current

year. During the year, the Company continued its

CURRENT SALES- HDFC Standard Life

“HDFC STANDARD LIFE PACING AHEAD”

The Financial Express 15th May 2006

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

the period April-March 2005-06, in comparison to the same period 2004-05,

with a new business first year premium of Rs 1,029 crore.

In terms of effective premium income (EPI), which gives a 10% value to a

Single Premium policy and is an internationally-accepted indicator of an

insurance company's performance, the EPI grew by 103% to Rs 887 cr from Rs

436 crore.

HDFC Standard Life's growth in new business is a manifestation of the number

of lives insured as well as an increase in the average premium. For the

individual business, volume measured by the number of lives insured

witnessed a 32% growth.

The average premium also grew by 62% to Rs 27,500 in 2005-06 from Rs

17,000 in 2004-05.

During the year the company issued over 3,97,000 policies and has covered

more than 5,80,000 lives”

Table Showcasing Financial Results:

Parameters

April-March

2004-05

(Rs. Cr)

April-March

2005-06

(Rs. Cr)

Growth

(%)

Total received premium 668.40 1532.21 129.23

    i.  New Business 486.15 1028.94 111.65

    ii. Renewal 182.25 503.27 176.14

Effective Premium

Income (Total) 436.08 887.30 103.47

Group Business Premium

(EPI) 49.40 135.15 173.58

FUTURE PLANS

HDFC has always been market-oriented and dynamic with respect to resource

mobilization as well as its lending program. This renders it more than capable

to meet the new challenges that have emerged. Over the years, HDFC has

developed a vast client base of borrowers, depositors, shareholders and

agents, and it hopes to capitalize on this loyal and satisfied client base for

future growth. Internal systems have been developed to be robust and agile,

to take into account changes in the volatile external environment.

HDFC has developed a network of institutions through partnerships with some

of the best institutions in the world, for providing specialized financial services.

Each institution is being fine-tuned for a specific market, while offering the

entire HDFC customer base the highest standards of quality in product design,

facilities and service.

SECTION 3

FINANCIAL PLANNING

A comprehensive financial advisory service involving financial strategies, tax,

corporate/trust structures, estate planning, legal issues, family law, asset

allocation, asset protection and investment advice.

Financial Planning takes into account:

Desired asset allocation, risk profile and return expectations.

Building cash flows correlating all expenses and income. Inflation and

outflows due to loans are considering in building the financial plan.

Future goals like retirement, housing and children's education / marriage or

other needs.

Why do you need Financial Planning?

You may have many dreams, needs and desires. For example, you could be dreaming of:

Owning a new car,

Buying a dream house,

Providing your children with the best education,

Planning a grand wedding for your children

Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how many

of these dreams can you hope to turn into reality? By planning well, you can

utilize your limited resources to the fullest.

EXPERIENCE THE POWER 360º FINANCIAL PLANNING

The only thing permanent in life is change. Times change. People change. So

does life. You expect life to be much better tomorrow than it is today.

Tomorrow, you hope to fulfill all your dreams and aspirations. But what

happens if things take an untoward turn? Or, if there is an eventuality?

Perhaps it's time for you to change the way you plan your investments...

                                                                                                                             

How will 360° Financial Planning help?

Instead of investing in an ad-hoc manner, 360° Financial Planning helps you

take a holistic, all-round view. Briefly, 360° Financial Planning comprises:

Investment Planning

Cash Flow Planning

Tax Planning

Insurance Planning

Children’ Future Planning

Retirement Planning

INVESTMENT PLANNING: To make your wealth grow

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

care of emergencies, you should start thinking about investing and to make

your money grow.

Investment Planning Service includes:

Risk Profiling

Asset Allocation and Portfolio Construction

Creation and Accumulation of Wealth through Systematic Investment

Plans (SIP)

Regular review of progress and Portfolio Rebalancing

CASH FLOW PLANNING: To provide for assets and meet the periodic cash requirements

In simple terms, cash flow refers to the inflow and outflow of money. It is a

record of your income and expenses.

Cash flow planning refers to the process of identifying the major expenditures

in future (both short-term and long-term) and making planned investments so

that the required amount is accumulated within the required time frame.

