mrp

INTERNATIONAL INSTITUTE OF PROFESSIONAL STUDIES,

DEVI AHILYA VISHWAVIDYALAYA

Major Research Project submitted for the partial fulfillment of the requirement for the degree of Master of Business Administration

(Management Science)

PROJECT TITLE

A Comparative Analysis of Unit Linked Insurance Plans (ULIPs) – An IDBI Fortis Perspective

AndStudy of Customers Buying Behavior

Guided by: Submitted by:

Dr.Geeta Sharma Pratiksha Rajani MBA (MS) 5Yrs.

8th Semester, Finance IM-2K6-49

I.I.P.S. DAVV

CERTIFICATE

This is to certify that Ms.PRATIKSHA RAJANI, student of MBA (MS)

5Yrs. 8th Semester International Institute of Professional Studies has

completed her Major Research Project on “A Comparative Analysis of

ULIP - An. IDBI Fortis Perspective and Study of Customers Buying

Behavior ”. Her work throughout the project was up to my satisfaction. I

wish her all the best for her future.

Dr. Geeta Sharma

Signature of Guide:

Date:

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ACKNOWLEDGEMENT

I would like to express my sincere gratitude to my faculty guide Ms. Geeta

Sharma Ma’am for guiding me throughout my research project and for all

her valuable inputs and constant support towards me throughout my project.

Her encouragement, time and effort are greatly appreciated.

I would like to thank my family, without their help and constant support; this

project would not have been possible.

I would like to thank all my friends who offered their valuable opinions and

suggestions and sometimes critical views throughout the survey which made

me constantly update myself and come out with a successful project.

It was a truly wonderful learning experience.

Pratiksha Rajani

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DECLARATION

I here by declare that I have successfully completed the MAJOR

RESEARCH PROJECT on “A Comparative Analysis of ULIP - An. IDBI

Fortis Perspective and Study of Customers Buying Behavior”. It is my

own research work done under the guidance of Geeta Sharma Ma’am,

faculty, IIPS

Pratiksha Rajani

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CONTENTS

Abstract

Introductiono Insurance and ULIPs o Company profile

Objectives

Literature Review

Research Methodology

Analysiso Comparison of Planso Survey Analysis

Findings

Recommendations

Strengths & Weaknesses

Conclusion

Scope for Further Research

Limitations

Bibliography

Enclosures5

ABSTRACT

The project aims to make a detailed study of Unit Linked Insurance Plans (ULIPs) in the Indian context, a comparative analysis of ULIPs of some well known selected companies and in the process identify the strengths and weaknesses of IDBI FORTIS. The different selected companies apart from IDBI FORTIS on which the project is entirely focused are namely:

a. ICICI PRUDENTIAL

b. BAJAJ ALLIANZ

c.. LIFE INSURANCE CORPORATION OF INDIA

The comparative study is primarily based in terms of the various benefits offered viz. Death Benefits, Health benefits, Maturity Benefits financial benefits & other benefits. The various parameters taken into consideration were flexibility, transparency, liquidity and the number of funds options available. The project consists of a detailed analysis of the comparison of various ULIPs of IDBI FORTIS with that of the selected major players in the market. The results of the project have been an outcome of a detailed analysis of collected secondary data and well supported by analysis of primary data collected through a survey in the Indore city. The project required me to design a questionnaire and conduct a primary survey. The survey was mainly conducted to study about the factors affecting the buying behavior of customers. The number of respondents targeted was 50. The data gathered from the primary survey was coded in a statistical tool called as CHI-SQUARE. Finally we interpreted the results of the project by combining both the primary and the secondary data analyses then identified the areas where the company is really strong and the areas where it needs to have a second look. Finally after a detailed study we have found out the merits and demerits of the IDBI FORTIS and based on those we have given some recommendations to the company to really work on.

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INTRODUCTION

INSURANCEInsurance may be described as a social device to reduce or eliminate risk of loss to life and property. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks which can be insured against include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance.

Life Insurance was the first to be nationalized in 1956. Consolidating the operations of various insurance companies formed Life Insurance Corporation of India. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process, which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.

LIFE INSURANCE As is evident from its very name, it deals with insurance of human life. “Life insurance corporation of India”- a public sector undertaking has the monopoly in this sector since its nationalization. In our wordily life, whenever there is uncertainty, there is an involvement of risk. The instinct for security against such risk is one of the basic motivating forces determining human attitudes. As a squeal to this quest for Security, the concept of insurance must have been born. The urge to provide insurance or protection against the loss of life & property must have prompted people to make some sort of sacrifice willingly in order to achieve security through “COLLECTIVE CO-

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OPERATION”, in this sense; story of insurance is probably as old as the story of mankind. All life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA). Therefore there is no risk in going in for private insurance players. In terms of being rated for financial strength like international players, only ICICI Prudential is rated by Fitch India at National Insurer Financial highest claims paying ability rating.

