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EXECUTIVE SUMMARYHDFC Standard Life insurance is the oldest life insurance company in the world. It is the
largest insurer in the UK and is the 28 th largest company in the world. In India, the
company is marketing life insurance products and unit linked investment plans. From my
research at HDFC SLIC, I found that the company has a lot of competition from other
private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition
from LIC. To compete effectively HDFC SLIC could launch cheaper and more reasonable
products with small premiums and short policy terms (the number of years premium is
to be paid). The ideal premium would be between Rs. 5000 Rs. 25000 and an ideal
policy term would be 10 20 years.
HDFC must advertise regularly and create brand value for its products and services.
Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use television
advertisements to promote their products. The Indian consumer has a false perception
about insurance they feel that it would not benefit them if they do not live through the
policy term. Nowadays however, most policies are unit linked plans where a customer is
benefited even if their death does not occur during the policy term. This message
should be conveyed to potential customers so that they readily invest in insurance.
Family responsibilities and high returns are the two main reasons people invest in
insurance. Optimum returns of 16 20 % must be provided to consumers to keep them
interested in purchasing insurance.
On the whole HDFC standard life insurance is a good place to work at. Every new recruit
is provided with extensive research on unit linked funds, financial instruments and the
products of HDFC. This research enables an advisor to market the policies better. HDFC
was ranked 13 in the Best Places to Work survey. The company should try to create
awareness about itself in India. In the global market it is already very popular. With an
improvement in the sales techniques used, a fair bit of advertising and modifications to
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the existing product portfolio, HDFC would be all set to capture the insurance market in
India as it has around the globe.
TABLE OF CONTENTS
Introduction to Insurance 5
Research Design 10
Company Profile of HDFC SLIC 16
Company Profile of Tata AIG LIC 29
POPs and PODs 33
Competitive analysis 38
Marketing problems 43
Analysis and Interpretation 46
Future line of research 63
Conclusion 65
References 67
Appendix 68
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ACKNOWLEDGMENTI would like to thank my project guide Mr. B. K. Panda, Sales Development Manager
HDFC Standard Life Insurance, New Delhi for guiding me through my summer internship
and research project. His encouragement, time and effort are greatly appreciated.
I would like to thank Prof. Varun Arya, Prof. M. M. Mehta and Mr. Sanjay Diddee for
supporting me during this project and providing me an opportunity to learn outside the
class room. It was a truly wonderful learning experience.
I would like to dedicate this project to my parents. Without their help and constant
support this project would not have been possible.
Lastly I would like to thank all the respondents who offered their opinions and
suggestions through the survey that was conducted by me in Jodhpur.
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CHAPTER I
INDIAN INSURANCEINDUSTRY
AN OVERVIEW
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THE INSURANCE INDUSTRY IN INDIAAN OVERVIEW
With the largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. Its a business growing at the rate of 15-20
per cent annually and presently is of the order of Rs 2060.41 billion (for the financial
year 2011 2012). Together with banking services, it adds about 8.2% to the countrys
Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and
funds available with LIC for investments are 8% of the GDP.
Even so nearly 63% of the Indian population is without life insurance cover while healthinsurance and non-life insurance continues to be below international standards. A large
part of our population is also subject to weak social security and pension systems with
hardly any old age income security. This in itself is an indicator that growth potential for
the insurance sector in India is immense.
A well-developed and evolved insurance sector is needed for economic development as
it provides long term funds for infrastructure development and strengthens the risk
taking ability of individuals. It is estimated that over the next ten years India wouldrequire investments of the order of one trillion US dollars. The Insurance sector, to
some extent, can enable investments in infrastructure development to sustain the
economic growth of the country. (Source: www.indiacore.com)
KEY MILESTONES1912: The Indian Life Assurance Companies Act enacted as the first statute to regulatethe life insurance business.
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1928: The Indian Insurance Companies Act enacted to enable the government tocollect statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended by the Insurance Act with theobjective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were taken overby the central government and nationalized. LIC was formed by an Act of Parliament-
LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.
PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA
The life insurance industry in India grew by an impressive 49.78%, with premium
income at Rs. 2060.41 billion during the fiscal year 2011-2012. Though the total volume
of LIC's business increased in the last fiscal year (2011-201) compared to the previous
one, its market share came down from 83.75% to 79.91%.
The 17 private insurers increased their market share from about 15% to about 19% in a
year's time. The figures for the first two months of the fiscal year 2011-12 also speak of
the growing share of the private insurers. The share of LIC for this period has further
come down to 75 percent, while the private players have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign players have
entered the market. The restriction on these companies is that they are not allowed to
have more than a 26% stake in a companys ownership.
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7
billion have poured into the Indian market and 19 private life insurance companies have
been granted licenses.
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Innovative products, smart marketing, and aggressive distribution have enabled
fledgling private insurance companies to sign up Indian customers faster than anyone
expected. Indians, who had always seen life insurance as a tax saving device, are now
suddenly turning to the private sector and snapping up the new innovative products on
offer. Some of these products include investment plans with insurance and good returns
(unit linked plans), multi purpose insurance plans, pension plans, child plans and
money back plans. (www.wikipedia.com)
CHAPTER IIRESEARCH DESIGN
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RESEARCH DESIGNINTRODUCTION
A Research Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It is the blue print that is followed in
completing the study. The basic objective of research cannot be attained without a
proper research design. It specifies the methods and procedures for acquiring the
information needed to conduct the research effectively. It is the overall operational
pattern of the project that stipulates what information needs to be collected, from which
sources and by what methods.
