Project On

COMPARATIVE STUDY

OF

TATA AIG LTD.

&

HDFC STANDARD

LIFE INSURANCE CO. LTD.

Master of Business Administration (Marketing)

Submitted in partial fulfillment of the requirement for award of Master of Business Administration of Tilak Maharashtra University, Pune.

Submitted by

Vinay Kumar 09-AIT-MBA-006 PRN No.-07209007647

of Ansal Institute of technology Gurgaon Guided By Prof. Ashok Malhotra

Tilak Maharashtra University, Pune(Deemed under section 3 of UGC act 1956 vide Notification No. F.9-19/85-U3 dated 24th April 1987 By the Government of India.) Vidyapeeth Bhavan, Gultekdi, Pune-411037.

CERTIFICATE

This is to certify that the project titled Comparative study of TATA AIG & HDFC Standard Life Insurance ltd. Is a bona fide work carried our by Mr. Vinay Kumar a student of Master Of Business Administration Semester 3rd, Specialization Marketing PRN. under Tilak Maharashtra University, in the year 2010.

Head of the Department Examiner Examiner Internal ExternalDate:

Place: University Seal

Certificate of Internal Guide

This is to certify that the project titled Comparative study of TATA AIG & HDFC Standard Life Insurance ltd. is a bonafide work carried out by Vinay kumar a candidate for the award of Master of Business Administration of Tilak Maharashtra University, Pune under my guidance and direction.

Signature of Guide Date: Name: Ashok Malhotra Designation: Prof. Ait, GurgaonPlace: Institute: Ansal Institute of Technology

STUDENT’S DECLARATION

I hereby declare that the project work titled Comparative study of TATA AIG & HDFC

Standard Life Insurance ltd.

is an authentic work carried out by me at HDFC Standard Life Insurance.

under the guidance of Prof. Ashok Malhotra (lecturer Ansal Institute of Technology and

Management Studies, Sec-55 Gurgaon.) For partial fulfillment for the award of the

degree of Master of Business Administration.

Dated: 31August, 2010

Vinay Kumar

MBA – 3rd Semester

Ansal Institute of Technology and Management Studies.

Sector-55,

Gurgaon (Haryana)

ACKNOWLEDGEMENT

Summer training project is essentially a learning process in which apart from learning the

subject, one learns to work in real life environment. It is very difficult to prepare a project

report of such a nature because of limited time. But every time I feel encouraged because

the whole staffs and executives of the company who have helped me by providing the

much-required information about the company, its operations and have helped in

structuring and completion of the project.

It gives me a great pleasure to present this report that is an outcome of my implant

training in TATA AIG LIC LTD., Panipat. I would like to express my heartfelt

gratitude towards Prof. Ashok Malhotra who extended his whole-hearted and

undeserved help to me throughout this project and enabled me to give the project its

present shape. I am grateful to marketing department in TATA AIG LIC LTD.for giving

me opportunity to work in the TATA AIG. I would like to thank to all those people who

directly or indirectly contribute to this project and in my Training.

TABLE OF CONTENT

Chapter 1. Rationale for the Study.

Chapter 2. Objective of the Study.

Title of the project. Objective of the study. Scope of the study.

Chapter 3. Profile of the Company. Chapter 4 Literature Review.. Chapter 5. Research Methodology.

Research Design Data collection methods/sources Sampling plan which should include sampling unit,

Sampling size and sampling methods viz questionnaire method,

Chapter 6 Data Analysis and Interpretations(using Various charts and graphs).

Chapter 7 Findings and Conclusions Chapter 8 Limitations Chapter 9 Expected Contribution from the study. Appendices

Copies of questionnaire. Copies of form(s) if any from the company Bibliography

Chapter 1: RATIONALE FOR THE STUDY

Practical training constitutes an integral part of management studies. Training gives an opportunity to the students to expose themselves to the industrial environment, which is quite different from the classroom teaching. The practical knowledge is an important suffix to the theoretical knowledge.

One cannot rely merely upon theoretical knowledge. It has to be coupled with practical for it to be fruitful. Classroom lectures make the fundamental concept of management clear but not their application in actual practice. Positive and correct result of the classroom learning needs realities of the practical situation. The working conditions under later when they join any organization.

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 32-34 per cent annually and presently is of the order of $ 41 billion (for the financial year 2009 – 2010). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP).

