Twcompartive naysis

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ACKNOWLEDGEMENT

I would like to take this opportunity to thank all those who have helped

me tremendously during the course of the project.

My heartiest thanks are due to many persons for assistance in this project

to present state. The profound gratitude to our teachers especially;

Mrs. Veera Lakshmi for being my guide throughout the

completion of this project.

Mr. Hridesh Chauhan, Branch Manager of HDFC Standard Life

Insurance Corporation, Roorkee for clarifying the problems which

I encountered during the preparation of this project.

I would also like to thank Mr. Sanchit Sachdeva, Sales

development Manager, for guiding me throughout my project. I

also extend my gratitude to other SDM's and my friends who have


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helped me directly or indirectly to complete my project.

I also acknowledge the Knowledge that I have gained during the

preparation of this project.

ASAF ALI

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CONTENT

1. INTRODUCTION 6

2. EXECUTIVE SUMMARY 7

3. OBJECTIVE OF THE STUDY 8

4. COMPANY PROFILES 9-13

5. DEPARTMENT OVERVIEW

15-

17

6. INSURANCE FUNCTION

18-

20

7. SOME TERMS ABOUT ULIP PLANS

21-

23

8. PRODUCT PROFILE24-44

9. TAXATION BENEFIT

45-

48

10

. COMPARATIVE STUDY OF DIFFERENT FIRMS

48-

51

11

. RESEARCH METHODOLOGY

52-

5412

. CONCLUSION & RECOMMENDATION 55

13

. BIBILOGRAPHY 56


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INTRODUCTION

The project started with class room sessions involving lectures and interactions

with the mentors Mr. Sanchit Sachdeva (SDM) and Mr. Hridesh Chauhan (BM).

They explained all the plans available with HDFC SLIC in detail and the pension

plan comparison of BIRLA SUN LIFE, BAJAJ ALLIANZ & LIC.

The classroom also involved role plays and games. The role plays and

games involved students being asked to play the roles of customers or

clients and that of a person trying to persuade the customer to go in for

a plan with HDFC SLIC.

These class room lectures and role-plays helped me to gain a substantial

understanding of the plans. This in turn helped me to effectively explain

these plans to people whom I meet or took appointment to meet.

The connect of life insurance has undergone several changes over the

years and what has myriad array of attractive options apart from the

basic of life cover. Life insurance schemes also offer tax benefits. In

todays scenario life insurance solves the three objectives.

1. Security

2. Saving


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3. Tax Benefit.

\

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EXECUTIVE SUMMARY

This project is based upon the fact & figure gathered from the websites

about the plans of the firm.

In the first part of the report there are some plans which are frequently sold

by HDFC SLIC in the market, and then comparative study of pension plan of

different firm namely BIRLA SUN LIFE, BAJAJ ALLIANZ and LIC is there

.

In the last part of the project I have given some of the findings and conclusion

about the life insurance market and what is the potential of the market. In the

end I have give all the sources from which I have collected all the information.


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OBJECTIVE OF STUDY

1. Comparative study of HDFC SLIC, BIRLA SUN LIFE,

BAJAJ ALLIANZ and LIC.

2. To analyze the pension plan on the basis of features

offered.

3. To observe working of various departments of the

organization.

.


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COMPANY PROFILE

HDFC LIMITED

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

social need that of promoting home ownership by providing long-term

finance to households for their housing needs. HDFC was promoted

with an initial share capital of Rs. 100 million.

Business Objectives

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

the country through the provision of housing finance in a systematic and

professional manner, and to promote home ownership. Another objective

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

the housing finance sector with the overall domestic financial markets.

Organizational Goals

HDFCs main goals are to

a) Develop close relationships with individual households,


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b) Maintain its position as the premier housing finance

institution in the country,

c) Transform ideas into viable and creative solutions,

d) Provide consistently high returns to shareholders,

e) To grow through diversification by leveraging off the existing client

base.

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HDFC STANDARD LIFE

The Partnership:

HDFC is an organization that strives for excellence, with the twinobjectives of enhancing customer satisfaction and shareholder value

HDFC and Standard Life first came together for a possible joint

venture, to enter the Life Insurance market, in January 1995. At the

outset it was clear that both companies shared similar values and

beliefs and a strong relationship quickly formed. In October 1995 the

companies signed a 3 year joint venture agreement.

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

further strengthening the relationship. The next three years were

filled with uncertainty, due to changes in government and ongoing

delays in getting the IRDA (Insurance Regulatory and Development

authority) Act passed in parliament.

Despite this both companies remained firmly committed to the venture. In

October 1998, the joint venture agreement was renewed and additional

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

Infrastructure Development Finance Company Ltd. (IDFC). Standard

Life also started to use the services of the HDFC Treasury department

to advise them upon their investments in India.

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

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

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


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

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

5% stake in HDFC Bank. In a further development Standard Life agreed to

participate in the Asset Management Company promoted by HDFC to enter

the mutual fund market. The Mutual Fund was launched on 20th July 2000.

The company was incorporated on 14th August 2000 under the

name: HDFC Standard Life Insurance Company Limited.

Their ambition from as far back as October 1995 was to be the first

private company to re-enter the life insurance market in India. On the

23rd of October 2000, this ambition was realized when HDFC Standard

Life was the only life company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with 81.6%, while

Standard Life owns 18.4%. HDFC and Standard Life have a long and close

relationship built upon shared values and trust. The ambition of HDFC

Standard Life is to mirror the success of the parent companies and be the

yardstick by which all other insurance companies in India are measured.