UNIT LINKED INSURANCE PLANS (ULIP)

A ULIP is a life insurance policy which provides a combination of risk cover and investment. ULIPs have gained high acceptance due to attractive features they offer like flexibility, transparency, liquidity and a vast variety of fund option. Unit linked plans are suitable for all customer profiles; however as a general belief the risk averse investors tend to choose traditional plans and an informed customer prefers a ULIP. ULIPs offer the kind of flexibility that no insurance product can. ULIPs essentially combine the benefits of an insurance policy and a market-linked investment. Investors can select a ULIP with an equity-debt combination that is in line with their risk profile. A risk-taking investor would typically select one with a high equity component, while a risk-averse investor would opt for a debt-heavy one. Simply put, ULIPs are structured in such a way that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency. So with many players around for a company to really be successful it has to really be very efficient on all fronts. It has to constantly adapt to the changing consumer preferences with a lot of new innovations and implementing new technology try to different from the lot. Especially if it is a new player in the market the company has to really work very hard to get into the completion and stay afloat.

The private companies are coming out with better products which are more beneficial to the customer. Among such products are the ULIPs or the Unit Linked Insurance Plans which offer both life cover as well as scope for savings or investment options as the customer desires. Further, these types of plans are subject to a minimum lock-in period of three years to prevent misuse of the significant tax benefits offered to such plans under the Income Tax Act.

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Unlike the mutual fund product that has a very simple cost structure, ULIPs carry a greater number of costs (administration and mortality), in addition to the others. So comparing ULIPs with mutual funds is erroneous.

Unit linked insurance plan (ULIP) is a life insurance solution that provides the client with the benefits of protection and flexibility in investment. It is a solution which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. The investment is denoted as unit and is represented by the value that it has attained called asNet Asset Value (NAV). ULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing a life cover. The residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by the customer. Simply put, ULIPs are structured in such that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency.

STRUCTURE OF ULIP

ULIP offered by different insurers have varying charge structures. Broadly the different TYPES OF FEES AND CHARGES are given below. However the insurers have the right to revise or cancel the fees and charges over a period of time.

Mortality Charges: These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc.

Fund Management Charges: These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV).

Policy/ Administration Charges: These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate

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Surrender Charges: A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

Fund Switching Charge: Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge. But now a days many insurers offer fund switching free of cost.

Service Tax Deductions: Before allotment of the units the applicable service tax is deducted from the risk portion of the premium.

ADVANTAGES OF ULIPS

ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one stop solution for everything the customers want. Unit Linked Insurance Plans (ULIPs) are different from traditional plans purely because, they are much more transparent, various charges are shared with the customer before the sale of the product, so as to enable the customer to make an informed decision. Customers have the flexibility to choose their life cover. Also the customers have the choice of multiple fund options based on their risk appetite, thereby enabling an investor to make the desired returns from the investment. The following are some of the advantages of Unit linked plans:

a. Life protection

b. Investment and Savings Market linked fund based on risk profile Switch option Premium redirection Automatic Transfer Plan(ATP)

c. Tax Planning

d. Flexibility of cover continuance

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e. Transparency

f. Extra protection with riders Death due to accident Disability Critical illness

g. Liquidity Partial withdrawals during the term At maturity

h. Variable investment options

i. Premium holiday

j. Allow Top-ups

COMPANY PROFILE

ABOUT IDBI FORTIS

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IDBI Fortis Life Insurance Co Ltd is a joint venture between three leading financial conglomerates – India’s premier development and commercial bank, IDBI Bank, one of India’s leading private sector banks, Federal Bank and Europe’s banking and insurance giant, Fortis, each of which enjoys a significant status in their respective business segments. In this venture, IDBI Bank owns 48% equity while Federal Bank and Fortis own 26% equity each. IDBI Fortis launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory Development Authority (IRDA). The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. At IDBI Fortis, people endeavor to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery the company intends to deliver world-class wealth management, protection and retirement solutions to Indian customers IDBI Ltd. continues to be, since its inception, India’s premier industrial development bank. Created in 1956 to support India’s industrial backbone, IDBI has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from over 490 branches and more than 600 ATMs. The Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI has been instrumental in sponsoring the development of key institutions involved in India’s financial sector – such as the Securities and Exchange Board of India (SEBI), National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd. Federal Bank is one of India’s leading private sector banks, with a national network and dominant presence in the state of Kerala. It has a strong network of over 550 branches and 450 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. They operate on the core banking platform and are RTGS/ NEFT enabled through which the Bank offers state-of-the-art technology enabled products and services.