TAX PLANNING: To save on taxes and increase your income

Proper tax planning is a basic duty of every person which should be

carried out religiously.

According to the Income Tax Act, 1961, One will be eligible for Tax Benefits

under Section 80C and Section 10(10D) of the act.

One has to compare the advantages of several tax saving schemes and

depending upon your age, social liabilities, tax slabs and personal preferences,

decide upon a right mix of investments, which shall reduce your tax liability to

zero or the minimum possible.

INSURANCE PLANNING: To protect yourself, your family and your Assets.

"Insurance is not for the person who passes away, it for those who

survive," goes a popular saying that explains the importance of Insurance

Planning.

It is extremely important that every person, especially the breadwinner, covers

the risks to his life, so that his family's quality of life does not undergo any

drastic change in case of an unfortunate eventuality. Insurance Planning is

concerned with ensuring adequate coverage against insurable risks.

CHILDREN'S FUTURE PLANNING: To give your children a financially secure

future

Like every parent, you too must be overjoyed to watch your child grow. All

parents want to give the best possible upbringing to their children. This

includes good education and security, in case of any eventuality. Soon, your

little bundle of joy will grow up, and it will be time to provide for his or her

higher education and wedding.

The purpose of Children's Future Planning is to create a corpus for foreseeable

expenditures such as those on higher education and wedding, and to provide

for an adequate security cover during their growing years.

RETIREMENT PLANNING: Because retirement is a time to relax, not to get worried

Some like it. Some don’t. But retirement is a reality for every working person.

Most young people today think of retirement as a distant reality.

However, it is important to plan for your post-retirement life if you wish to

retain your financial independence and maintain a comfortable standard of

living even when you are no longer earning. This is extremely important,

because, unlike developed nations, India does not have a social security net.

CONSUMPTION PATTERN

*Source-Business world magazine 2nd week April 2006

The consumption pattern is determined by the income so more would be the

income more would be the consumption. The consumption though can differ in

terms of areas where the money is actually spent. The above representation

tells us the consumption pattern of the consumer in India i.e. where do they

actually invest their money and in what proportion do they spend in various

areas. The chart shows that people are spending 6.9% of their savings into

savings and investments.

40.10%

4.10%8.80%

6.90%

6.60%

3.90%

10.80%

2.30%

7.60%

2.10%0.80%

1.60%4.60%

Food & Grocery

Home Textiles

Personal Care

Saving & Investment

Clothing

Consumer Durable

Vacation

Eating out

Footwear

Movies & Theater

Entertainment

Accessories

Books & Music

FIRST CONVERSATION

APPOINTMENT

FILLING THE PROPOSAL FORM

COLLECT THE REQUIRED DOCUMENTS AND THE FIRST PREMIUM

Follow Up

Follow Up

OBJECTIVE: To generate leads for various Unit Linked Plans offered

by the company, by interacting with walking and existing

customers and to know the awareness level of Financial

Planning among them.

SALES PROCEDURE :

STEP 1: FIRST CONVERSATION WITH A KNOWN OR AN UNKNOWN CUSTOMER

This is the first time, when you interact with a person and try to get the

information from him about the industry or the company and understand the

customer’s insight i.e. what actually does a customer expects from the

companies.

The objective was to know the awareness about Financial Planning among the

customers and this was done by getting a questionnaire filled by the people.

The various activities performed were:

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

collected the data.

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

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

people regarding their views about the industry.

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

working in BPOs and other IT companies.

4) TELE-CALLING: This was random calling from the data base

provided by the company and the aim was to collect

information from them.

5) CORPORATE PRESENTATION: A presentation was arranged for the

employees of VED RAM AND SONS (Paras), to make them aware about

the importance of Financial Planning in today’s unpredictable

environment.

STEP 2: APPOINTMENT

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

then followed up and an appointment is fixed for further details.

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

by the company. The customer is informed about the procedure and the

options he can opt for like:

1) Choose the premium he wish to invest

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

mode, quarterly mode, or monthly mode.