In India, life insurance has begun in 1818 when It was conceived as a means to provide for English widows. In those days a higher premium was charged for Indian lives than the non-Indian lives, as the Indian lives were considered more risky to cover.

Life insurance sector is very important in our country’s economy. This sector is very big and is still growing. There are many opportunities in this sector to grow. Today everyone wants to get insured. This sector is not at it’s maturity stage. It’s generating employment at a high rate. This service has reached to everywhere whether it’s rural, remote or urban areas. That’s why I studied this sector.

Chapter 2 Objective of the Study

Title of the Project: Comparative study of TATA AIG LTD. & HDFC SLIC LTD.

Objective of the study:

o To understand the life insurance sector in India.

o To understand the importance of this sector.

o To know the position of TATA AIG LTD. in private life insurers.

o To know about all the life insurance plans of TATA AIG LTD.

o To analyze the data and information of TATA AIG LTD.

o To study about the growth of life insurance sector by taking two companies TATA AIG LTD. & HDFC SLIC LTD.

Scope of the study:

o TATA AIG LTD. is one of the leading life insurance company in

insurance sector. It has many types of life insurance plans. The company has 540 branches all over India. The company is using all marketing strategies to grow and to capture life insurance market as much as possible.TATA AIG LTD. is doing it’s marketing work very effectively at all India level and growing day by day by its marketing

strategies.

Chapter 3.

Profile of the Company

Tata 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 Group’s pre-eminent leadership position in India and AIG’s global

presence as the world’s 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 GROUP

The Tata Group is one of India's largest and most respected business conglomerates, with

revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8

per cent of the country's GDP. Tata companies together employ some 215,000 people.

The Group's 32 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 40

countries across six continents, and its companies export products and services to 140

nations.

AIG

American International Group, Inc. (AIG), world leaders in insurance and financial

services, is the leading international insurance organization with operations in more than

130 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.

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 4.50% of the market share followed by Tata

AIG with about 2.10% 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

clear winner in terms of customer satisfaction in the life insurance category. 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.

PRODUCTS & SERVICES:

Corporate life insurance products:

Employee Benefits

Credit Life

Group Pensions

Workplace Solutions

Individual life 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.

Management

Gaurav Garg

Tata AIG General Insurance Company (Tata AIG General) appointed Mr.

Gaurav Garg as the Managing Director of company

effective July 1, 2007. Previously, Mr. Garg was the president (field operation) of AIG,

New York. He succeeds Michael Carlin.

Based in Mumbai, Gaurav is responsible for providing overall leadership for

managing the operation of Tata AIG general in India and for driving all business and

market development activities.

Commenting on these changes Farrokh Kavarana, Chairman, Tata AIG General

Insurance Company said, “We welcome Mr. Garg on board as the takes over the reins

from Mr. Carlin as the Managing Director of Tata AIG General Insurance. We would;

like to thank Mr. Carlin for his contribution during his tenure in India and wish him

success for the future. Mr. Garg was a part of the start up team in the year 2000 of Tata

AIG General Insurance Company, as the Personal Lines Profit Center head. Since 2004,

in AIG New York, he has been a part of various multifunctional task forces set up to

improve operations and transfer best practice. With solid domestic and international

experience, Mr. Garg is well equipped to build on the momentum that the company has

achieved over the last six years and we wish him all the best as he takes on this

challenging assignment.”

Before joining Tata AIG, Gaurav has had a long career with the National Insurance

Company of India where he held various responsibilities. Gaurav has completed an MBA

from the University of Lucknow in India and is also a fellow of the Insurance Institute of

India.

CHAPTER- 4:

REVIEW OF LITERATURE

2.1 INTRODUCTION

Different investment avenues are available to investors. Insurance also offer

good investment opportunities to the investors. Like all investments, they also

carry certain risks. The investors should compare the risks and expected yields

after adjustment of tax on various instruments while taking investment

decisions. The investors may seek advice from experts and consultants

including agents and distributors of insurance schemes while making investment

decisions. With an objective to make the investors aware of functioning of

insurance, an attempt has been made to provide information in question-answer

format, which may help the investors in taking investment decisions.

A Insuranceis a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities. The income

earned through these investments and the capital appreciation realized are

shared by its unit holders in proportion to the number of units owned by them.

Thus a Insuranceis the most suitable investment for the common man as it offers

an opportunity to invest in a diversified, professionally Insuranceis a mechanism

for pooling the resources by issuing units to the investors and investing funds in

securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all

stocks may not move in the same direction in the same proportion at the same

time. Insuranceissues units to the investors in accordance with quantum of

money invested by them. Investors of insurance are known as unit holders.