HDFC Standard Life Insurance Company has been signed on by Blue Star to

provide insurance cover to its 1,805 employees across India and overseas.HDFC Standard Life Insurance is one of the leading players in the group

insurance segment of the life insurance business. Its group business has

grown significantly since inception and now covers over 25,000 lives, across

the entire industry spectrum including software, FMCG, pharmaceuticals,

banking, consultancy, BPOs, retailing, and consumer electronics


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HDFC STANDARD LIFE

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MISSION:-

HDFC Standard Life aims to be the top new life insurance

company in the market.

This does not just mean being the largest or the most productive

company in the market, rather it is a combination of several things like:

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different

customers Use of technology to improve service standard

Increasing market share

VALUES:-

1. SECURITY: Providing long term financial security to its policy

holderswill be the companys constant endeavor. It will do this by

offering life insurance and pension products.

2. TRUST: HDFC Standard Life appreciates the trust placed by its

policyholders in it. Hence, it will aim to manage their

investments very carefully and live up to this trust.


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3. INNOVATION: Recognizing the different needs of its customers, it

will be offering a range of innovative products to meet these needs.

The companys mission is to be the best new life insurance

company in India and these are the values that will guide it in this

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Why HDFC Standard Life?

There are many reasons why one may choose HDFC Standard Life

Insurance Company Ltd. as your partner in meeting your insurance needs:

a) Innovative products to meet your needs.

b) Efficient customer service team.

c) Good financial track record of both parents HDFC and Standard

Life.

d) Certified Financial Consultants to advise you.

e) Professional approach in managing your investments.

f) Income Tax benefits for our insurance products.


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FINANCE DEPARTMENT AT HDFC STANDARD LIFE

The finance department of HDFC Standard Life Insurance is headed by

the General Manager (Finance), who reports to the MD and CEO. There

are four other departments under the Finance Departments. These are:

1. Accounts Department

2. Actuary Department

3. Investment Department

4. Underwriting Department

The Accounts Department:

The Accounts Department functions like any other Accounts department. It is

concerned with the disbursement of salaries, reimbursements, incentives,

commissions to agents. It also handles the payments due to other agencies with

which the Company interacts, viz. event management companies etc. The work

of an Accounts department assumes much importance in an insurance company

because it has to be able to pay the claims arising time to time.


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The Actuary Department:

The Actuary Department is the Pricing Department of an insurance company.

It must be understood that the basic premise on which the insurance companies

work is use the corpus of policy holders for disbursement for any claim.

Based on this principle, this department decides the amount of premium to

be charged from a client for a particular policy. This is normally done with

the help of Mortality Tables, which can either be prepared by the company

itself, or the company can use the existing tables available for its use. The

IRDA (Insurance Regulation Development Authority) has prescribed the

use of the mortality tables used by LIC for all other companies.

The Actuary Department is also responsible for Asset-Liability Management

of the insurance company. It must ensure that the Solvency margin (Assets-

Liabilities) must be at least Rs 50 crores, as prescribed by IRDA. 95% of the

surplus above this has to be distributed to the investors a bonus. HDFC

Standard Life has till now declared three bonuses to its policyholders

The Investment Department:

The Investment Department is responsible for the investment of the

money of the investors. Since the basic reason for the investors investing

their money in Life Insurance is security, IRDA has put certain regulations

on such companies for investments so that the money of investors is safe.


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These guidelines are:

1. not less than 50% of the corpus will be invested in Government

Securities (G-Sec)

2. Up to15% of the corpus will be invested in infrastructure, social

and rural sectors.

3. Not less than 20% can be invested in government and other

equities.

4. Remaining 15% can be invested in unapproved equities.

Till recent time, HDFC has not been investing in equities. But now it has

decided to follow the footsteps of its Joint-Venture partner Standard Life, which

invests around 75% of its corpus in equities. The Investment Department is also

responsible for calculating the returns of the investment to the investors. Here

also the insurance companies are bound by regulations and guidelines.According to IRDA, the returns have to be in the range of 6 %-9 %.

The Underwriting Department

This department is responsible for taking the decision on whether to

insure a person or not. For this it must take into account the risk

premium associated, the reinsurance opportunities etc. normally,

there are charts available with the people of this department on the

basis of which they can come to a viable decision.


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Underwriting is done on the basis of two grounds:

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Financial Grounds: here the underwriters decide on the worth

of the personby taking into account his tax returns of the last

three years. On this basis they are able to assess the premium

paying ability of that person and accordingly take a decision.

Medical Grounds: each new customer is required to undergo a

comprehensive medical test, which determines the persons

general health. On the basis of this report, the underwriters

decide upon the premium to be charged from customer.

Functions of Insurance

The functions of Insurance can be bifurcated into three parts:

1. Primary Functions


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2. Secondary Functions

3. Other Functions

The primary functions of insurance include the following:

1) Provide Protection - The primary function of insurance is to provide

protection against future risk, accidents and uncertainty. Insurance cannot

check the happening of the risk, but can certainly provide for the losses of risk.

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Insurance is actually a protection against economic loss, by sharing

the risk with others.

2) Collective bearing of risk - Insurance is a device to share the

financial lossof few among many others. Insurance is a mean by

which few losses are shared among larger number of people. All

the insured contribute the premiums towards a fund and out ofwhich the persons exposed to a particular risk is paid.

3) Assessment of risk - Insurance determines the probable

volume of risk byevaluating various factors that give rise to

risk. Risk is the basis for determining the premium rate also

4) Provide Certainty - Insurance is a device, which helps to change

fromuncertainty to certainty. Insurance is device whereby the

uncertain risks may be made more certain.