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

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

a) Life option Death Benefit

b) Life & Health option Death Benefit + Accidental Death Benefit

c) Extra Life & Health option Death Benefit + Critical Illness Benefit + Accidental Death Benefit

5) Choose the Investment funds or funds one desires.

The various funds available are:

Liquid Fund

Secure Managed Fund

Defensive Managed Fund

Balanced Managed Fund

Equity Managed Fund

Growth Fund

6) Other information like:

a) Tax Benefit

b) Various Charges

c) Switching option

d) Surrendering

e) Terms & Conditions etc.

STEP 3: FILLING THE PROPOSAL FORM

After the second step, the interested customers are required to fill the

proposal form which requires the following information:

b) Personal details of the policy holder,

c) Personal details of Beneficiary or Nominee

d) The Premium amount selected

e) The Term of the policy

f) The Fund choice for investment

STEP 4 : COLLECTING THE DOCUMENTS

Once the form is filled all the necessary documents are collected like :

a) Address proof,

b) DOB certificate etc.

And also the first premium amount in form of cheque or cash is collected.

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

customer is required to read the documents carefully.

SECTION 4

SAMPLE SIZE: 100

Sample was collected on Random Basis

AGE DISTRIBUTION

AGE DISTRIBUTION(yrs.)

35%

41%

24%Below 30

31 - 45

Above 45

Highest number of Respondents (41%) from Age group 31 to 45

yrs.

35% respondents are of age below 30 yrs, small percentage of

which is unemployed.

MARITAL STATUS

MARITAL STATUS

19

4

16

37 24

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Below 30 31 - 45 Above 45

AGE(yrs)

SINGLE MARRIED

Total number of single respondents – 23

Total number of married respondents – 77

INCOME DISTRIBUTION

INCOME DISTRIBUTION(Annual in Rs.appx.)

16

13

5

1

7

12

12

10

0

6

12

6

<1.5 lacs

1.5 - 3 lacs

3 - 5 lacs

> 5 lacs

INC

OM

E

Below 30 31 - 45 Above 45

Highest, 16 respondents in income bracket below 1.5 lacs,

which mainly comprises of age group below 30 years.

Respondents of the age group 31-45 yrs, lie in all the income

slabs.

Minimum, 6 respondents in income bracket of above 5 lacs,

which are in age group of above 45 years.

ARE YOU AWARE ABOUT FINANCIAL PLANNING ?

98%

2%

0

10

20

30

40

50

60

70

80

90

100

NO

OF

PE

OP

LE

DO YOU KNOW WHAT IS FINANCIAL PLANNING ?

YES

NO

98% of the respondents were aware about Financial Planning.

BRAND RECALL

BRAND RECALL

100

96

92

8286

72

64

75

71

6051

LIC

ICICI Prudential

HDFC Std Life

TATA AIG

BIRLA SUN LIFE

KOTAK MAHINDRA

SBI LIFE

AVIVA

MAX NEW YORK

METLIFE

INGVYSYA

100 % respondents mentioned first name to be LIC

Among private players, ICICI Prudential has the highest

Brand Recall i.e. 96%

HDFC Standard life has Brand Recall of 92%

INVESTMENT PREFERENCE

INVESTMENT PREFERENCE

11%18%

21%

9%

20%

21%

Banks & Postoffice

Share Market

Insurance

Bonds

Mutual Funds

Real Estate

21% respondents prefer banks and post office schemes as an

investment tool preference.

Respondents of age group below 30 years prefer Mutual Funds, as

they provide higher returns than banking investment tools.

Insurance ranks 2nd as an investment tool choice, which itself

includes various protection, saving and pension plans.

Govt. Bonds & securities are mostly preferred by people of higher

age group rather than young generation.

Property as an investment option is most lucrative choice.

However it is important to mention that majority of respondents

are in age group of above 30 years and people with high income

bracket prefers to invest in Real Estate.

INSURED PERCENTAGE

ARE YOU INSURED?

87%

13%

YES

NO

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

family members.

So we had 13 % of potential customers to approach.

COMPANY PREFERENCE

COMPANY PREFERENCE(in %)

55% 30% 15%

0 20 40 60 80 100 120

1

ONLY LIC BOTH ONLY PVT. COs

55% of respondents have insurance cover provided by LIC only

15% of respondents have insurance cover provided by Private Cos.

only

Whereas 30% have got insurance from both LIC and Private

Companies.