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In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, and Any Where Banking, debit cards, co-branded credit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. Fortis, a European financial services provider engaged in banking and insurance with a presence in over 50 countries, offers its personal, business and institutional customers a comprehensive package of products and services through its own channels, in collaboration with intermediaries and through other distribution partners. With a market capitalization of over EUR 40 billion, Fortis ranks among the 20 largest financial institutions in Europe. Fortis’ sound solvency position and dedicated, professional workforce of over 80,000, enables it to combine global strength with local flexibility to provide its clients with optimum support and service.

VISION

To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.

MISSION

To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner.

To be transparent in the way we deal with our customers and to act

with integrity.

To invest in and build quality human capital in order to achieve the mission.

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VALUES

. Transparency: Crystal Clear communication to our partners and stakeholders

. Value to Customers: A product and service offering in which

customers perceive value

Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and having clarity in claims.

. Customer-friendly: Advice and support in working with customers

and partners. .

Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholder sand the community at large.

OBJECTIVE

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To compare the Unit Linked Insurance Plans (ULIPs) of IDBI FORTIS with that of some other selected companies.

To identify the strengths and weaknesses of IDBI FORTIS and suggest areas where it could focus more and improve upon.

To study about the factors affecting the buying behavior of customers.

LITERATURE REVIEW

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Till today a lot of research has been done on the Indian insurance industry especially the life insurance sector.

The material for this study was collected from various internet sites, journals and books by various authors. Similar research has been carried out by Sathak Mohanty who worked on the risk profile of ULIPs and analyzed insurance as an investment option. He says that Life Insurance Corporation of India (LIC) is still the undisputed leader in the Indian context.

According to Anita Gupta-director, marketing and communication, ING Vysa Life insurance ULIPs are suitable for all types of customers, right from the lower class to the premium class. Also according to the Financial express (Dated 12th April, 2009) ULIPs are flexible to the core.

During the course of the project some official studies on the products of Tata-AIG and HDFC standard Life have been referred to.

Also the author Heena Vasnani says that if you are one of those who are interested in keeping their hands in the stock market as well as providing a life time protection to their family, must go for a ULIP LINKED INSURANCE PLAN.

Dhirendra Kumar of Value Research said unit-linked insurance policies (ULIPs) still continue to attract investment even though the pace may have slowed down. “Inflows into tax-saving funds are expected to be around Rs 5,000 crore,” Kumar said.

Posted by Deepak Shenoy made the research study ULIP versus TERM PLAN+INVESTMENT: The winner is clear.

A New Dimension in Insurance: ULIP – Khushbu Kesarwani, Research Scholar dept. of Commerce and Business Administration, University of Allahabad, says that ULIP is a new word entered into the market of insurance in the recent years which changed all the trends in the past.

RESEARCH METHODOLOGY

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The Research Methodology used in this research project includes both the secondary data and primary data. The right design and timeline of the project is developed to achieve the objectives of the project.

SOURCES OF DATA In the data collection method, we have to collect both primary and secondary data to meet our objectives.

Secondary Data - The secondary data will be collecting directly from the companies and their websites and internet surveys. Also a lot of similar research studies and journals have been referred to.Primary Data -The primary data will be collecting by a survey based on the questionnaire. It is formulated on the basis of information carefully gathered by me about the various mindsets of the people. Following are various variables

Age of the Respondents Income of the Respondents Occupation of the Respondents Percentage of Savings Risk involved in ULIP Sector Preferred Purpose of Investment Mode of information for choosing Plans Other Factors like SAFETY OF PRINCIPAL, HIGH RETURNS, and

LOW RISK etc.

DATA SAMPLING: The number of respondents targeted was 50 and the survey is confined to Indore city.

RESEARCH DESIGN: Descriptive Approach.

ANALYSIS

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About the Product

IDBI FORTIS different variety of schemes and a good range of ULIPs under the flagship banner Wealthsurance. There are a lot of other ULIPs under Bondsurance, Homesurance and Retiresurance but as our study is only confined to the study and comparative analysis of ULIPs under Wealthsurance we would just be discussing about the various plans under Wealthsurance. As discussed earlier the Wealthsurance Foundation Plan enables the customer to save and build wealth to meet your financial goals. However, unlike other investment alternatives, it also enables him to achieve his wealth goals even in the event of unexpected death, accidents, disablement or serious illness. The Wealthsurance Foundation Plan can ensure that his plans for wealth creation are achieved by protecting that plan with insurance benefits. Wealthsurance is one of its kinds in India. The company offer 11 investment options and 8 protection benefits under the plan apart from tax benefits Under Wealthsurance there are a lot of different funds available which are explained below:

WEALTHSURANCE

Min entry age: 30 days Max entry age: 65 yrs Min premium: 10000 Max maturity age: 75 yrs Riders: ADBR, ADB, WOPR, MAJOR DISEASES BENIFIT, HOSPITAL CASH BENEFIT, TERMINAL ILLNESS BENEFIT Min premium payment term: 3 yrs Types of funds: EQUITY, NIFTY, Capital Guarantee, Asset Allocator, GRF, MONTHLY INT A/C, INCOME, LIQUID As discussed earlier we would be comparing the Unit Linked Insurance Plans (ULIPs) of the companies selected initially with those of IDBI FORTIS and then make a detailed analysis. This analysis would be well supported by the primary data analysis and then the final results would be interpreted .So here first we would be listing out various ULIPs of the selected companies and their details. After that we make a detailed

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comparison with that of the plans under Wealthsurance of IDBI FORTIS and explain it. So following are the details of ULIPs of various companies and the comparative analyses.

Comparison of Plans

LIFE INSURANCE CORPORTAION (LIC) OF INDIA

LIC offers three different types of ULIPa. Market Plusb. Profit Plusc. Fortune Plus

MARKET PLUS

Min entry age 18 yrs Max entry age 70 yrs Max Maturity age 75 yrs Min premium 10000 SP No of funds 04 Riders ADBR Min premium payment term 5 yrs

PROFIT PLUS

Min entry age 0 yrs

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Max entry age 65 yrs Max Maturity age 70, 75 yrs Min premium 20000 No of funds 04 Riders ADBR, CIBR Min premium payment term 3 yrs

FORTUNE PLUS

Min entry age 12 yrs Max entry age 60 yrs Max Maturity age 65 yrs Min premium 20000 No of funds 04 Riders ADBR Min premium payment term 5yrs

ADBR-Accidental Death Benefit Rider, CIBR-Critical Illness Benefit Rider

Comparative Analysis

MARKET PLUS

Premium allocation charge is 16.5% in this product where as Wealthsurance has a charge of Max 4%.

There are no riders available in this product as against Wealthsurance has a host of riders to choose from.

After 3 years we can go for partial withdrawals as against in this product there are no partial withdrawal available.

PROFIT PLUS

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Premium allocation charge is 15% min in this product where as Wealthsurance has a charge of Max 4%.

.There are no riders available in this product as against Wealthsurance has a host of riders to choose from.

FORTUNE PLUS

Min Entry age in Wealthsurance is 0 years as against in this product it is 12 years

Max entry age in Wealthsurance is 65 years as against in this product it is 60 years only.

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BAJAJ ALLIANZ LIFE INSURANCE COMPANY

BAJAJ ALLAINZ offers five different types of ULIPa. UNIT GAIN PLUS GOLD b. UNIT GAIN PREMIER c. CENTURY PLUS d. NEW UNIT GAIN PLUS e. PENSION GUARANTEE

UNIT GAIN PLUS GOLD

Min entry age 0 yrs Max entry age 60 yrs Max Maturity age 70 yrs Min premium 12000 No. of funds 06 Riders 6(after 18) Min premium payment term 3 yrs

UNIT GAIN PREMIER

Min entry age 0 yrs Max entry age 60 yrs Max Maturity age 70 yrs Min premium 50000 No. of funds 03 s Riders NM Min premium payment term 3 yrs

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CENTURY PLUS

Min entry age 8 yrs Max entry age 60 yrs Max Maturity age 70 yrs Min premium 25000 No of funds 07 Riders ADBR Min premium payment term 3 yrs

NEW UNIT GAIN PLUS

Min entry age 0 yrs Max entry age 60 yrs Max Maturity age 70 yrs Min premium 10000 No. of funds 07 Riders ADBR, WOP CIBR, FIB, HCB, PDB Min premium payment term 3 yrs

PENSION GUARANTEE

Min entry age 45 yrs Max entry age 80 yrs Max Maturity age NA Min premium 25000-purchase price No. of funds NM Riders NM Min premium payment term NM

ADBR-Accidental Death Benefit Rider,

CIBR-Critical Illness Benefit Rider,

NM-Not Mentioned,

WOP-Waiver of Premium,

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FIB-Family Income Benefit,

HCB-Hospital Cash Benefit,

PDB-Permanent Disability Benefit


UNIT GAIN PLUS GOLD

Wealthsurance only has a allocation charge of only 4% in comparison to 15% in this product

.Max Entry age in Wealthsurance is 65 as against 60 of Unit Gain Gold Plus

CENTURY PLUS

Wealthsurance has an Min Entry Age of 0 Years against this product where the entry age is 8 Years.