TITLE OF THE STUDY
To Compare the products of HDFC Standard L ife Insurance CompanyLimited and Tata AIG Life Insurance Company Limited for HDFC StandardLife Insurance Company Ltd.
STATEMENT OF THE PROBLEM
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This study was undertaken to identify which type of insurance plans HDFC SLIC should
market to beat Tata AIG LIC in India. A survey was undertaken to understand the
preferences of Indian consumers with respect to insurance. While marketing policies the
sole duty of an advisor/ agent is to provide insurance plans as per customer
requirements.
In effect plans (insurance products) should be flexible to suit individual requirements.
This research tries to analyze some key factors which influence the purchase of
insurance like the term of the policy, the type of company, the amount of annual
premium payable (capacity and willingness to spend), risk taking ability and the
influence of advertising. Solutions and recommendations are made based on qualitative
and quantitative analysis of the data.
OBJECTIVES OF THE STUDY
To analysis the product details of HDFC Standard life Insurance Company
limited and Tata AIG life Insurance Company Limited.
To find Points of Parity and Points of Difference of HDFC Standard Life
Insurance Company Limited and Tata AIG Life Insurance Company Limited.
To find out factors that influence customers to purchase insurance policies
and give suggestions for further improvement.
RESEARCH METHODOLOGY
TYPE OF DATA COLLECTEDThere are two types of data used. They are primary and secondary data. Primary data is
defined as data that is collected from original sources for a specific purpose. Secondary
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data is data collected from indirect sources. (Source: Research Methodology, By C. R.
Kothari)
PRIMARY SOURCESThese include the survey or questionnaire method, telephonic interview as well as the
personal interview methods of data collection.
SECONDARY SOURCESThese include books, the internet, company brochures, product brochures, the company
website, competitors websites etc, newspaper articles etc.
SAMPLINGSampling refers to the method of selecting a sample from a given universe with a view
to draw conclusions about that universe. A sample is a representative of the universe
selected for study.
SAMPLE SIZEThe sample size for the survey conducted was 114 respondents. This sample sizewas taken on 95% confidence level and 6 significant level. Data universe for this sample
is 4,14,000 which is approx population of Udaipur excluding people below age of 18
years.
SAMPLING TECHNIQUERandom sampling technique was used in the survey conducted.
PLAN OF ANALYSIS
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Tables were used for the analysis of the collected data. The data is also neatly
presented with the help of statistical tools such as graphs and pie charts. Percentages
and averages have also been used to represent data clearly and effectively.
OVERVIEW OF CHAPTER SCHEMECHAPTER 1:Introduction to insurance - An overview of the industry in India, history, keymilestones, present scenario in India.
CHAPTER 2:Research Design - Introduction, title of the study, statement of the problem,objectives of the study, research methodology, sampling, plan of analysis.
CHAPTER 3:Company prof i le of HDFC SLIC Introduction of HDFC SLIC, products andservices.
CHAPTER 4:Company pro fi le o f Tata AIG Introduction of Tata AIG, products andservices. The advantages of investing in HDFC SLIC compared to other financial
instruments.
CHAPTER 5:
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Points of Parity and Points of Difference between HDFC SLIC and TataAIG LIC Comparison between different plans, charges, fees, deductions andriders available with HDFC SLIC and Tata AIG LIC
CHAPTER 6:Competit ive analysis Information about the plans offered by LIC and otherprivate insurers in India. Comparisons between the plans to find the most popular
and beneficial plans which HDFC SLIC can incorporate into their product portfolio.
CHAPTER 7:Marketing problems - The techniques used to market insurance and theiradvantages and disadvantages along with suggestions for improvement.
CHAPTER 8:Analysis and Interpretat ion A survey on factors that influence people topurchase Life Insurance Policy.
CHAPTER 9:Problems requiring more research Future line of work
CHAPTER 10:Conclusion
ReferencesAppendices
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CHAPTER III
COMPANY PROFILEOF
HDFC STANDARD LIFEINSURANCE COMPANYLTD.14
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HDFC STANDARD LIFE INSURANCE COMPANYLIMITED
INTRODUCTIONHDFC 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. 122 Crores. The
gross premium income for the year ending March 31, 2012 stood at Rs. 2,956 Crores
and new business premium income at Rs. 1,824 Crores. The company has covered over
9,88,000 lives year ending March 31, 2012.
HDFC operates through almost 470 locations throughout the country with its corporate
head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE
with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 36 years.
KEY PLAYERS
Mr. Deepak S Parekh is the Chairman of the Company. He is also the ExecutiveChairman of Housing Development Finance Corporation Limited (HDFC Limited). He
joined HDFC Limited in a senior management position in 1978. He was inducted as a
whole-time director of HDFC Limited in 1985 and was appointed as its Executive
Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a
Fellow of the Institute of Chartered Accountants (England & Wales).
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Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company sinceNovember, 2000. Prior to this, he was the Managing Director of HDFC Limited since
1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian
Institute of Technology, Bombay and a Masters Degree in Business Administration fromThe American University, Washington DC.
GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.
HDFC Chubb: Upcoming Private companies in the field of General Insurance.
HDFC Mutual Fund
HDFC reality.com: Helps to search properties in all major cities in India
HDFC securities
STANDARD LIFE
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Standard Life is Europes largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 175 years is a modern company
surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from kits original Edinburgh premises, opening offices in
other towns and acquitting other similar businesses.