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The secondary functions of insurance include the following:

1) Prevention of Losses - Insurance cautions individuals and businessmen to

adopt suitable device to prevent unfortunate consequences of risk by observing

safety instructions; installation of automatic sparkler or alarm systems, etc.

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Prevention of losses causes lesser payment to the assured by the insurer and

this will encourage for more savings by way of premium. Reduced rate of

premiums stimulate for more business and better protection to the insured.

2) Small capital to cover larger risks - Insurance relieves the

businessmenfrom security investments, by paying small

amount of premium against larger risks and uncertainty.

3) Contributes towards the development of larger industries -

Insuranceprovides development opportunity to those larger

industries having more risks in their setting up. Even the

financial institutions may be prepared to give credit to sick

industrial units which have insured their assets including plant

and machinery.


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The other functions of insurance include the following:

1) Means of savings and investment - Insurance serves as savings

and investment, insurance is a compulsory way of savings and it

restricts the unnecessary expenses by the insured's For the purpose

of availing income-tax exemptions also, people invest in insurance.

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2) Source of earning foreign exchange - Insurance is an

internationalbusiness. The country can earn foreign

exchange by way of issue of marine insurance policies and

various other ways.

3) Risk Free trade - Insurance promotes exports insurance, which

makes theforeign trade risk free with the help of different types

of policies under marine insurance cover

SOME TERMS ABOUT ULIP PLANS

Fund Management


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The crux of the entire product is the returns that this product can

generate and this is dictated by the management of the fund. There is

no great value in doing well in all other aspects of the product delivery if

the fund does not perform well.

The insurance company has two options with regards to the management of the

fund i.e. external and internal. External funds usually have a proven track record

that could be used as a significant marketing too. In India many of the insurance

companies, which are apart of the larger financial services groups, already have

a sister fund Management Company and they could bank on their performance.

For others, they would usually be having an in-house investment

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team and this could be extended to management of the funds too. The

expenses and hence the cost should be kept in mind as by nature the

unit linked insurance product is a very transparent product and hence

this would become a significant selling point in the long run.

Charges and Expenses

There are different charges that can be levied by the insurance

companies, some of the more common ones are:

1) Initial charges

2) Annual charges

3) Investment charges

4) Morality charges

5) Surrender charges

Initial charges

Initial charges are applied at the time of setting up the policy; this could


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be in the form of a bind offer spread and also in the form of allocation of

units known as the allocation factor. It is also possible to be levying a

per member level charge.

Annual charges

The annual charges can either be fixed or can be linked to the size of the

fund. It could also be linked to the number of members in the scheme. This

charge is usually taken to cover the maintenance expenses of the insurer.

Investment charges

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A fund management charge is levied to take care of the fund management

expenses depending upon whether the fund is managed internally or externally.

Mortality charges

It is possible to have an insurance element built into the super annuation

contract and in case of a gratuity there would be an element of insurance

the degree and the form could differ from company to company.

The insurance premium can be taken as a part of the gratuity contract of it

can be administered outside this but packaged to look as if it is a whole some

product offering gratuity and insurance to the employees of the organization.

Surrender Charges

The surrender charges can be used in multiple ways. It could be used as a

way of recouping the initial outlay of the insurer in case the company

decides to withdraw in the early years of the contract or it could be used

as a deterrent for the company to shift the service provider at any point of

the contract. Usually the surrender charges/ penalty would decrease over

a period of time and would be expressed as a percentage of the fund.


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Administration

The unit linked policies are significantly complex to administer and also

would need a very highly technically trained customer service department to

handle enquiries. Much of the administer the policy, As the allocation of units

would be time dependent it is extremely important to have a very robust

system that can take care of allocation, de allocation and reallocation of units.

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It is essential to have a system that would be able to talk/ interact with

other systems to capture the unit price details, to give outputs to

accounting packages, report generators etc.

INDIVIDUAL PRODUCTS:

Each of us leads a unique life and so has unique needs. HDFC Standard Life

offers a range of products and invites you to choose the one that suits you best.


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PLAN BENEFIT

Savings Plans

Endowment Assurance Plan Life Insurance with Savings

Unit Linked Endowment Plan

Life Insurance & Savings with

choice

of investment funds

Childrens Plan Financial Security for your child

Money Back Plan

Financial security for your child

with

choice of investment fundsUnit Linked Young Star Plan Life Insurance with Savings

Investment Plans

Single Premium Whole of Life Plan Investment with Life Insurance

Protection Plans

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Term Assurance Plan

Life Insurance customized for

home

loansLoan Cover Term Assurance

Plan

Life Insurance at an affordable

price

Retirement Plans

Personal pension plan Savings for retirement

Unit Linked Pension Plan Retirement Savings with a choice of

investment funds


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Endowment Assurance Plan

Endowment assurance plan is a participating (with profits) insurance

plan that offers the following features:

Provides financial support to the family by way of a lump sum payment in

case of the unfortunate death of the life assured within the term of the policy.

provides a lump sum payment to the life assured on survival up to maturity

This plan is with profits saving plan and is well suited for saving money

for your long term financial goals. This plan also helps provide for the

needs of your family in your absence by paying out a lump sum in the

event of your unfortunate death during the term of the policy.

Optional benefits

You can add the following optional benefits to customise your policy

to suit your needs:

Critical Illness (CI) Benefit provides an amount, equal to the sum

assured chosen under this optional benefit, on diagnosis of any one of

the 6 common critical illnesses(1). The sum assured is payable if you


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survive for 30 days after the date of the claim. Once such a claim has

been met, no further Critical Illness Benefit is payable. However, your

basic policy continues even after we pay a claim On this benefit.