Total number of LIC policies sums up to 85% and total number of

Pvt. Companies policies sold sums up to 45%.

Data provides that though LIC is still got a maximum market share

but Private Companies are making a fast move in the market.

TYPE OF PLAN BOUGHT

TYPE OF PLAN

26, 29%

20, 23%

24, 28%

17, 20% MONEY BACK

ENDOWMENT

PENSION PLAN

ULIPs

Money back Policies have been most popular and also the

endowment plans.

As people today are more aware about financial planning, so

people of the age 30 years have planned for their Retirement now.

ULIPs are fast gaining popularity as they provide investment

benefit with Insurance.

PURPOSE OF BUYING INSURANCE

PURPOSE OF BUYING INSURANCE

52%

11%

23%

14%

0 10 20 30 40 50 60

Risk Cover

Investment

Tax Benefit

RetirementPlanning

Risk cover remains the most important purpose for buying

insurance followed by option as Tax saving tools.

Retirement Planning in a early period is also gaining the market

share.

ULIPs are responsible for increasing popularity of insurance as an

investment tool

DISTRIBUTION CHANNEL PREFERENCE

CHANNEL PREFERENCE

56 17 14 9 4

0 20 40 60 80 100 120

1

Known/Current Advisor Friends & Relatives

Group Insurance BanccassuranceTelesales/unknown Advisor

According to the data, known/current Advisors remains the 1st

choice for buying Insurance.

In retail also known Advisors are preferred over referrals.

Bancassurance is emerging as a popular option for buying life

Insurance.

Group insurance is a channel which customers expect but it is not

so popular because only few employers have taken the initiative.

Buying insurance from a unknown person or getting a phone call is

still not preferred by most of the people

THE BARRIERS FACED DURING THE PROCESS: The Attitudinal Barriers To Purchasing …..

• Death - a taboo topic for discussion

“It’s quite ashubh talking about death”

• The belief in karma … destiny

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

The Product/ Service Barriers ……

• Liquidity

“What if I need my money urgently for some medical illness?”

• Service quality of the Agent

“He disappears after he takes the first premium”

• Sanctity of the contract

“What if my dependents do not get the money once I die?”

Charges

“Its better to invest in Mutual Funds, the charges there are very less”

The Other Barriers….

Unsure about Pvt. Companies

Low rate of return

“Better to put my money in PPF, at least I get fixed returns”

Money gets tied up

High premiums

SECTION 5

CONCLUSION

The various conclusions drawn from the project are:

There has been a tremendous change in the insurance industry. And with it

there has been continuous growth in this sector both in Indian as well as world

context.

The opening up of the insurance sector has changed the whole look of the

industry. While the LIC, in order to face the competition is coming up with new

strategies. New private players are leading the sector due to their strategic

management and tailored made projects.

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

opting for LIC plans are more as compared to other private players’ but the

latter are gaining momentum in the market day by day.

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

rising literacy rates, and growth of service sector. In-fact opening up of the

insurance sector is an integral part of the liberalization process being persued

by many developing countries.

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

product any earning member of a family must have. Having said this, a well-

diversified portfolio is one of the first rules of financial planning, and as such

one should consider different instruments as the ability to save increases.

Possible investment options range from bank deposits and government small

saving schemes to mutual funds, stocks and property.

Certainly ULIPs successfully combine the first and most important need of

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

All financial products have a certain amount of risk and charges, be it a mutual

fund, property, or even a bank deposit. It would be unrealistic to assume that

the features and benefits of a ULIP come at no cost, though the charges are

considerably lower than that of a traditional product.

In fact, the very reason the product is transparent is because the customer

knows the charges and risks.

There is no right or wrong in this. The success of marketing insurance depends

on understanding the social and cultural needs of the target population, and

matching the market segment with the suitable intermediary segment.

All intermediaries can’t sell all lines of business profitably in all markets. There

should be clear demarcation in the marketing strategies of the company from

this perspective. Clients should also receive price differentials for using

different channels.