. Min Premium in Wealthsurance is only Ten Thousand Rupees in comparison to Twenty Five Thousand Rupees of this product.

In Wealthsurance there is a choice of 5 riders where as in this product only one rider is available

NEW UNIT GAIN PLUS

Wealthsurance only has a allocation charge of only 4% in comparison to 55% in this product

.Max Entry age in Wealthsurance is 65 as against 60 of Unit Gain Gold Plus

UNIT GAIN PREMIUM

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Min Premium in Wealthsurance is only Ten Thousand Rupees in comparison to Fifty Thousand Rupees of this product.

Max Entry age in Wealthsurance is 65 as against this product which has a cut of 60 years.

PENSION GUARANTEE

Wealthsurance can be customized for retirement planning. Customers can opt for a partial withdrawal without any charges post 3

years from his fund value and use the money as pension. There is no Tax/Charges on the money withdrawn/taken as pension

ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI PRUDENTIAL offers seven different types of ULIP

a. LIFE TIME GOLD b. LIFE LINK SUPER c. PREMIER LIFE GOLD d. LIFE TIME PLUS e. LIFE STAGE f. SMART KID CHILD PLAN g. LIFE TIME SUPER PENSION

LIFE TIME GOLD

Min entry age 0yrs Max entry age 65yrs Max Maturity age 75yrs Min premium 20000 No. of funds 07 Riders ADBR,CIBR, WOP Min premium payment term 3 yrs

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LIFE LINK SUPER

Min entry age 0yrs Max entry age 65yrs Max Maturity age 70yrs Min premium 50000 No. of funds 07 Riders NO Min premium payment term SP

PREMIER LIFE GOLD

Min entry age 0yrs Max entry age 65, 69 yrs Max Maturity age 75yrs Min premium 10000 No. of funds 07 Riders ADBR,CIBR ,WORP Min premium payment term 3,5 yrs

LIFE TIME PLUS

Min entry age 0yrs Max entry age 65yrs Max Maturity age 75yrs Min premium 20000 No. of funds 07 Riders ADBR, CIBR Min premium payment term 3 yrs

LIFE STAGE

Min entry age 0yrs Max entry age 65yrs Max Maturity age 75yrs

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Min premium 15000 No. of funds 07 Riders ADBR, CIBR Min premium payment term LIFE BASED

SMART KID CHILD PLAN

Min entry age 0yrs Max entry age 15yrs Max Maturity age 25yrs Min premium 12000 No. of funds 07 Riders ADBR, CIBR WOP Min premium payment term 3 yrs

LIFE TIME SUPER PENSION

Min entry age 18yrs Max entry age 65yrs Max Maturity age 45 yrs vesting age Min premium 15000 No. of funds 07 Riders ADBR, CIBR Min premium payment term 3 yrs

ADBR-Accidental Death Benefit Rider,

CIBR-Critical Illness Benefit Rider,

NM-Not Mentioned,

WOP-Waiver of Premium

SP-Single Premium

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LIFE TIME GOLD

Premium allocation charge is premium based in this product where as Wealthsurance has a charge of Max 4% and with higher premium the allocation charge decreases.

Min Premium in Wealthsurance is only Rs.10000 as against in this product it is 20000

In Wealthsurance there is unlimited switching and partial withdrawal allowed absolutely free of charge.

LIFE LINK SUPER

Premium allocation charge is 20% in this product where as Wealthsurance has a charge of Max 4%.


In Wealthsurance there is unlimited switching and partial withdrawal allowed absolutely free of charge.

PREMIER LIFE GOLD

Premium allocation charge is 12% in this product where as Wealthsurance has a charge of Max 4%

There are no riders available in this product as against Wealthsurance has a host of riders to choose from.

In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge

LIFE TIME PLUS



In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge.

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LIFE STAGE



In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge.

There are only 2 riders available in this product as against Wealthsurance has a host of riders to choose from.

SMART KID CHILD PLAN



Wealthsurance can be beautifully customized to be a child plan by just adding wavier of premium.

LIFE TIME SUPER PENSION

Premium payable in this product is Rs.75000 as against in Wealthsurance it is only Rs.10000

There are only two rider available in this product as against Wealthsurance has a host of riders to choose from.

Allocation charge of 20% on this product and Wealthsurance has a 4% charge.

Annuity is taxable where as all the funds in Wealthsurance is tax free. Wealthsurance can be customized to be a tax free retirement plan. For post 3 years customers can also do unlimited partial withdrawal whenever there is a need for money without being charged or taxed.