Additional Term Benefit (ATB) provides an additional amount

equal to the sum assured chosen under this optional benefit, in

case of your unfortunate death.

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Accidental Death Benefit (ADB) provides an additional

amount,equal to the sum assured chosen under this optional

benefit, in case of your unfortunate death:

-due to an accident and within 60 days of an accident.

Waiver Of Premium (WOP) Benefit waives the premium for you in

case you become totally disabled. The waiver is applicable

during the period of total disability.

This plan can be taken on a single life basis or a joint life (first

claim) basis.

Eligibility

This plan can be taken as a single life basis or a joint life (first claim)

basis. The eligibility ages are as follows:

Basic

Basic policy with optional

benefits

Policy CI ATB ADB WOP

Min. age of entry 12

1

8 18 18 18

Max. age of entry 60 5 60 55 50

Max. age of expiry 75 7 75 65 60


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0

Minimum term: 10 years Maximum term: 30 years

Tax Benefits

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Tax benefits described in Section 88, Section 80D and Section 10

(10D) of the income Tax Act are applicable.

Applicable to premium paid for CI and WOP

Payment options

you have the choice of paying your premium either in yearly, half-

yearly or quarterly modes, depending on your convenience


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Unit Linked Endowment Plan:

The unit linked endowment plan is an insurance policy that is designed to

pay a lump sum on maturity or on earlier death. The Unit Linked Endowment

Plan also gives the option of additional protection against the six common

critical illnesses, as well as additional protection if death is as the result of an

accident. Your premiums are invested in units of the investment fund of your

choice, based on the prevailing unit price. On maturity you receive the value

of your units. On death (or critical illness, if chosen) you receive the greater

of the value of your units and your selected basic sum assured.

Premiums

Premiums can be paid either quarterly, half-yearly or annually, throughout

the term of the policy. The minimum premium amount is Rs. 10,000 each

year. Premiums can be paid by cash, cheque or demand draft.

Benefits

There are 4 different options available to choose from:

1. Life Option

On death within the policy term, the greater of the Sum Assured

and the value of the unit-linked fund will be paid to your nominee.


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On survival to the end of the policy term the value of the unit

linked fund will be paid to you.

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2. Life and Health Option

On death or earlier diagnosis of any one of six common critical illnesses

within the policy term, the greater of the Sum Assured and the value of

the unit-linked fund will be paid to your nominee.

On survival to the end of the policy term the value of the unit-linked

fund will be paid to you.

The illnesses covered under this option are cancer,

coronary artery by pass graft surgery, heart attack, kidney

failure, major organ transplant (as recipient) and stroke.

3. Extra Life Option

This option pays the same benefits as the Life Option but, should

death occur within the policy term as the result of an accident, an

extra benefit equal to the Sum Assured will be paid.

4. Extra Life and Health Option

This option pays the same benefits as the Life and Health Option

but, should death occur within the policy term as the result of an

accident, an extra benefit equal to the Sum Assured will be paid.


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Levels of protection

Depending on your age at entry, you may choose between 3 levels of

cover Low, Medium or High. For each level the Sum Assured isbased on the amount of premium you pay each year.

The Sum Assured can not be changed during the term of the contract.

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Age at entry

Levels of

cover

Low Medium High

18 to 40 5XPremium 10XPremium 20XPremium

41 to 50 5XPremium 10XPremium

Over 51 5XPremium

Eligibility

The age and term limits for taking out a Unit Linked Endowment

Plan are: (years)

Minimum Maximum Minimum Maximu Maximum

m age at age at

term term age at entry

entry expiryLife 10

10 30 18 60 75

Life and

health 10 30 18 5 65


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Extra life 10 30 18 55 70

Extra life

and hea lth 10 30 18 55 65

The alteration of premium, surrendering of the policy, conditions on

stopping of payment of premiums and charges are the same as that of

the unit linked pensions plan.

Tax Benefits

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Tax benefits under section 88 and section 10 (10D) of the income tax

act are applicable.

Surrendering the policy

The policyholder can surrender the policy at any point of time during

the contract term. The amount payable will be the unitised fund

value after applying additional surrender charges mentioned below.

Accessing money?

You can make lump sum withdrawals from you funds provided the fund

balance after withdrawal and charges does not fall below the Sum

Assured. The minimum withdrawal amount is Rs. 10,000.


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Children's Plan

Childrens Plan is designed to provide a lump sum to the child at maturity. It

also provides financial security to the child in the future, even in case of the

insured parents unfortunate death during the policy term. Childrens Plan

receives simple reversionary bonuses, which are usually added annually. This

is a flexible plan with three options for you to choose from, depending on your

requirements. The details of these options are explained in the next section.

Options

You will have the choice of 3 options at the start of the policy.


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Option On the death of the insuredOn maturity

parent during the policy

term

Maturity

Future premium waived

and

Benefit Plan the policy continues till

maturity.

Accelerated Sum assured + bonuses paidOn the survival of the

Benefit plan and the policy stops. insured parent to the

m aturity date, sumassured

+ bonuses paid.


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Double Sum assured paid, future Sum assured + bonuses

Benefit plan

premiums waived, and

the paid.

policy continues till

maturity.

Tax Benefits

The premiums you pay will be eligible for tax relief under Section 88 of the

Income Tax Act, 1961. The benefits received under the policy are eligible

for tax relief under Section 100 (10D) of the income tax act, 1961.

Eligibility

The eligibility ages for the life assured under the plan are as follows:

Minimum Age of

Entry 18 years

Maximum Age of

Entry 60 years


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Maximum Age of

Maturity 75 years

Term of policy

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Min. Term: 10 years Max. Term: 25 years

Payment options

You have the choice of paying the premium either in yearly, half-



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Unit Linked Young Star Plan

HDFC Unit Linked Young Star Plan is designed to provide a lump sum to the

child at maturity. It also provides financial security to the child in the future,

even in case of the insured parent's unfortunate death during the policy term.