Standard Life Currently has assets exceeding over 70 billion under its management
and has the distinction of being accorded AAA rating consequently for the six years by
Standard and Poor.
JOINT VENTUREHDFC Standard Life Insurance Company Limited was one of the first companies to be
granted license by the IRDA to operate in life insurance sector. Reach of the JV player is
highly rated and been conferred with many awards. HDFC is rated AAA by both CRISIL
and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard and
Poors. These reflect the efficiency with which HDFC and Standard Life manage their
asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of
as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life
Insurance Companies, which offers a range of individual and group insurance solutions.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.) Indias leading housing finance institution and the Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength and are thus
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committed to being a long-term player in the life insurance industry- all important
factors to consider when choosing your insurer.
BUSINESS GROWTH
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2012 stood at Rs.
2,956 crores and new business premium income at Rs. 1,824 crores.
The company has covered over 9,88,000 lives year ending March 31, 2012. Company
also declared our 5th consecutive bonus in as many years for our with profit
policyholders.
KEY STRENGTH
Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life has the
financial expertise required to manage long-term investments safely and efficiently.
Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to offer
complete flexibility combined with a low charging structure.
Strong Ethical Values:
HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment
with the customers is not allowed.
Most respected Private Insurance Company
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HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class
Magazine Business World for Integrity, Innovation and Customer Care.
PRODUCTS & SERVICESThe right investment strategies won't just help plan for a more comfortable tomorrow --
they will help you get Sar Utha ke Jiyo.At HDFC SLIC, life insurance plans are created
keeping in mind the changing needs of family. Its life insurance plans are designed to
provide you with flexible options that meet both protection and savings needs. It offers
a full range of transparent, flexible and value for money products. HDFC SLIC products
are modern and contemporary unitized products that offer unique customer benefits like
flexibility to choose cover levels, indexation and partial withdrawals. (Source:
www.hdfcslic.com)
PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE
Individual ProductsProtection Plans
A person can protect his family against the loss of his income or the burden of a loan
in the event of his unfortunate demise, disability or sickness. These plans offer
valuable peace of mind at a small price. Protection range includes our TermAssurance Plan &Loan Cover Term Assurance Plan.
Investment PlansHDFC SLICsSingle Premium Whole of Life plan is well suited to meet longterm investment needs. This provides attractive long term returns through regular
bonuses.
Pension Plans
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Pension Plans help to secure financial independence even after retirement. Pension
range includes Personal Pension Plan , Unit Linked Pension ,Unit LinkedPension Plus .
Savings PlansSavings Plans offer a flexible option to build savings for future needs such as buying
a dream home or fulfilling your childrens immediate and future needs.
Savings range includes Endowment Assurance Plan, Unit LinkedEndowment, Unit Linked Endowment Plus ,Unit Linked Endowment PlusII,Money Back,Unit Linked Enhanced Life Protection II,Chi ldren's Plan, Unit LinkedYoung Star, Unit Linked Young Star Plus , Unit Linked Young Star Plus II .
Group Products
One-stop shop for employee-benefit solutionsHDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit solutions
to their employees. It offers different products for different needs of employers ranging
from term insurance plans for pure protection to voluntary plans such as superannuation
and leave encashment.
HDFC SLIC offers the following group products to esteemed corporate clients:
Group Term InsuranceGroup Variable Term InsuranceGroup Unit-Linked Plan
An investment solution that provides funding vehicle to manage corpuses with
Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave
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Encashment schemes of your companyAlso suitable for other employee benefit schemes such as salary saving schemes
and wealth management schemes
Social Product
Development Insurance PlanDevelopment Insurance plan is an insurance plan which provides life cover to members of a
Development Agency for a term of one year. On the death of any member of the group insured
during the year of cover, a lump sum is paid to those member beneficiaries to help meet someof the immediate financial needs following their loss.
CHAPTER IVCOMPANY PROFILE
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TATA AIG LIFEINSURANCE COMPANYLTD.
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TATA AIG LIFE INSURANCE COMPANY LIMITEDIntroductionTata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,
formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life
combines the Tata Groups pre-eminent leadership position in India and AIGs global
presence as the worlds leading international insurance and financial services
organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG
holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals
and corporate. Tata AIG Life Insurance Company was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001.
THE TATA GROUPThe Tata Group is one of India's largest and most respected business conglomerates,
with revenues in 2011-012 of $150.3 billion (Rs. 7904,565 million), the equivalent of
about 2/3 per cent of the country's GDP. Tata companies together employ some
425,000 people. The Group's 42 publicly listed enterprises - among them standout
names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have
a combined market capitalization that is the highest among Indian business houses in
the private sector, and a shareholder base of over 2 million. The Tata Group has
operations in more than 48 countries across six continents, and its companies export
products and services to 170 nations.
AIGAmerican International Group, Inc. (AIG), world leaders in insurance and financial
services, is the leading international insurance organization with operations in more than
140 countries and jurisdictions. AIG companies serve commercial, institutional and
individual customers through the most extensive worldwide property-casualty and life
insurance networks of any insurer. In addition, AIG companies are leading providers of
retirement services, financial services and asset management around the world. AIG's
common stock is listed on the New York Stock Exchange as well as the stock exchanges
in London, Paris, Switzerland and Tokyo.
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Tata AIG has strong brand name and recall factor which most of its competitors lack in.