The investors in proportion to their investments share the profits or losses. The

insurance normally come out with a number of schemes with different

investment objectives, which are launched from time to time. A insuranceis

required to be registered with Securities and Exchange Board of India (SEBI),

which regulates securities markets before it can collect funds from the publican

aged basket of securities at a relatively low cost.

A insuranceis set up in the form of a trust, which has sponsor, trustees, Asset

Management Company (AMC) and custodian. The trust is established by a

sponsor or more than one sponsor who is like promoter of a company. The

trustees of the insurancehold its property for the benefit of the unit holders.

Asset Management Company (AMC) approved by SEBI manages the funds by

making investments in various types of securities. Custodian, who is registered

with SEBI, holds the securities of various schemes of the fund in its custody.

The trustees are vested with the general power of superintendence and direction

over AMC. They monitor the performance and compliance of SEBI Regulations

by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee

company or board of trustees must be independent i.e. they should not be

associated with the sponsors. Also, 50% of the directors of AMC must be

independent. All insurance are required to be registered with SEBI before they

launch any scheme.

Previous Academic Studies:

There are various studies undertaken by many intellects on insurance some of

them are

The early studies on performance persistence of MF gave many contradictory

opinions. Sharpe(1966) used ratio developed by him called Sharpe Ratio to

measure the fund performance. he had taken into consideration two periods i.e.

1944-53 and 1954-63 and a significantly positive not very perfect , relationship

between two ranking periods.

15

A Study of Monthly Insurance Returns and Performance Evaluation Techniques

Mark Grinblatt, Sheridan Titman undertaken in 1992 which is licensed by

university of Washington school of business administration. This paper

empirically contrasts the Jensen measure Treynor measure and the positive

period weighting measure on a sample of 279 insurance . The study finds that

the measure generally yields same inferences when using the same benchmark

and that inferences can vary, even from the same measure, when using different

benchmarks. This paper also analyses determinants of MF performance.

During 1992, positive results were also obtained in studies carried out by

Brown, Goetzmann, Ibbotson and Ross, wherein they analysed the relationship

between volatility and returns .Their study period ranged from 1976-87 with at

three year evaluation period. They presented some numerical examples to show

that the effect could be strong enough to account for the strength of the evidence

favoring return predictability.

Hendricks, Patel, and Zeckhauser (1993) study 165 no-load growth-oriented

funds over the period 1974 to 1988 and obtain similar results. In a study of 728

insurance returns over the period 1976 to 1988, Goetzman and Ibbotson (1994)

find that two-year performance is predictive of performance over the successive

two years. Volkman and Wohar (1995) extend this analysis to examine factors

that impact performance persistence. Their data consists of 322 funds over the

period 1980 to 1989, and shows performance persistence is negatively related to

size and negatively related to levels of management fees.

Studies of performance persistence in insurance are not without contrary

evidence. Carhart (1997) shows that expenses and common factors in stock

returns such as beta, market capitalization, one-year return momentum, and

whether the portfolio is value or growth oriented "almost completely" explain

short term persistence in risk-adjusted returns. He concludes that his evidence

does not "support the existence of skilled or informed insuranceportfolio

16

managers" (Carhart, 1997, p. 57). In the Kahn and Rudd 1995 study of 300

equity funds and 195 bond funds between 1983 and 1993, only the bond funds

show evidence of persistence. In an article in this issue, Detzel and Weigand

(1998) use a regression residual technique to control for the effects of

investment style, size and expense ratios. They find, after controlling for these

variables, no evidence of performance persistence.

Two other studies have used performance ranks. Dunn and Theisen (1983) rank

the annual performance of 201 institutional portfolios for the period 1973

through 1982 without controlling for fund risk. They found no evidence that

funds performed within the same quartile over the ten-year period. They also

found that ranks of individual managers based on 5-year compound returns

revealed no consistency. Bauman and Miller (1995) studied the persistence of

pension and investment fund performance by type of investment organization

and investment style. They employed a quartile ranking technique because they

noted that "investors pay particular attention to consultants' and financial

periodicals' investment performance rankings of insurance and pension funds"

(Bauman & Miller, 1995, p. 79). They found that portfolios managed by

investment advisors showed more consistent performance (measured by quartile

rankings) over market cycles and that funds managed by banks and insurance

companies showed the least consistency. They suggest that this result may be

caused by a higher turnover in the decision-making structure in these less

consistent funds. This study controls for the effects of turnover of key decision

makers by restricting the sample to those funds with the same manager for the

entire period of study.