The intermediaries need to be empowered with the right learning, training and

sales tools and technology enablers. Coupled with the right product mix, this

will help the insurers to survive and flourish in this competitive market

scenario.

So lets conduct this business with utmost economy with the spirit of trusteeship; thereby making insurance widely popular.

RECOMMENDATION Positioning insurance as a means to fulfilling one’s duties during one’s

lifetime.

Fears relating to thefts, ailments, death could be addressed through

‘sensitive’ communication

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

testimonials, positioning as “worry free”.

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

rather than a financial investment.

Lack of understanding: Training of Channels

To provide quality advice on products best suited

Lack of Knowledge: Ease of Process, simplifying the product and the

procedure

Need to promote the quality of awareness

The benefits: Leverage on Risk Protection or Returns oriented or

both

The product: catering to life stages

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

Insurance market which not only faces the problem of securing and

retaining customers in an increasingly competitive marketplace but also

experiences the need for heightened relevance of the brand proposition in

a world where brand has been termed the new religion.

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

wake of competition insurance companies have to do a considerable brand

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

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

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

credible positioning that springs from the organization’s history. The brand

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

Focus on different segments to survive and thrive in a competitive

environment. Each company has to choose its own unique positioning

based on its unique strengths. Below-mentioned positioning alternatives

can be worth considering.

VARIETY-BASED POSITIONING

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

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

have distinctive advantages or strengths in offering certain products and

services. In the insurance industry too, it is possible to achieve a unique

position by focusing on certain category of products.

NEEDS-BASED POSITIONING

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

differing needs of different groups of consumers. This can be done

successfully if a company has unique strengths to service a group of

customer needs better than others.

The insurance needs of customers vary significantly for different groups of

customers. The insurance needs of young family with small children will be

quite different from that of a family in which the income-earner is close

to retirement. However, in India most of the life insurance companies have

a wide variety of products tailored for different customer needs and there is

no company focusing on a particular customer need.

ACCESS-BASED POSITIONING

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

That is different groups of customers may be accessible in different ways

even though they may have similar needs. Access is typically a function of

customer geography or customer scale. There is excellent opportunity in

the insurance industry to employ access-based positioning by targeting the

rural insurance sector.

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

in terms of needs, income levels and distribution (seasonality, for example),

penetration of media and so on. Rural market can be a highly profitable

position if one is able to carefully plan and tailor an entire set of low-cost

activities of advertising, distribution, and product design etc. to successfully

exploit the potential.

Questionnaire Glossary Bibliography

QUESTIONNAIRE

“Awareness of Financial Planning and Consumer’s Perception about Insurance Industry”

Name:________________________

Age:______

Gender: M F F

Marital Status: Married Single

Occupation : ___________________

Contact No : __________________

Annual Income (appx. in Rs.)

Upto 1.50 lacs 1.50 lacs-3 lacs

3 lacs-5 lacs Above 5 lacs

Q1) Are you aware about ‘what is financial planning’?

YES NO

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

1) ________________ 4) ________________ 2) ________________ 5) ________________ 3) ________________ 6) ________________

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

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

Banks Share Market

Insurance Bonds & Securities Mutual Funds Real Estate/Property

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

YES NO

(If no, switch to Q 9 )

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

LIC ICICI PRUDENTIAL

BIRLA SUNLIFE ING VYSYA

BAJAJ ALLIANZ SBI LIFE

HDFC STD. LIFE TATA AIG

MAX NEW YORK LIFE AVIVA

RELIANCE KOTAK MAHINDRA

MET LIFE OTHER ____________ (specify)

Q7) Which type of plan did you buy?

Money Back Plan

Endowment Plan

Pension Plan

ULIP

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

a) PROTECTIONOF FAMILY

b) TAX BENEFIT

c) INVESTMENT

d) RETIREMENT PLANNING

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

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

2) Advisors referred by friends/family

3) Telesales and subsequent visit by unknown Advisor

4) Schemes offered by your bank (Bancassurance)

5) Group Insurance Policies offered by your employer

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

YES NO

Q11) How many dependents do you have?

<2 2-4 4-6 >6 Q12) Do you really think insurance cover in todays scenario is not essential?