SURVEY ANALYSIS

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A detailed survey was done in Indore city to understand and

study the consumers buying behavior towards ULIP. The

primary data was collected through questionnaires. This

questionnaire was mainly formulated to target the common

man to see his perception and awareness of various

investment options available. The sample size of the survey

was 50. The sample of respondents was carefully selected

covering people in all age groups and with different

backgrounds and occupations. The analysis of these

questionnaires gives us an insight about the mindset of

people regarding ULIP. The study extract the prominent

factors influencing the investments decisions of the

customers .Customer preferences as to where they would

like to invest have been studied Also we come to know

about the preferences given by customers towards various

top life insurance companies and their reasons for it. Here

we see that most of the customers invest regularly from

quite some time but since the last few months their

investments have come down due to recession and market

slowdown. Following is the analysis of the primary data

collected through questionnaires.

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1. AGE OF THE RESPONDENTS AND PREFERENCE FOR ULIPs

Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

18-30 16 3.5 12.25 .98

31-40 22 9.5 90.25 7.22

41-50 9 -3.5 12.25 .98

>50 3 -9.5 90.25 7.22

Total 50 16.4

Expected frequency= 50/4= 12.5

Chi square = 16.4

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between age and preference of ULIP, which is taken as NULL HYPOTHESIS.

The OBSERVED FREQUENCY is the response of the respondents conducted through poll.

The calculated value is then compared with the tabulated value which can be found out by looking at chi square table at 3 degree of freedom at 5% level of significance which comes out to be 7.815.

Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between age and preference of ULIP. Customers lying under the group of 31-40 tend to invest more in ULIP.

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2. INCOME OF THE RESPONDENTS AND PREFERENCE FOR ULIPs

Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

Below 1.5 lakh 8 -2 4 .4

1.5-2.5 lakh 11 1 1 .1

2.5-3.5 lakh 10 0 0 0

3.5-4.5 lakh 14 4 16 1.6

Above 4.5 lakh 7 -3 9 .9

Total 50 3

Expected frequency= 50/5= 10

Chi square = 3

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between income and preference of ULIP, which is taken as NULL HYPOTHESIS.


The calculated value is then compared with the tabulated value which can be found out by looking at chi square table at 4 degree of freedom at 5% level of significance which comes out to be 9.488

Since the calculated value is less than the tabulated value, the NULL HYPOTHESIS is accepted which interprets that there is no association between income and preference of ULIP. Customers of all the income groups tend to invest in ULIP.

3. OCCUPATION OF THE RESPONDENTS AND PREFERENCE FOR ULIPs

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Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

Govt. service 12 -.5 .25 .02

Businessman 7 -5.5 30.25 2.42

Private

company Job

22 9.5 90.25 7.22

Self employed 9 -3.5 12.25 .98

Total 50 10.64


Chi square = 10.64

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between occupation and preference of ULIP, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between occupation and preference of ULIP. Customers lying under the group of private company job tend to invest more in ULIP.

4. PERCENTAGE OF INCOME AS SAVINGS

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Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

0-5 % 26 9.4 88.36 5.32

5-10 % 13 -3.6 12.96 .78

10-15 % 11 -5.6 31.36 1.88

TOTAL 50 7.98

Expected frequency= 50/3 = 16.66

Chi square = 7.98

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between % of savings and preference of ULIP, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between % of savings and preference of ULIP. Customers doing the saving of around 5 %, used to invest in ULIP.

5. RISK INVOLVED IN ULIPs

Options Frequenc

y

(observed-

expected

(observed- (observed-

34

expected)² expected)²/e

High Risk 18 5.5 30.25 2.42

Moderate Risk 23 10.5 110.25 8.82

Low Risk 9 3.5 12.25 .98

Safe 0 -12.5 156.25 12.5

Total 50 24.72


Chi square = 24.72

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between risk involved and preference of ULIP, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between risk involved and behavior pattern. Customers find that there is moderate risk involved in ULIP and therefore take into account before making investment.

6. SECTOR PREFERRED BY CUSTOMERS TO INVEST.

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Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

Govt. Sector 33 8 64 2.56

Private Sector 17 -8 64 2.56

Total 50 5.12

Expected frequency= 50/2 =25

Chi square = 5.12

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between the preference of sector and customers buying behavior, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between the preference of sector and customer buying behavior. People mostly bend towards the government sector.

7. FACTORS CONSIDERED BEFORE MAKING INVESTMENT

36

Expected

frequency= 50/5 = 10, Chi square = 14.2

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between the aforesaid factors and the buying behavior of customers, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between the factors considered before making investment and buying behavior. People mostly prefer high returns while making investment.