17

Global Financial Management, Quantitative Performance Evaluation1997 by

Campbell R. Harvey and Stephen Gray. This class considers the efficiency of

capital markets and how to measure the performance of individual stocks and

insurance over time. Three notions of efficiency are introduced based on the

type of information being used to forecast returns. A number of technical

trading rules are introduced and their success is evaluated. Three traditional

measures of portfolio performance are reviewed, and some more recent

measures of performance are introduced. The relative strengths and weaknesses

of the various measures are compared and contrasted.

INSURANCE OPERATION FLOW CHART

Investors

Passed back to Pool their money with

Returns Fund Manager

Generates Invest in

Securities

Figure: 2.1 Insurance operation flow chart

2.2 GENESIS OF INSURANCE

18

The goal of security industry is to create a nation of shareholding capitalists to

make every man and woman a participant in the corporate activities. A small

investor is unsophisticated so far as corporate investment is concerned. With the

limited resources, he cannot buy shares of 'blue chip companies'. He may not, in

the most cases get allotment of the shares, applied for, in the Primary Market.

On the other hand, he will get full allotment of some dud shares. His

investments would, therefore, be not balanced and diversified. He is not thereby

able to minimize his risks by spreading his limited funds over different

industries. He has limited access to price sensitive information of the stock

exchanges. He may not even know the developments that take place in the share

markets and corporate bodies. 'Insurance' have come to a boon to the small

investors and they have emerged as the popular medium through which small

and medium investors can reap the benefits of good investing. The Institution of

Insurance collectively manages the funds from different small investors. It

mobilizes savings from the public and provides them attractive returns, security

and liquidity by investing in Capital Market.

Insurance emerged in the UK and the US as 'investment management

institutions' in the early Twentieth century, during the 1920s. The origin of

Insurance may however be traced back to the days ancient Greek where

'merchants' banded together to take shares in the commercial undertakings.

Similar arrangements existed in Rome and Europe also when merchants in

colonial America used to take shares in voyages which when completed would

be liquidated and assets divided among themselves. The Scottish American

Investment Trust was formed in 1873 to hold portfolio of American Railroads

bonds shares in trust were issued to the interested citizens of Dundee. Most of

these schemes were a closed type and the shares were sold and purchased at the

market rates and the 'law of demand' and supply set the price.

The concept of Insurancewas experimented in the US from 1920s and the

institutional business was becoming popular in the late 1940s. As the financial

climate during the early 1980s enhanced the competitiveness of certain

19

investment products the Insurance Industry responded to investors demand by

increasing the number and type of Insurance.

In the UK, during the 1920s, 'the accepting houses' emerged as a major force in

the business of investment management agencies. Investment management has

its genesis in the deployment of the large fortunes made by some of the

Victorian merchant bankers. But only in 1950, the accepting houses rapidly

built up on their existing skills and knowledge to deal with increasing capital.

The investment trust was superseded by the Unit Trust as small savers means of

access to professional management.

The foundation for the Insuranceoperation in India was laid by the Parliament in

1963 with the enactment of the Unit Trust of India (UTI) Act. At that time, the

then Finance Minister Mr. T.T. Krishnamachari, who initiated the Act, made it

clear to the Parliament that “UTI would provide an opportunity for the middle

and lower income groups to acquire without much difficulty, property in the

form of shares or units. This institution is intended to cater mainly to the needs

of individuals investors whose means are small.” The statement of objects and

reasons to the Unit Trust of India Act brings out critically the objects and role of

Mutual Fund. The statement stated:

“The question of establishing an institution in the public sector for carrying on

the business which is transacted by Unit Trust of India or Insurance in other

countries has been under consideration for sometimes. It is now proposed to

establish such an institution to be known as the Unit Trust of India with an

initial capital of five crores of rupees.

The Unit Trust of India will encourage saving by providing for various classes of

investors the facility of investing their money in units of the Trust. The Trust will invest

the initial capital and the capital obtained by the sale of the units in shares and other

securities and will distribute every year not less than 90 per cent of the net income

accruing to the unit holders. It is expected that the risk of losses or of depreciation on

account of the investments will be reduced or eliminated as a result of the proposed

20

arrangement. The Trust will also be in a position to contribute through its operations to

the growth and diversification of the country’s economy.