Other than the public behemoth Life Insurance Corporation (LIC) of India which has a
major hold in the market share (of approximately 79%), the private players too are
having more and more opportunities to tighten their hold of the market. Of the private
players, ICICI Prudential comes first with an almost 6.50% of the market share followed
by Tata AIG with about 4.10% of the pie. The private players have everything to work
for, especially with LIC not meeting the needs of its clientele with respect to the services
they need. This provides a prospect for the private sector players to increase their share
of the market. Companies with a familiarity such as Tata AIG can especially achieve
their targets due to the brand image that the Tata group has.
(Source: www.tata-aig-life.com)
A recent survey conducted by the Voluntary Organization in Interest of Consumer
Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the
c le a r w i nn e r i n t e rm s o f c u st o m er s a ti sf ac t io n i n t he l if e i ns u ra n cec a t ego r y . This is India's first-ever customer satisfaction study for the insurance sector.
The survey also revealed that Tata AIG Life had a high recall as a reputed brand name.
The ability to provide innovative and customer-focused service such as allowing the
maximum grace period for premium payment has not only further distinguished Tata
AIG Life from other life insurance companies but also appealed to consumers.
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PRODUCTS & SERVICES:Corporate l i fe insurance products:
Employee Benefits Credit Life
Group Pensions
Workplace Solutions
Individual l i fe insurance products: Health First
Health Protector
Mahalife
InvestAssure II, InvestAssure Gold
Shubh life, Nirbhay life
With respect to individual life insurance products, Tata AIG has an array of policies to
suit the needs and requirements of all age groups viz, children, students, adults, retirees
etc.
The SUPPORT arm of Tata AIG Life is constituted of Operations, Human Resources,
Marketing, Corporate Training, Finance and Compliance.
Tata AIG Life possesses the philosophy and drive to customize retirement obligations
(for the company) which occur in the form of cash outflows, for the maximum benefit of
both the employer and the departing employee.
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CHAPTER V
POINTS OF PARITYAND
POINTS OFDIFFERENCEBETWEEN
HDFC SLIC AND TATAAIG
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Points of Parity
Funds avai lable with ULIP Plans
General Description Nature of Investments Risk Category
Equity Funds Primarily invested in companystocks with the general aim of capitalappreciation
High
Income, Fixed Interestand Bond FundsInvested in corporate bonds,
government securities and other fixedincome instruments
Medium
Cash Funds Sometimes known as MoneyMarket Funds invested in cash, bankdeposits and money market instruments
Low
Balanced Funds Combining equity investmentwith fixed interest instruments
Medium
Generally all life insurance companies have three types of fund which are Equity fund,
Debt fund and Balance fund. These fund have different risk profile. Equity fund has high
risk but it gives high return, Debt fund has low risk so it gives low return and Balanced
fund is combination of both Equity and Debt fund so risk is medium and return is also
low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of Debt
Equity fund. These are liquid fund, stable managed fund, secure managed fund,
defensive managed fund, balanced managed fund, equity managed fund, growth fund.
IndexationYou have the option to increase your regular premiums by an indexation rate at any
policy anniversary to protect the real value of your investment against inflation. The rate
of indexation will be in line with the increase in the Whole Sale Price Index (or in the
event that this Index ceases to be published such other index as the Company may
select for this purpose). The base sum assured and sum assured of any attached rider
would also be increased by the corresponding indexation increase.
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Charges, Fees and Deductions in ULIP Premium Allocation Charge
This is a premium-based charge. After deducting this charge from premiums, the
remainder is invested to buy units. The Allocation charges are guaranteed for the entire
duration of policy term.
Mortal ity ChargeThe Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund
Value pertaining to regular premiums). It will be deducted by monthly cancellation of
units from the accumulation unit account. The Mortality Charge shall remain guaranteed
throughout the policy term.
Fund Management Charge
1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and
1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a
daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the
IRDA.
Policy Administration Charge
Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC
will be deducted monthly by cancellation of units from the accumulation unit account. If
premiums are discontinued, this charge would reduce to 60% of the charge applicable
for the premium paying policies
Surrender Charge
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This is the charge that applies when the policy is surrendered. It is equal to 50% of the
difference between regular premiums expected and those paid in the first year of the
contract.
Service Tax Deductions12.36% service tax is applicable on the first premium of life insurance policy.
Tax BenefitsTax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961.
Insurance is tax free up to Rs. 100000 per annum and the returns on investment on
maturity of the policy are also tax free.
Riders and Bonuses
HDFC Standard LifeInsurance Tata AIG LifeInsuranceFree Look Period 15 days 15 days
Reversionary Bonus Based on company'sperformance
Based on company'sperformance
Terminal Bonus Based on company'sperformance
Based on company's
performanceTOP UP Minimum Rs. 5000 Minimum Rs. 5000Riders Critical Illness (CI)Benefit
Gives on diagnosis ofanyone
of 6 critical illness
Gives on diagnosis ofanyone
of 12 critical illnessAdditional Term Benefit(ATB) Provides ProvidesAccidental Death Benefit(ADB) Provides ProvidesDouble Benefit Provides Does not provideTriple Benefit Provides Does not providePayer Benefit Rider(PBR) Does not provide ProvidesWaiver of Premium(WOP) Benefit Provides Provides
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Points of Difference
HDFC Standard Life
InsuranceTata AIG Life
InsuranceGrace Period 15 days 31 daysPolicy AdministrationCharge Rs. 60 per month Rs. 55 per month
Guaranteed Bonus Does not give 10% on sum-assuredafter 10 year
Loyalty Bonus 0.1% every year 0.25% after every 4thyear
Fund Switching ChargeTotal 24 free switches in a
policy
after this Rs. 100 perSwitch
4 free switches per yearafter this
Rs. 250 per switch
Guaranteed Surrendervalue 50% of all premiumpaid excluding 1st premium30% of all premium
paid excluding 1st
premium
Fund ManagementCharge 0.80% per annumon the fund value 1.75% per annumon the fund value
Premium RedirectionChargeTotal 12 free Premium
Redirectionin a policy after this Rs.