8. PURPOSE OF INVESTMENT

Options frequenc

y

Observed-

expected

(Observed-

expected)²

(observed-

expected)²/e

Safety of

principal

14 4 16 1.6

Low risk 14 4 16 1.6

Higher

returns

15 5 25 2.5

Maturity

period

4 -6 36 3.6

Terms

and

conditions

3 -7 49 4.9

Total 50 14.2

37

Options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

Buying a

House

0 -12.5 156.25 12.5

Children’s

Education

16 3.5 12.25 .98

Children’s

Marriage

22 9.5 90.25 7.22

Retirement 12 -.5 .25 .02

Total 50 20.72

Expected frequency= 50/4= 12.5, Chi square = 20.72

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that all there is equal association between the purpose of investment and customers buying behavior, which is taken as NULL HYPOTHESIS.



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is association between the two and people use to make investment mostly for the purpose of children’s marriage.

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9. MODE OF INFORMATION USED BY CUSTOMERS TO CHOOSE PLANS AND COMPANIES

options Frequenc

y

(observed-

expected

(observed-

expected)²

(observed-

expected)²/e

Advertisement

s

22 9.5 90.25 7.22

Agents 12 -.5 .25 .02

Seminar 7 -5.5 30.25 2.42

Workshop 9 -3.5 12.25 .98

Total 50 133 10.64


Chi square = 10.64

Here the EXPECTED FREQUENCY is calculated by dividing the total number in the sample by the number of categories on the basis of the expectation that there is no association between mode of information and customers buying behavior,



Since the calculated value is greater than the tabulated value, the NULL HYPOTHESIS is rejected which interprets that there is a significant change in the observed and expected frequency which says that ALL MODES ARE NOT EQUALLY POPULAR, ADVERTISEMENT IS MOST POPULAR.

FINDINGS

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The Age of the respondents plays an important role in deciding the investment pattern. Respondents under the age group of 30-40 mostly prefer to invest in ULIP.

The respondents from all the income groups tend to invest in ULIP. The preference does not change with the change in the income of the customers.

The respondents have different occupations. Therefore the impact on purchasing a ULIP is affected by change in the occupation, people of private job prefer more to invest in comparison of others.

.Respondents having savings around 5%, used to invest in ULIP. Others might go for shares or gold as an investment option

Generally, government sector is preferred by the people for investment depending upon their requirements.

Various factors are considered before making investment but in general people used to prefer high returns before going for any investment.

Generally people find moderate risk in making investment in ULIP.

There are many companies in the market giving various plans of ULIP but L.I.C. is the most preferred company by the customers in the market.

The mode of information for choosing the insurance company is very well explained and concluded that advertisements are most popular.

Mainly the purpose of investment for the customers is children’s marriage.

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Also,

. There is a great future of the life insurance sector in India as 80% of the Indian population is still without life cover and people are just now coming in response to the awareness campaigns being carried out by almost all the insurance companies.

. A good positive growth is being shown by IDBI FORTIS and even though it is new and has a long way to go, it has already started working hard and is trying to make competition much tougher.

All the products of IDBI FORTIS under Wealthsurance are really very good and have an edge over most of the products of other major life insurance companies as the plans offered by the company are really very flexible.

Life Insurance Corporation (LIC) of India is still the undisputed market leader as 63% of the respondents surveyed owned a policy in it and it has also got a tremendous rating in the survey conducted.

RECOMMENDATIONS

41

IDBI FORTIS has to improve its distribution network as its reach to a common man is very limited .Also the number of agents working for the company is very less right now when compared to the other companies

The company should constantly come out with innovative products as the competition is very tough with around 22 companies fighting hard for the market share. Some new innovative ideas have been suggested below.

1. An insurance plan for the unborn babies. The premium payment term could be for 6 months and it could start once the fetus is 3 months old inside the mother’s womb. There could be various benefits under this plan for the customers like in case of a premature or a complicated birth the company would bear the expenses till the baby is healthy again through the insurance policy. Also there could be death benefits in case of the death of the baby inside the womb or at the time of delivery. This plan could really be successful as in India there are lot of premature child deaths and if the company comes out with a plan like this very tactfully with some implied conditions it would be the first Indian company to offer insurance to unborn babies.

2. An insurance plan for mentally retarded and physically handicapped people. This might be hard to digest but if at all plans like these are possible and really come out then a good amount of Indian population would really be interested.

3. The company could also come out with a plan for both the husband and wife where automatically the wife gets insured along with her husband when her husband purchases the policy. This could also be the other way round. This could be called the combo family plan. In simple words it means buy one policy and get another free. No other company has done something like this till now.

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As the company is a new company it has to really work hard to get it promoted. The company could start sponsoring major events and conduct talk shows and seminars to get noticed. It could also take the help of NGOs. There are many people in India who still do not know about the concept of insurance. The company could take this as an opportunity by trying to create awareness.

STRENGTHS & WEAKNESSES

43

The Fund allocation charges and fund management charges are very low when compared to most of the other companies in the market.