CHAPTER-5:

RESEARCH METHODOLOGY

RESEARCH DESIGN

INTRODUCTION

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

21

“To Compare the products of HDFC Standard Life Insurance Company Limited

and Tata AIG Life Insurance Company Limited for HDFC Standard Life Insurance

Company Ltd.”

STATEMENT OF THE PROBLEM

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.

22

OBJECTIVES OF THE STUDY

To analysis the product details of TATA AIG life Insurance Company limited

and HDFC Standard life Insurance Company Limited.

To find ‘Points of Parity’ and ‘Points of Difference’ of TATA AIG Life

Insurance Company Limited and HDFC Standard Life Insurance Company

Limited.

To find out factors that influence customers to purchase insurance policies and

give suggestions for further improvement.

23

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There 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

data is data collected from indirect sources. (Source: Research Methodology, By C. R.

Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the

personal interview methods of data collection.

SECONDARY SOURCES

24

These include books, the internet, company brochures, product brochures, the company

website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling 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 SIZE

The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

10,00,000 which is approx population of Panipat excluding people below age of 18 years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

25

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.

STUDY AREA

The samples referred to were residing in Panipat City. The areas covered

were Bhatiya colony, Hari Bagh colony, Sukhdev nagar,Bishan Swaroop

colony,Kachha Camp, Virat nagar etc.

Chapter 6

Data Analysis and Interpretations (using

Various charts and graphs).

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 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

26

CHART 1:

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.

27

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.

Customer profile of Served Respondents

TABLE 2:

Customer profile No. of respondents

Student 62

Housewife 5

Working Professional 116

Business 49

Self Employed 24

Government service employee 14

CHART 2:

28

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 THEIR

NAME

TABLE 3:

Person who have life insurance policyYes 103No 167

CHART 3:

29

ANALYSIS:

This graph shows that out of total 270 respondents only 103 or 38% respondents have life

insurance policy in their name. Rest all don’t 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 COMPANIES

30

TABLE 4:

LIFE INSURER NUMBER OF POLICIESHDFC STANDARD LIFE 4BIRLA SUN LIFE 3AVIVA LIFE INSURANCE 6BAJAJ ALLIANZ 7LIC 55TATA AIG 6ICICI PRUDENTIAL 12ING VYSYA 6BHARTI AXA 2OTHERS 2

CHART 4:

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.

31

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 5:

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

32

CHART 5:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

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 TATA AIG Life Insurance would be able to capture

the market better if it introduced products/plans where the minimum premium starts at

Rs. 5000 per annum.

33

Only 19% of the respondents pay more than Rs. 25000 as premium and most products

sold by TATA AIG Life Insurance 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 PLANS

TABLE 6:

Type of Plan No. of Respondents

Term Insurance Plans 105

Endowment Plans 122

Pension Plans 16

Child Plans 8

Tax Saving Plans 19

34

CHART 6:

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 PLANS

TABLE 7:

Awareness of Unit Linked Plans No. of RespondentsYes 154No 116

CHART 7:

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,

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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.

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 8:

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 8:

37

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

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.

TATA AIG Life Insurance 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.

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CHART SHOWING IDEAL POLICY TERM

TABLE 9:

Ideal policy term No. of respondents3 - 5 years 516 - 9 years 4110 - 15 years 9516 - 20 years 3821 - 25 years 2426 - 30 years 5More than 30 years 3Whole life Policy 13

CHART 9:

CHART SHOWING IDEAL POLICY TERM

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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 TATA AIG Life Insurance 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

TABLE 10:

Parameter No. of RespondentsAdvertisements 35High returns 84Advice from friends 46Family responsibilities 89Others 16

CHART 10:

40

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.

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 RESPONDENTS

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TABLE 11:

Type of Company No. of Respondents PercentageGovernment Owned Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 11:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

Analysis:

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.

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MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 12:

Expected Returns No. of respondentsLess than 5% 55% - 10% 3911% - 15% 4616% - 20% 4921% - 25% 4626% - 30% 2731% - 40% 2241% - 50% 14More than 50% 22

CHART 12:

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.

Chapter 7 Findings and Conclusions

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

TATA AIG LTD., 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 TATA could be used to give a push to

TATA AIG LTD. 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 TATA AIG Life

Insurance 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 TATA AIG LTD. A

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large number of changes could be introduced and this would help in saving operating

costs and improving the efficiency of the firm.