250 per PremiumRedirection
First 2 PremiumRedirection in a
year is free after this
Rs. 1000per Premium Redirection
Last Year Return 42.70% 72%
We see that both the life insurance companies products are almost same. They
have same charges, fees and deductions. There is slightly difference in charges
and maximum limits of all charges are fixed by IRDA. Before buying any life
insurance policy one should check charges and fees on policy and companysoverall performance and return given to its consumer.
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CHAPTER VI
COMPETITIVEANALYSIS
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COMPETITIVE ANALYSISLIFE INSURANCE CORPORATION OF INDIA (LIC)
LIC has an excellent money back policy which provides for periodic payments of partial
survival benefits as long as the policy holder is alive. 20% of the sum assured is payable
after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with
accrued bonus. (www.lic.com)
For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20
years and the balance 40% plus the accrued bonus becomes payable at the 25th year.
An important feature of these types of policies is that in the event of the death of the
policy holder at any time within the policy term the death claim comprises of full sum
assured without deducting any of the survival benefit amounts which have already been
paid. The bonus is also calculated on the full sum assured.
HDFC SLIC does not have a money back policy. It could offer a money back plan and
capture some portion of this market. While marketing insurance products I found that
many customers wanted to purchase these plans.
LIC offers 66 different plans; plans are formulated for specific occasions whole life
plans, term assurance plans, money back plan for women, child plans, plans for the
handicapped individuals, endowment assurance plans, plans for high worth individuals,
pension plans, unit linked plans, special plans, social security schemes diversified
portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more
plans for high worth individuals and women.
ICICI PRUDENTIAL
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ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between
ICICI Bank which is the biggest private bank in India and Prudential Plc which is a
global life insurance company.
The company has an investment plan which is market related Invest Shield Life. In
this plan even if the market falls, the premium will be returned to investors. It is a
guaranteed plan which ensures the company carefully invests your money. The stock
market performance of ICICI Prudential is much better than HDFC SLIC. The returns on
the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC.
Customers are attracted by higher returns and this is a plus point for Prudential.
The company is very well advertised. The advertisements are showcased in movies,
television, newspapers, magazines, bill boards, radio etc. The company has an excellent
brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust
and faith in the minds of our people.
However the charges are very high in the plans offered by ICICI Prudential. It is 35%
during the first year, 15% in the next year and 3% from the third year onwards. Also a
higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible
to the lower strata of the society. (Source: www.iciciprulife.com)
BIRLA SUN LIFE
Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading
international financial services organization. The local knowledge of the Aditya Birla
Group combined with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future. (Source: www.birlasunlife.com)
The Aditya Birla Group has a turnover close to Rs. 72078 crores with a market
capitalization of Rs. 3425.3115 crores (as on 31st March 2012). It has over 133000
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employees across all its units worldwide. It is led by its Chairman - Mr. Kumar
Mangalam Birla. Some of the key organizations within the group are Hindalco and
Grasim.
Sun Life Financial Inc. and its partners today have operations in key markets worldwide,
including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. It had assets under management of over
US$943 billion, as on 31st March 2012. The company is a leading player in the life
insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in technology to build
world class processing capabilities. BSLI has covered more than a million lives since
inception and its customer base is spread across more than 1000 towns and cities in
India. All this has assisted the company in cementing its place amongst the leaders in
the industry in terms of new business premium income. The company has a capital base
of 620 crores as on 31st July, 2012.
Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years
of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5
years from the eleventh policy year onwards. However the charges are very high. The
initial charges for the first year are 65%. Hence the fund value is greatly reduced.
BAJAJ ALLIANZBajaj Allianz is a joint venture between Allianz AG with over 115 years of experience in
over 80 countries and Bajaj Auto, a trusted automobile manufacturer for over 60 years
in the Indian market. Together they are committed to offering you financial solutions
that provide all the security you need for your family and yourself. Bajaj Allianz is the
number one private life insurer for the year 2011 2012. It is leading by 508 crores. It
has experienced a whopping growth of 616% in the last financial year.
The company has sold 19, 00,000 policies and is backed by 590 offices across India. It
offers travel insurance, motor insurance, home insurance, health and corporate
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insurance. The mortality charges are lower than HDFC SLIC. The entry age could be
zero years which allow even new born babies to be insured. (Source:
www.bajajallianz.com)
TATA AIGTata Aig is a joint venture between the Tata group and American International Group
Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs.
2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers
from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a
good benefit. Charges are relatively low compared to HDFC SLIC for some policies.