The growth of the company has been tremendous in terms of the premiums collected and the variety of funds introduced. All this has been done in a very short span of time which indicates that there is a great future for IDBI Fortis.

. IDBI Fortis offers funds almost to everyone right from a 3 month child to a 70 year old elderly person. The variety of funds offered is very vast.

The tie-up of the well known IDBI bank with Fortis International and Federal bank both of which are well established and good rated gives the company a greater scope for good growth in the future.

All the plans offered by the company especially under ULIPs are really flexible as there are no charges charged for switching and a customer can make use of the switching facility any number of times he wants to free of charge. Also the premiums payable can be decided by the customers themselves according to their feasibility and capacity.

DEMERITS:

IDBI Fortis has a limited presence right now so most of the people know nothing about the company.

With already around more than 20 private companies in the market it is really a mammoth task for IDBI Fortis to establish itself and move forward successfully as it is always difficult for any new company to capture the market very early.

44

Also with LIC still at the helm as the market leader it is really difficult for the company to move anywhere closer to it because LIC is the only public sector life insurance company and generally people would prefer a public company rather than a private company.

The company has to improve its distribution network as its reach to a common man is very limited .Also the number of agents working for the company is very less right now when compared to the other companies.

It is very difficult to convince the customers first because this is a new unknown company and secondly there are no part records which normally the customers consider seriously to show the company’s performance.

The variety of funds under IDBI FORTIS has to increase as competitors like ICICI Prudential have a larger and better variety of the same.

45

CONCLUSION

A Unit Linked Insurance Plan (ULIP) is an ideal investment vehicle for

today’s complex and modern financial scenario. Today almost each and

every person is fully aware of every kind of insurance proposals available in

the market. Everybody wants to get their future secured by making

investment in various insurance plans. The proposal which is entitled to low

risk, high returns and early redemption is mostly preferred.

At the same time, investing in ULIP as investing avenue is good for people

who have interest in staying for longer period of time around 10 years and

above.

Also in the coming times ULIP will grow faster. ULIP are actually being

publicized more and also the other traditional endowment policies are

becoming unattractive because of lower interest rates.

It is good for people who are investing in ULIP policies of insurance

companies as their investment earn them a better return than other policies.

In my opinion, before investing in ULIP, one should be fully aware of each

and everything.

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SCOPE FOR FURTHER RESEARCH

The ULIP has not been considered as a fruitful option in the market nowadays when is compared with just a normal term plan+ investment, so further research can be made in this area.

The further research can be done by involving other plans of other companies too.

The purchasing idea of a ULIP plan can be influenced by any other factors other than taken in questionnaire and therefore other researches can be conducted while considering other factors.

LIMITATIONS

The comparative analysis is done just with the WEALTHSURANCE, other products are not considered like RETIRESURANCE, BONDSURANCE, and HOMESURANCE.

The study is confined only to a small segment of the entire population due to monetary and time constraints and hence the results are applicable only to the city of Indore.

The comparative analysis done here is just among the few companies and many are left out. So, the results might not represent the real situation.

47

BIBLIOGRAPHY

www.licindia.com

www.idbifortis.com

www.bajajallianz.com

www.iciciprulife.com

www.moneycontrol.com

www.wikipedia.org

Research Methodology - C.R. Kothari

Research Methodology and Statistical Technique - Santosh Gupta

48

http://www.wikipedia.org/

http://www.moneycontrol.com/

http://www.iciciprulife.com/

http://www.bajajallianz.com/

http://www.idbifortis.com/

http://www.licindia.com/

ENCLOSURES

QUESTIONNAIRE

(This questionnaire is only of the sake of some research work being done on insurance companies. Confidentiality would be maintained.)

Name: ________________________________________________________

Gender: Male Female

Age Group:

18-30 31-40 41-50 >50 Qualification:

Post Graduate Graduate 12th < 12th

Occupation:

Government Service Businessman Private Company

Self Employed Any other (Please specify) Your income range (per annum):

Below 150000 150000-250000 250000-350000

350000-450000 More than 450000

Your savings per year:

Below 10000 10000-25000 25000-50000

50000-100000 More than 100000

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Your opinion about investment:

Tax Saving Good returns Better future after retirement

Wealth creation Any other (please specify)

Preferably you would like to invest in:

Government Sector Private Sector

According to you what is the amount of risk involved in (ULIPs) Unit Linked Investment Plans?

High risk Moderate risk Low risk

They are Safe No Idea

What is the mode of information for choosing Life insurance Company?

Advertisements Agents

Seminars Workshops

According to you who are the best insurance company?

________________________________________________________

--------------THANK YOU SO MUCH FOR YOUR VALUABLE TIME----

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