CONCLUSION

TATA AIG life insurance is first life insurance company in India. It has businesses

spread out across the globe. It started its work in India on January 22, 2001. 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 TATA AIG Life Insurance. 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 unit linked concept must be specifically promoted. The general perception of life

insurance has to change in India before progress is made in this field. People should not

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be afraid to invest money in insurance and must use it as an effective tool for tax

planning and long term savings.

TATA AIG LTD. 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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Chapter 8

Limitations

1. Some people don’t give the remarkable answer, so the surveyor has to make his own

assumption

2. Since the survey has been conducted in Panipat, being so big market it might not give

true picture.

3. The questionnaire was too long and many a times respondents used to refuse to fill

the questionnaire as they considered it to be time consuming.

4. The time period allotted for the study was limited as it had to be completed with this

stipulated period of time.

5. The number of respondent covered in the study is limited. Although all efforts has

been taken to make this study a representative of total market of Panipat, the sample size

is too small so that data are not reliable. Most of the customer were busy in their work

and saying “sorry I don’t have time” .So it was very difficult to access information from

those people.

6. The respondents were unable to read exact data spontaneously.

It is very difficult to catch the exact word of customers through questionnaire

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Chapter 9

Expected Contribution from the study

The project allowed me to know the subject in a better way by practical learning.

How the insurance sector contribute in Indian economy .

How different aspects of an area (area under study) effect the marketing strategies .

How the company make strategies and move towards growth .

How an area can be divided into various sub cities so that marketing can be done effectively.

How insurance sector attracts public towards their services.

How the company insures people’s life and also makes its own profit.

How the company decides new opportunities in the market.

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Appendices

Bibliography

1. Management notes of TATA AIG LTD.2. www.tata-aig-life.com3. C.R KOTHARI4. Journal of the company to know it in a better way. 5. Corporate mentor Mr. Pawan Sabharwal.

Websites:

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

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Copy of questionnaire

Dear Sir/Madam,

I am a student of Ansal Inst. Of Technology, Gurgaon. As part of the requirements for my Post Graduation Degree in Management I am required to do a research based project. Kindly spend a few minutes of your valuable time and fill in this questionnaire.

Do you have a life insurance policy/investment plan in your name?

o Yes o No

If yes which company’s insurance policies do you hold?

o TATA AIG Life Insurance

o Birla Sun Life Insurance

o Aviva Life Insurance

o Bajaj Allianz Life Insurance

o LICo HDFC Standard

Life Insuranceo ICICI Prudential

Life Insurance

o ING Vysya Life Insurance

o Bharti Axa Life Insurance

o Others (specify name)

What is the approximate premium paid by you annually (in Rupees)?

o Rs. 5,000 – Rs. 10,000

o Rs. 10,001 – Rs. 15,000

o Rs. 15,001 – Rs. 25,000

o Rs. 25,001 – Rs. 50,000

o Rs. 50,001 – Rs. 60,000

o Rs. 60,001 – Rs. 80,000

o Rs. 80,001 – Rs. 1,00,000

o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in your

current stage of life?

50

o Life Insuranceo Life Insurance and

Investment Plans

o Pension Planso Child Plans

o Tax saving plans

Are you aware of the new unit linked insurance plans in the market?

o Yes o No

How much would you be willing to spend per annum if you were to go for an investment/insurance plan?

o Less than Rs. 6,000o Rs. 6,001 – Rs.

10,000 o Rs. 10,001 – Rs.

25,000

o Rs. 25,001 – Rs. 50,000

o Rs. 50,000 – Rs. 1,00,000

o More than Rs. 1,00,000

Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)

o 3 to 5 yearso 6 to 9 yearso 10 to 15 yearso 16 to 20 years

o 21 to 25 yearso 26 to 30 yearso More than 30 yearso Whole life policy

What motivates you to purchase insurance/investment plans?

o Advertisementso High Returns

o Advice from friends

o Family responsibilities

o Others (specify)

In which kind of company would you prefer to make a purchase of insurance?

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o Government owned company

o Public Limited Company

o Private Companyo Foreign based

company

Typically what kind of returns would you look at from your investments? (Please note: Higher returns 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. :

Profile of Student Housewife Working

Professional Business Self – Employed Government

Service Employee

Date:

Respondent:

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