The Unit Linked Young Star Plan also gives the option of additional

protection against the six common critical illnesses.

Your premiums are invested in units of the investment funds of your choice,

based on the prevailing unit prices. On maturity the value of the units will be

paid. On death (or critical illness, if chosen) the selected basic sum assured is

paid, and the policy continues until maturity. Following a valid death or critical

illness claim, we will pay the future premiums (at the level originally chosen at

inception) into your policy, as and when they would have fallen due.

Premiums

You agree to pay a level premium regularly, either quarterly, half-

yearly or annually, throughout the term of the policy. The minimum

premium amount is Rs. 10,000 each year.

Premiums can be paid by cash, cheque or demand draft.

Benefits

There are 2 different options available:


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1. Life Option

This option consists of a Maturity Benefit and a Death Benefit.

The Maturity Benefit will pay the value of the unit-linked fund at

the end of the policy term.

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The Death Benefit will pay the basic Sum Assured on death of

the life assured during the policy term. Following payment of

this benefit, no further premiums are due from the policyholder.

Following a valid death claim, we will pay future premiums on

your behalf, as and when they become due. The level of

premium will be that chosen by you at inception of the policy.

2. Life and Health Option

This option consists of a Maturity Benefit, a Death Benefit and an

Extra Health Benefit.

The Maturity Benefit will pay the value of the unit-linked fund

at the end of the policy term.

The Death Benefit will pay the basic Sum Assured on death of

the life assured during the policy term. Following payment of

this benefit, no further premiums are due from the policyholder

and the Extra Health Benefit will lapse without value.

The Extra Health Benefit will pay the basic sum assured on

diagnosis of any one of six critical illnesses during the policy

term. Following payment of this benefit, no further premiums are

due from the policyholder and the Death Benefit will lapse

without value. The illnesses covered under this benefit are

cancer, coronary artery by pass graft surgery, heart attack,


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kidney failure, major organ transplant (as recipient) and stroke.

Following a valid death or critical illness claim, we will pay future

premiums on your behalf, as and when they become due. The level

of premium will be that chosen by you at inception of the policy.

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Eligibility

The age and term limits for taking out a Unit Linked Young Star Plan are:

(Years)

Minimum Maximum Minimum Maximum

Maximu

m

Term Term Age at Age at Age at

Life Entry Entry Expiry

10 25 18 60 75

Option

Life and 10 25 18 55 65

Health

Option

Surrendering the policy

The policyholder can surrender the policy at any point of time during

the contract term. The amount payable will be the unitised fund

value after applying additional surrender charges mentioned below.


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Accessing money

You can make lump sum withdrawals from you funds provided the

fund balance after withdrawal and charges does not fall below Rs.

15,000. The minimum withdrawal amount is Rs. 10,000.

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Money Back Plan

It is a participating (with profits) insurance plan that offers the

following features:

Payment of cash lump sum, each of which is a proportion of the

basic sumassured, at 5-year intervals during the term of the policy.

(Please refer to the table given below.)

on survival up to maturity, a payment equal to the basic sum assured

plusany bonus additions less the cash lump sums paid earlier is provided.

In case of the unfortunate death of the life assured within the term

of thepolicy, the basic sum assured plus any bonus additions is

provided. This is over and above the earlier payouts.

This plan helps you plan for future anticipated expenses by paying

periodic cash lump sum to you at regular intervals. This plan also helps

provide for the needs of your family in your absence by paying them the

basic sum assured plus any bonus additions in the event of your

unfortunate death during the term of the policy.

Benefits

You can add the following optional benefits to customise your policy

to suit your needs:


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Critical Illness (CI) Benefit provides an amount, equal to the sum

assured chosen under this optional benefit, on diagnosis of any one of

the 6 common critical illnesses. The sum assured is payable if you

survive for 30 days after the date of the claim. Once such a claim has

been met, no further Critical Illness Benefit is payable. However, your

basic policy continues even after we pay a claim on this benefit.

Additional Term Benefit (ATB) provides an additional amount,

equalto the sum assured chosen under this optional benefit, incase of your unfortunate death.

\

Accidental Death Benefit (ADB) provides an additional amount

equalto the basic sum assured in case you die:

- due to an accident, and

- within 90 days of the accident.

Waiver Of Premium (WOP) Benefit waives the premium for

you in case you become totally disabled. The waiver is

applicable during the period of total disability.

All optional benefits must be selected at the outset of your plan.


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Eligibility

This plan can be taken on a single life basis or a joint life (first claim)

basis. The eligibility ages are as follows:

Basic

Basic policy with optional

benefits

Policy CI ATB ADB

WO

P

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Min. age of entry 12 18 18 18 18

Max. age of entry 60 5 60 55 50

Max. age of expiry 75 70 75 65 60

PAYMENT OPTIONS

You have the choice of paying your premium either in yearly, half-



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SINGLE PREMIUM WHOLE LIFE INSURANCE

Single Premium Whole of Life Insurance Plan is well suited to meet

your long term investment needs. This participating (with profits) plan

offers you the following

Benefits:

A sound investment:

Your money will be invested in our With Profits fund. The fund aims to

provide secure and stable long term growth. Normally, we will declare

a compound reversionary bonus for your policy every year and add it

to your policy on its anniversary. In addition, on death, surrender or on

the guaranteed dates, a terminal bonus might be payable. You pay asingle premium and the policy will pay you a lump sum.