_____________________________________________________

_____________________________________________________

THANK YOU FOR YOUR CONTRIBUTION

GLOSSARY

Accident Benefit

An add-on with a life policy. It compensates a policyholder in the event of

death or injury by accident

Annuity

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

in exchange for a premium or a series of premium.

 

Asset allocation

How your investments are spread across various asset classes

 

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 encashed only on maturity of the policy; a cash

bonus can be withdrawn when declared

 

Capital gains

Profit earned from the sale of stocks, mutual fund units and real estate. Long-

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

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

 

Corpus

The amount of money available with a scheme for investing. If already

invested, the corpus is the current value of the scheme’s portfolio.

 

Cover

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

 

Critical illness rider

A rider that provides a policyholder financial protection in the event of a

critical illness

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) less outstanding loans.

 

Endowment plans

An insurance plan that provides a policyholder risk cover and some return on

investment. Usually suitable for the risk-averse

 

ELSS (equity-linked savings schemes)

Diversified equity funds that additionally offer a tax deduction under Section

80C on investments up to Rs.1 lakh.

Financial planning

It covers the essential elements of a person’s financial affairs and is aimed at

achieving a person’s financial goals.

 

Group Insurance

An insurance policy taken out by employers to provide life cover to their

employees. Usually the cheapest form of insurance.

 

Insured

The policyholder: The person who buys an insurance policy

 

Insurer

The insurance company

 

Investments

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

acquired for the purpose of earning a return

 

Liquidity

The quality of assets that can be easily and quickly converted into cash

without any, or significant, loss in value.

 

Lock-in period

The period of time for which investments made in an investment option cannot

be withdrawn.

 

Maturity date

The date on which a policy term or fixed-income investment like fixed deposit

or bond comes to an end.

 

Money-back plans

A variant of endowment plans in which survival benefits are disbursed through

the policy term, rather than in a lump sum at the end.

 

Net asset value (NAV)

The simplest measure of how a scheme is performing, it tells how much each

unit of it is worth at any point in time. A scheme’s 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.

Pension Plan

Investment products offered by insurance companies and mutual funds that

required the investor to make defined contributions over regular periods,

mostly every year. The contributions are invested according to a pre-decided

investment plan. At retirement, the accumulation is paid out through regular

pay-out options.

 

Policy

The legal document issued by an insurance company to a policyholder that

states the terms and conditions of an insurance contract.

 

Policy term

The period for which an insurance policy provides cover

 

Post office schemes

Also known as Small Savings schemes, they are offered at post offices and

carry the highest returns among fixed income instruments. Government

backing makes these instruments like Public Provident Fund (PPF), National

Savings Certificate (NSC), Kisan Vikas Patra (KVP) and Post Office Monthly

Income Scheme (POMIS) risk-free

 

Premium

The amount paid by the insured to the insurer to buy cover

 

Riders

Additional covers that can be added to a life policy, for a cost

Sum assured

The amount of cover taken under a life insurance policy, it is the minimum

amount that will be paid on death of the policyholder during the policy term.

 

Surrender value

The amount payable by the insurer to the owner of an investment-based plan

in case he opts to terminate the policy after three years (the mandatory lock-in

period) but before its maturity date. The surrender value will be the premia

paid till date minus surrender charges and any outstanding loans due.

 

Term plans

A plan that provides life cover for a specified period of time, but no return on

the premium paid

 

Vesting date

In pension plans, it is the date from which the policyholder starts receiving

pension. In children’s plans, it is the date from which a child becomes the

owner of a policy taken out in his name (generally, around his 18th birthday).

  

Waiver of premium rider

A rider that waives the premia payable on the base policy and other riders in

certain circumstances mostly related to death, disability or injury. An

important feature especially for investment products such as children’s

policies.

  

Will

A document that designates the assets of a person-both financial and physical-

to various family members and other heirs.

 

Whole-life plans

Class of life insurance policies that provide cover through your lifetime.

BIBLIOGRAPHY

Websites

www.rbi.org.inwww.irdaindia.orgwww.banknetindia.comwww.hdfcinsurance.comwww.businessworldonline.com

www.google.com (search engine)

Other References:

Brochures of various plans