The company offers high coverage plans at low cost. There is a plan even for a policy
term of 1 year. Your family can continue to enjoy their current lifestyle even in the case
of something happening to you. These plans are very flexible and HDFC SLIC could
adopt this idea of insuring individuals for short periods of time. For example; there is a
family of four. The only earning member is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to
repay the loan with his current salary in 15 years. The problem arises if something were
to happen to him within these fifteen years. Not only will the family face the emotional
and financial loss of their father but they will also have to repay the home loan or risk
being homeless. (Source: www.tataaig.com)
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CHAPTER VII
MARKETING
PROBLEMS
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MARKETING PROBLEMSThe old and out dated technique of tele marketing is used to prospect customers. More
modern techniques must be adopted. The company must sponsor shows and give
presentations in corporate houses. The financial health check must be performed for
every prospect to assess his/her true financial position and needs. Some of the advisors
skip this vital step and the prospect ends up with a plan they do not appreciate and
soon surrender or discontinue.
Some of the main problems in marketing the policies are:
Large amount of competition .
Other brands are well advertised and have higher recall value
LIC is considered a safer option
Face competition from banks and mutual funds
High premium policies are difficult to market
Incorrect perception about insurance
Interested prospects might have a lack of time and postpone investments
Customers get defensive if you cold call
Short term plans are available only at large premium
Customers do not have risk appetite to invest in shares
Some prospects have already invested and are not interested in further
investments
Consumers dont want to undertake medical examinations
Large amount of documentation
Customers do not like their money locked up for many years
Lack of awareness about the unit linked funds in the market
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No money back plan present in the product portfolio
SUGGESTIONS FOR IMPROVEMENT
Advertise about the company and its products it motivates individuals to
purchase insurance
Create a positive perception about insurance
Speak about the good features a plan offers like high returns, life cover, tax
benefits, indexation, accident cover while prospecting customers
Try to sell the product/plan which the consumer requires and not the plan where
the advisors benefit is higher
Improve the efficiency in operations
Bring out policies with small premiums payable for short periods of time Rs.
5000 Rs. 10000 per annum for 10 years
Attract the youth of India with higher returns on investment as returns are the
motivating factor which influence purchase of insurance
Promote insurance in colleges and corporate houses
Promote HDFC SLIC as an Indian Company to build trust
HDFC SLIC could have a brand ambassador or a mascot to promote its services
Should have partial withdrawals from the first year onwards
Tap the rural market where there is large potential
Diversify product portfolio
Make products more straight forward reduce complexities
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CHAPTER VIIIANALYSIS
&INTERPRETATION
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ANALYSIS & INTERPRETATIONA SURV EY ON THE L I FE INSURANCE IND USTR Y IN IND IA
AGE GROUP OF SURVEYED RESPONDENTSTABLE 1:Age group No. of Respondents
18 - 25 years 127
26 - 35 years 67
36 - 49 years 46
50 - 60 years 24
More than 60 years 6
CHART 1:
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Analysis:From the chart above we find that 47% of the respondents fall in the age group of 18
25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group of
36 49 years.
Therefore most of the respondents are relatively young (below 26 years of age). These
individuals could be induced to purchase insurance plans on the basis of its tax saving
nature and as an investment opportunity with high returns.
Individuals at this age are trying to buy a house or a car. Insurance could help them
with this and this fact has to be conveyed to the consumer. As of now many consumers
have a false perception that insurance is only meant for people above the age of 50.
Contrary to popular belief the younger you are the more insurance you need as your
loss will mean a great financial loss to your family, spouse and children (in case the
individual is married) who are financially dependent on you.
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
TABLE 2:
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Particulars No. of Respondents
Male 193
Female 77
CHART 2:
CUSTOMER PROFILE OF S URVEYED RESPONDENTSTABLE 3:Customer profile No. of respondents
Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14
CHART 3:
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Analysis:From the chart above it can clearly be seen that 43% of the respondents are working
professionals, 23% are students and 18% are into business. Therefore the target
market would be working individuals in the age group of 18 25 years having surplus
income, interested in good returns on their investment and saving income tax.
NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIRNAMETABLE 4:
Person who have l i fe insurance pol icyYes 103
No 167
CHART 4:
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ANALYSIS :This graph shows that out of total 270 respondents only 103 or 38% respondents have
life insurance policy in their name. Rest all dont have a single policy in their name. So
there is a very big scope for life insurance companies to cover these people. So in future
business of life insurace will gro further.
MARKET SHARE OF LIFE INSURANCE COMPANIESTABLE 5:
LIFE INSURER NUMBER OF POLICIES
HDFC STANDARD LIFE 4
BIRLA SUN LIFE 3
AVIVA LIFE INSURANCE 6
BAJAJ ALLIANZ 7
LIC 55
TATA AIG 6
ICICI PRUDENTIAL 12
ING VYSYA 6
BHARTI AXA 2
OTHERS 2
CHART 5:
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Analysis:In India, the largest life insurance company is Life Insurance Corporation of India. It has
been in existence in India since 1956 and is completely owned by the Government of
India. Today the organization has grown to 2048 offices serving 18 crore policies and
has a corpus of over 340000 crore INR.
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ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
TABLE 6:
Premium paid (p.a.) No. of respondents
Rs. 5000 - Rs. 10000 40
Rs. 10001 - Rs. 15000 26
Rs. 15001 - Rs. 24900 18
Rs. 25000 - Rs. 50000 10
Rs. 50001 - Rs. 60000 4
Rs.60001 - Rs. 80000 2
Rs. 80001 - Rs. 100000 3
CHART 6:ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
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Analysis:From the chart above we find that, 39% of the respondents surveyed pay an annual
premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an
annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs.
25000. Hence we can safely say that HDFC SLIC would be able to capture the market
better if it introduced products/plans where the minimum premium starts at Rs. 5000
per annum.