Flexibility of term:

Even after choosing your policy, you can decide on the policy term. For 4

weeks after any one of the 10th, 15th, 20th and subsequent five-year

anniversaries, you can choose to receive the sum assured plus any attaching

bonuses, in full. Once the money has been received, your policy will cease.


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Surrender value:

You can terminate the policy any time, after it has been in force for at

least 6 months, and receive a surrender value.

In case of unfortunate death:

Your nominee gets the sum assured secured by your premium,

plus any attaching bonuses.

No medical requirements:

We do not require you to undergo any medical test for this plan.

Eligibility

Minimum age at

entry : 18 years

Maximum age at

entry : 70 years


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You can buy the product on a single life basis.

Tax benefits

Tax benefits under Section 88 of the income Tax Act are applicable on

premiums up to 20% of the sum assured.

Payment options

A single premium can be paid by cash, cheque or demand draft.

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PENSION PLAN

The policy is basically a saving contract, which is designed to

provide an income for life from retirement, with an option to take

the lump sum elsewhere to buy the annuity, provide it is permitted

by the prevailing regulations.

Your commitment. You agree to pay a single premium or level

premiums with installments due every quarter half-year or year

throughout the deferment period of the policy, after which you will

start receiving your pension.

Plan is basically a savings contract, which is designed to provide an

income for life from retirement. It does this by accumulating a national

lump sum on retirement, comprising of sum assured plus any attaching

bonus.

Can I take the national lump sum as cash on retirement?


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Subject to the prevailing legislation and regulations, part of this can be

taken as a lump sum and the rest used to buy an immediate annuity.

Mode of premium

You can pay either a single premium or pay premiums is quarterly half

yearly or annual form by cheque, in cash or by bank drafts.

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Eligibility

The age and term limits for looking out a personal pension plan area:

Minimum Maximum Maximu Maximu Minimum

Maximu

m

Ter

m

Ter

m m Age

m Age

of age of age

o

f

entry

Retiremen

t

Retireme

n

RP SP RP SP RP SP t

10 5 40 15 18 35 60 50 70


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What if I need money?

Loans

There is no facility for loans against this contract.

Tax benefits

Tax benefits described in Section 80 CC of the income tax act are

applicable (up to Rs. 10,000)

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Unit Linked Pension Plan

The unit linked pension plan is basically an insurance contract,

which is designed to provide a retirement income for life.

Your premiums are invested in units of the investment fund of your

choice, based on the prevailing unit price. On vesting the value of

your units will be used to buy your retirement benefits.

On earlier death, the beneficiary receives the value of your units

plus a cash lump sum of Rs 1000.

Premiums

You agree to pay level premiums regularly, either quarterly, half-yearly

or annually, throughout the term of the policy or a single premium at the

start of the policy. The minimum premium amount for regular premium

mode is Rs. 10,000 each year and for single premium, it is Rs. 25,000.

To facilitate increased investment, we allow additional single premium

top-ups at any time. The minimum single premium top-up is Rs. 5,000.

Premiums can be paid by cash, cheque or demand draft.

Benefits

At the chosen vesting date, the unitised fund value will be available to secure


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pension benefits. Subject to the prevailing regulations, part of this value can

be taken in the form of a cash lump sum and the rest converted to an annuity

at the rate then offered by HDFC Standard Life. Alternatively, if it is permitted

by the prevailing regulations, the proceeds net of any cash lump sum can be

used to buy an annuity with any other insurance company who will accept

such business. The current maximum limit for any cash lump sum is one-

third of the unitised fund value on vesting.

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On death the unitised fund value will be paid along with a cash lump

sum of Rs. 1,000. The beneficiary may use the proceeds to purchase

pension benefits for the surviving spouse.

Your basic benefits will be paid by cheque.

Eligibility

The age and term limits for taking out a Unit Linked Pension

Plan are: (Years)

Minimu Maximu Minimu Maximu Minimu Maximu

m Term m Term

m Age of

m Age

of m Age ofm Age of

Entry Entry Vesting Vesting

Regular

Premiu 10 40 18 60 50 70

m

Version

Single

Premiu 5 40 18 65 50 70

m


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Version

TAXATION

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TAX BENEFITS OF INSURANCE AND PENSION PLAN.

Life insurance and retirement plans are effective ways of saving taxes.

The tax breaks that are available under various insurance and pensionpolicies are described below:

1. Life insurance plans are eligible for deduction under Sec. 80C.

2. Pension plans are eligible for a deduction under Sec. 80CCC.

3. Health riders are eligible for deduction under Sec. 80D.

4. The proceeds or withdrawals of life insurance policies are exempt

under Sec 10(10D), subject to norms prescribed in that section.

Tax Rates for Individuals

The rates of income tax for FY 2005-06 are as follows:

Rate of tax

Total Income (Rs.) Senior

Women

below

Other

s

citizen 65 years

Up to Rs 1, 10,000/- Nil Nil Nil

Above Rs 110,000/- to Nil Nil 10%


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125,000/-

Above Rs 125,000/- to Nil 10% 10%

150,000/-

Above Rs 150,000/- to 20% 20% 20%

250,000/-

Above Rs 250,000/- 30% 30% 30%

Surcharge on Income Tax: In case where the Total Income

exceeds Rs 10, 00,000, there would be a surcharge @ 10%.

Education Cess on Income Tax: Education Cess @2% will be payable

on the amount of income tax (including surcharge).

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Premiums paid for Life insurance - Deduction under Section 80C

1 Category of assesses allowed deduction: Individual assessee and

HinduUndivided Family assessee.