Only 19% of the respondents pay more than Rs. 25000 as premium and most products
sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They
should introduce more products like Easy Life Plus and Safe Guard where the minimum
premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase
their market share as more individuals would be able to afford the policies/plans
offered.
POPULAR LIFE INSURANCE PLANSTABLE 7:
Type of Plan No. of Respondents
Term Insurance Plans 105
Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19
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CHART 7:POPULAR LIFE INSURANCE PLANS
Analysis:From the chart given above we can clearly see that 45% of the respondents hold
endowment plans and 39% of the respondents hold term insurance plans. Endowment
plans are very popular and serve two purposes life cover and savings.
If the policy holder dies during the policy term the nominee gets the death benefit that
is, sum assured and accumulated bonus. On survival the policy holder receives the
survival benefit with a bonus.
A term plan is a pure risk cover plan wherein the insured pays a lower premium for a
higher sum assured. Term insurance is the cheapest form of insurance and helps the
policy holder insure himself for a relatively low premium. For the returns sensitive
investor term plans do not find favor as they do not offer a return in case the individual
does not die during the policy term.
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AWARENESS OF UNIT LINKED INSURANCE PLANSTABLE 8:
Awareness of Unit Linked Plans No. of Respondents
Yes 154No 116
CHART 8:AWARENESS OF UNIT LINKED INSURANCE PLANS
Analysis:From the chart given above we find that 57% of the respondents are aware of unit
linked life insurance plans and 43% are not aware of such plans. These plans should be
promoted through advertising. The company can advertise through television, radio,
newspapers, bill boards and pamphlets. This would increase awareness and arouse
curiosity in the minds of the consumer which would enable the company to market its
products more effectively.
Unit linked plans are those where the benefits are expressed in terms of number of
units and unit price. They can be viewed as a combination of insurance and mutual
funds. The number of units a customer would get would depend on the unit price when
they pay the premium.
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When the policy matures the individual gets his fund value. The value of his fund is
calculated by multiplying the net asset value and number of units held by them on that
day.
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
TABLE 9:
Willingness to spend on premium No. of respondents Percentage
Less than Rs. 6,000 41 15%
Rs. 6,001 - Rs. 10,000 73 27%
Rs. 10,001 - Rs. 25,000 110 41%
Rs. 25,001 - Rs. 50,000 41 15%
Rs. 50,001 - Rs. 1,00,000 5 2%
CHART 9:CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
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Analysis:From the graph above, we can clearly see that 41% of the respondents would be willing
to spend between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to
spend between Rs. 6001 Rs. 10000 per annum. Only 15% would be willing to spend
more than Rs. 25000 per annum as life insurance premium.
We could say that the maximum premium payable by most consumers is less than Rs.
25000 p.a. This is further reduced as most customers have already invested with LIC,
ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.
HDFC SLIC is faced with a large amount of competition. There are 18 insurance
companies in India inclusive of LIC. Hence to capture a larger part of the market the
company could introduce more reasonable plans with lesser premium payable per
annum.
CHART SHOWING IDEAL POLICY TERMTABLE 10:
Ideal policy term No. of respondents
3 - 5 years 51
6 - 9 years 41
10 - 15 years 95
16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13
CHART 10:
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CHART SHOWING IDEAL POLICY TERM
Analysis:From the chart given above it can be seen that 35% of the respondents prefer a policy
term of 10 15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9
years. This means that HDFC SLIC could introduce more plans wherein the premium
paying term is less than 15 years.
The outlook of insurance as a product should be changed from something which you
pay for your whole life (whole life policy) and do not receive any benefit (the nominee
only receives the benefit in case of your death) to an extremely useful investment
opportunity with the prospects of good returns on savings, tax saving opportunities as
well as providing for every milestone in your life like marriage, education, children and
retirement.
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
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TABLE 11:Parameter No. of Respondents
Advertisements 35
High returns 84Advice from friends 46
Family responsibilities 89
Others 16
CHART 11:
Analysis:From the chart above it can be seen that 33% of the respondents purchase life
insurance to secure their families, 33% take life insurance to get high returns, 17%
purchase insurance on the advice of their friends and 13% purchase insurance because
of the influence of advertisements.
The main purpose of insurance is to cover the financial or economic loss that occurs to
the family in case of the uncertain death of the policy holder. But now a days this trend
is changing. Along with protection (life cover), a savings element is being added to
insurance.
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With the introduction of the new unit linked plans in the market, policy holders get the
option to choose where their money will be invested. They can invest their money in the
equity market, debt market, money market or a combination of these. The debt and
money markets usually have low risk attached whereas the equity market is a high risk
investment option.
PREFERRED COMPANY TYPE OF THE RESPONDENTSTABLE 12:
Type of Company No. of Respondents Percentage
Government Owned Company 127 47%
Public Limited Company 62 23%
Private Company 49 18%
Foreign Company 32 12%
CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS
Analysis:
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From the graph above we find that 60% of the respondents preferred to purchase
insurance from a government owned company, 29% of the respondents preferred to
purchase insurance from a public limited company and only 4% of the respondents
preferred a foreign based company. Heavy advertising through television, newspapers,
magazines and radio is required.
MINIMUM EXPECTED RETURN ON INVESTMENTTABLE 13:Expected Returns No. of respondents
Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22
CHART 13:
Analysis:
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From the chart above it can clearly been seen that 18% of the respondents would like
16 20% returns, 17% would like returns between 21 25% and 17% would like
returns of 11 15% on their investments. Therefore the average return on investment
should be at least 16 20 %.