2 Eligible Savings: Premiums paid or deposited by assessee to effect

or tokeep in force insurance on the life of following persons:

In case of individual assessee Himself/herself, spouse, children of

such individual

In case of HUF assessee any member

3. 20% limit: If the amount of premium paid in a financial year for a policy

isin excess of 20% of the actual capital sum assured, then deduction will

be allowed only for premiums up to 20% of the sum assured.

4 Limit on amount of deduction: Deduction will be restricted to

investments of up to Rs 100,000 in savings specified under Section

80C (including life insurance premiums). If any investments have been

made under Section 80CCC and 80CCD, then the qualifying amount

under Section 80C will stand reduced to that extent.

5. Deduction limit: The amount of deduction will be equal to the

amount by which the income tax payable on such total income is in

excess of the amount by which the total income exceeds 100,000.

Premiums paid for Pension plans - Section 80CCC


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1 Permitted Deduction: Section 80CCC allows for deduction of premiums

paid under a pension plan. As per this Section, a premium paid up to Rs

10,000 by an individual is allowed as deduction from his total income.

2 Disallowance: This benefit will be reversed if the policy lapses / is cancelled.

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3 Limit: It may be noted that from FY2005-06, the limit of deduction

underSection 80CCC will be part of the overall limit prescribed under

Section 80CCE.

Premiums paid for medical insurance - Section 80D

I) Category of assessee allowed deduction: Individual assessee and

Hindu Undivided Family assessee.

II) Eligible premiums: Premiums paid by assessee by cheque out of his

taxable income to effect or to keep in force an insurance on the healthof following persons: In case of individual assessee Himself/herself,

spouse, dependant children and dependant parents.

In case of HUF assessee any member of HUF

III) Deduction and upper limit: The qualifying amounts under Section 80D

is up to Rs 10,000/-. However, a higher amount of up to Rs 15,000/- is

permitted if the person, for whose health insurance the premium was paid,

was aged 65 years or more at any time during the financial year in which

the premium was paid. Such amounts of premium paid would be allowed

as deduction from the total income of the assessee.

Overall deduction limit - Section 80CCE

A new Section 80CCE is proposed to be inserted from FY2005-06. As per

this section, the maximum amount of deduction that an assessee can claim

under Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000.


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Benefits under insurance policy - Section 10(10D)

As per Section 10(10D) of Income tax Act, 1961, any sum received under a life

insurance policy, including the sum allocated by way of bonus on such policy is

exempt from tax. However, this rule does not apply to following amounts:

Sum received under Section 80DD (3), or

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Any sum received under a Key man Insurance Policy, or

Any sum received other than as death benefit under an insurance

policy which has been issued on or after April 1 2003 and if the

premium paid in any of the years during the term of the policy is

more than 20% of the sum assured.

Rebate in respect of Securities Transaction Tax (STT) paid

1 Section 88E has been introduced by Finance Act (No 2) of 2004.

2 As per the provisions, where total income of an assessee includes

any income under the head Profits and Gains from Business or

Profession arising from taxable securities transactions, he shall be

entitled to a deduction from the income tax on such income.

3 Amount of deduction: Amount of STT paid in respect of taxable securities

transactions entered into in the course of business during that previous year

4 The deduction will be allowed if proof of payment of STT is furnished

along with the return. The proof has to be furnished as per the format

prescribed by Income Tax.

5 Maximum deductions shall be equal to the amount of income tax on

above income.


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COMPARITIVE ANALYSIS

CONTENTS

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1. HDFC PENSION-II VS BIRLA FLEXI SECURELIFE RETIREMENT

2. HDFC PENSION-II VS BAJAJ ALLIANZ UNIT GAIN

3. HDFC PENSION II VS LIC BIMAPLUS

HDFC PENSION-II VS BIRLA FLEXI SECURE LIFE RETIREMENT

VS BAJAJ ALLIANZ UNIT GAIN VS LIC BIMAPLUS

HDFC BIRLA FlexiSecure Allianz Bajaj

Features PENSION Life Retirement Unit gain

LIC Bima

Plus

Age 18 - 60 years 18 - 60 years 0 60 years 12 - 55 year

Term 10 - 30 years Minimum Term of

Choice rests

with

10 years the consumer

with a minimum

premium

payment term of

3 years


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10 years

Sum

Assured

Only 5, 10,

20 Minimum Sum Minimum Sum

Maximum

limit

(age-based) Assured is Rs. Assured is 5 up to Rs. 2

multiples are

50,000. Zero

Death times the lakhs

allowed as Benefit is also premium paid.

Sum

Assured. available.

Survival Value of units

Unit Value is used

to

Value of Fund

at

Bid Value of

the

benefit partly in cash

purchase an

annuity Bid price fund units

partly

converted to

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annuity.

Death benefit

Value of

units,

Value of units in

this Higher of Sum Death durin

no sum case the Sum Assured or value the first 6

assured is Assured is zero. of units. months - 30

given. of SA + valu

units, next 6

months - 60

of SA + valu

units. Death

after 1st ye

SA + value

units. Death

during the 1

year - 105%

SA + value

units.

Partial or Premature

Withdrawal No Partial No Partial complete withdrawal

benefit withdrawals withdrawals are withdrawal at bid allowed afte

are available. available price after 3rd one year (a

year applying bid

offer spread

Contribution/ Minimum: Rs. Minimum Rs. 5,000 Minimum: Rs. Minimum R

premium 10,000 p.a. p.a. 10,000 p.a. 10,000 p.a


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Flexible Available Not available Only an increase Not availab

contribution in contribution is

allowed

Investment 5 Fund Nourish, Growth and Equity Fund, Balanced,

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options Options- Enrich Debt Fund,

Secured &

Risk

Balanced, Balanced Fund,

Defensive Cash Fund

Managed,

Safe

Managed,

Liquid &

Growth

SurrenderThesurrender Surrender is A selling /

Partialsurrender

Value

charge is

25% available from the purchase price up to 50% o

of 3 years of

1st year itself. In

the

spread of 5%

will bid value of

regular 1st year surrender be applicable units allowe

premium. No

charges are 75%,

in

from the 3rd

year after 3 years

charges after

3 the 2nd year the onwards from date of

years

charges are 50%,

in

commencem

t

the 3rd year the

charges are 25%..

Top-up

Available

with Available, with a Available

a minimum minimum top-up of

top-up of Rs Rs. 10,000


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5,000 and Available

maximum of

(Charges:

1.5%

20% of sum of the top-up

assured.

Switch 24 Switches

2 free switches

every Three free No free

are free. year. Every switches every switches. Co

additional switch policy year. of switching

will be charged at Subsequent 2% of the fu

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0.5% of the switch switches would

amount. be charged @1%

of switch amount

or Rs. 100,

whichever is

higher. value.

Initial Charge Charges Charges Charges

1st yr-27%, 20% of the initial 1st year - 70%;

2nd yr- 27%, premium in the 1st 2nd year - 2%;

3rd yr year and 2% of the 3rd year - 1%; No

onwards- 1% premium from the charges from the

2nd year onwards. 4th year onwards Not Disclos

Admin Charge Admin Policy admin fee of Annual admin

charges of Rs. 20 per month charges of 1.25%

Rs.180 fixed p.a. of net assets

charge

Per annum. Not applica

Fund Least in the A fund based fee of Annual 1% of the fu

Management industry 0.8% 2.25 % p.a. of the investment per annum

Charges of the fund perpolicy fund. charge of 1% p.a.

annum of fund.Bonus units Available Not Available Not Available Available

RESEARCH METHODOLOGY


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STUDY

The present investigation is a descriptive type of study undertaken to

estimate the comparative study pension plan of HDFC SLIC, BIRLASUN LIFE, BAJAJ ALLIANZ, LIC.

SAMPLE SIZE

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For the purpose of analysis a sample size of different companies were

selected. The sample size taken was 4.

SAMPLING METHOD

The sampling method used for the project was Random Sampling.

This type of sampling is also known as probability sampling where each

and every item in the population has an equal chance of inclusion in the

sample and each one of the possible samples. This procedure gives

each item an equal probability of being selected.

DATA COLLECTION

SECONDARY DATA

The secondary data was collected by referring through web sites, and

the final data was analyzed systematically to achieve the desired result.


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DATA ANALYSIS AND INTERPRETATION

After analyzing the data above in the table we came to the

following interpretation. Interpretation has been done on the

basis of the features mentioned in the table.

1. AGE AND TERM OF POLICY: Since the minimum age is minimum

in BAJAJ ALLIANZ and the term depends on the customer. The

customer has probability of getting the maximum returns (all otherthings being equal). And HDFC is offering investment for maximum

30 years which is rated as second best in this feature.

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2. SWITHCHES: After analyzing the feature the conclusion

drawn is thatHDFC is offering the most switches in the year.

3. CHARGES : The charges levied on the policy of the insurer is

lowest in HDFC SLIC like FMC, PAC, but initial charge is

second lowest which is also not bad in terms of investment.

4. WITHDRAWALS : Withdrawals not allowed in HDFC SLIC &

BIRLASUN LIFE because if withdrawals are there plan would

not yield good return.

5. INVESTMENT OPTIONS : HDFC SLIC provides you the

maximumfunds for investment (Balanced fund, Defensive

Managed fund, Safe Managed fund, Liquid fund & Growth

fund). So HDFC SLIC provides you better portfolio to

diversify your funds which reduces the risk and maximizesthe return.

6. TOP UP : In HDFC SLIC the minimum top up is of RS 5000 with no

charges levied but in others it is Rs 10000. Here we could see that

people with low income can increase the premium with small

amount.

7. BONUS UNIT : Only two firms are offering bonus unit to the

customerand they are HDFC SLIC and LIC.

8. FLEXIBLE CONTRIBUTION : This feature is available in

HDFCSLIC where a customer can increase or decrease its

premium, but only Bajaj Allianz is offering an increase option

only.


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RECOMMENDATIONS

1. Premium allocation charge (initial charge) should be reduced

to provide customer with better return.


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2. Policy administration charge should be reduced to gain more

advantage in the market.

3. Surrender charges should be reduced.

CONCLUSION

Based on comparative study HDFC SLIC is on the upper side in the private

life insurance companies in comparison to Birla sun life, Bajaj Allianz.

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HDFC SLIC based on the comparative study has many advantage in

this segment of product like fund management charge, switches facility

and maximum number of investment funds in offering (i.e., 5 namely

Balanced fund, Defensive Managed fund, Safe Managed fund, Liquid

fund & Growth fund ) but the rest of the insurance player that is LIC,

Birla sun life, Bajaj Allianz are also not far behind HDFC SLIC.

BIBLOGRAPHY


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WWW.HDFCINSURANCE.COM

www.irda.com

www.LICindia.com

www.birlasunlife.com

WWW.GOOGLE.COM

61
http://www.hdfcinsurance.com/http://www.irda.com/http://www.irda.com/http://www.licindia.com/http://www.birlasunlife.com/http://www.google.com/http://www.irda.com/http://www.irda.com/http://www.licindia.com/http://www.birlasunlife.com/http://www.google.com/http://www.hdfcinsurance.com/


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