Most consumers are willing to adapt to some amount of risk but still want some
guaranteed returns. Therefore the bulk of investment should be made in the balanced
fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed
as these involve investment is government securities and the debt market. But the
returns on these instruments are low (8 10%). If the company invests in shares,
returns are higher (39%) but correspondingly risk borne by the policy holder is also
higher. Therefore a good combination of the two instruments is often a wise choice.
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CHAPTER IXFUTURE LINE OF
RESEARCH
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FUTURE LINE OF RESEARCH
The future topics for research in the organization could be setting up of an appropriate
ad campaign. It is very vital to the companies success that the people of India know
about HDFC SLIC, its products and their special features and how insurance in general
can help them in their future. The advertisements have to be emotionally appealing.
They might also include a celebrity. The brand name of HDFC could be used to give a
push to HDFC SLIC and its products. The general perception of insurance as
inauspicious should be done away with and individuals and corporations accept
insurance on power with other investment opportunities.
The other area of research could be in the management of funds HDFC SLIC possesses
and how it can maximize returns for its investors. A research project could be
undertaken on how to ensure that the money gets invested in the right companies and
earns a medium high return on investment. Another area of research could be an
analysis of the sales and marketing techniques used by HDFC SLIC. A large number of
changes could be introduced and this would help in saving operating costs and
improving the efficiency of the firm.
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CHAPTER X
CONCLUSION
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CONCLUSIONHDFC standard life insurance is first life insurance Company in India. It has businesses
spread out across the globe. It was registered on 23rd December 2000. It currently
ranks number 4 amongst the insurers in India (Source: annual premium provided by the
company)
The company faces a large amount of competition. To sustain itself it must promote its
products through advertising and improve its selling techniques. Consumers must be
aware of the new plans available at HDFC SLIC. The medium of advertising used could
be television since most of its competitors use this tool to promote their products. The
company must be promoted as an Indian company since consumers seem to have more
trust in investing in Indian firms.
The general perception of life insurance has to change in India before progress is made
in this field. People should not be afraid to invest money in insurance and must use it as
an effective tool for tax planning and long term savings.
HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.
There are individuals who are willing to pay small amounts as premium but the plans do
not accept premiums below a certain amount. It was usually found that a large number
of males were insured compared to females. Individuals below the age of 30 (mostly
male) were interested in investment plans. This was a general conclusion drawn during
prospecting clients.
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REFERENCESwww.hdfcslic.comwww.tata-aig-life.comwww.irdaindia.comwww.lic.comwww.money control.comwww.bajajall ianz.comwww.icici.prulife.com
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A RESEARCH ON INSURANCE INDUSTRYDear Sir/Madam,
I am a student of Pacific Institute of Management, Udaipur. As part of the requirementsfor my Post Graduation in Management I am required to do a research based report.Kindly spend a few minutes of your valuable time and fill in this questionnaire.
Do you have a l ife insurance poli cy/ investmentplan in your name?o Yes o No
If yes which companys insurance pol ic ies do youhold?o HDFC Standard
Life Insuranceo Birla Sun Life
Insurance
o Aviva LifeInsurance
o Bajaj Allianz Life
Insuranceo LIC
o Tata AIG Life
Insuranceo ICICI Prudential
Life Insurance
o ING Vysya Life
Insuranceo Bharti Axa Life
Insuranceo Others (specify name)
What i s the approximate premium pa id by youannual ly (in Rupees)?o Rs. 5,000 Rs.
10,000o Rs. 10,001 Rs.
15,000o Rs. 15,001 Rs.
25,000o Rs. 25,001 Rs.
50,000
o Rs. 50,001 Rs.
60,000o Rs. 60,001 Rs.
80,000o Rs. 80,001 Rs.
1,00,000
o More than Rs. 1,00,000 (specify premium)
What kind of insurance pol icy would suit you bestin your current stage of l i fe?
o Life Insurance
o Life Insurance and
Investment Plans
o Pension Plans
o Child Plans
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o Tax saving plans
Are you aware of the new unit l inked insuranceplans in the market?o Yes o No
How much wou ld you be wil li ng to spend perannum if you were to go for aninvestment/insurance plan?o Less than Rs.
6,000o Rs. 6,001 Rs.
10,000o Rs. 10,001 Rs.
25,000
o Rs. 25,001 Rs.
50,000o Rs. 50,000 Rs.
1,00,000o More than Rs.
1,00,000Which according to you is an ideal pol icy term?(Number o f years you wou ld be wil li ng to paypremium)o 3 to 5 years
o 6 to 9 years
o 10 to 15 years
o 16 to 20 years
o 21 to 25 years
o 26 to 30 years
o More than 30
yearso Whole life policy
What motivates you to purchaseinsurance/investment plans?o Advertisements
o High Returns
o Advice from
friendso Family
responsibilitieso Others (specify)
In which kind of company would you prefer tomake a purchase of insurance?o Government
owned companyo Public Limited
Company
o Private Company
o Foreign based
company
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Typical ly what kind of returns would you look atf rom your investments? (Please note: H igherreturns involve greater risk)o Less than 5%
o 6% - 10 %
o 11% - 15 %
o 16% - 20 %
o 21% - 25%
o 26% - 30%
o 31% - 40%
o 41% - 50%
o More than 50%
Personal Details:Name:Address:Age: Contact No. :Profi le of respondent:
Student
Housewife
WorkingProfessional
Business
Self Employed
GovernmentService Employee
Date:
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