A SUMMER TRAINING PROJECT REPORT

ON

“A STUDY OF FACTORS AFFECTING

INVESTMENT BEHAVIOR IN LIFE POLICIES”

Submitted in partial fulfillment of the requirement for the

Award of Degree of Bachelor of Business Administration

2013-2014

Under the Guidance of: - Submitted By:-

Mr. ANIL KANWA AMIT VASHISTH

(Internal Guide) (Regn. No.–1177350032 )

HINDU COLLEGE

(SONEPAT)

Affiliated to Maharshi Dayanand University, Rohtak

STUDENT DECLARATION

This is to certify that the Summer Training Project titled “A STUDY OF FACTORS AFFECTING

INVESTMENT BEHAVIOR IN LIFE POLICIES” is an academic work done by Amit Vashisth

under the guidance of “Mr. Anil Kanwa” in the partial fulfillment of the requirement for the

award of the degree of “Bachelor of Business Administration” from “Hindu College, Sonepat”.

This is an original piece of work and I have not submitted it earlier elsewhere.

Name of the student: AMIT VASHISTH (Sign)

Course: BBA III

Batch: 2011-2014

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CERTIFICATE FROM GUIDE

This is to certify that the project titled “A STUDY OF FACTORS AFFECTING

INVESTMENT BEHAVIOR IN LIFE POLICIES” is an academic work done by AMIT

VASHISTH submitted in the partial fulfillment of the requirement for the award of the Degree

of BBA from Hindu College, Sonepat (Affiliated to Maharshi Dayanand University,Rohtak)

under my guidance and direction. To the best of my knowledge and belief the data and

information presented by her in the project has not been submitted earlier.

Name and signature of Faculty Guide

Designation

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ACKNOWLEDGMENT

I would like to thank my project guide Mr. Dharamendra Mishra, Channel Development Manager, HDFC Standard Life Insurance, Mayur Vihar, New Delhi for guiding me through my summer internship and research project. His encouragement, time and effort are greatly appreciated.

I would like to thank Mr. Anil Kanwa for his support and guidance. We thank her for guiding and correcting us with great attention and care. She has taken pain to go through the project and provide her valuable suggestions at every step. It was a truly wonderful learning experience.

Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me in New Delhi and NCR.

AMIT VASHISTH

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EXECUTIVE SUMMARY

HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest

insurer in the UK and is the 28th largest company in the world. In India, the company is

marketing life insurance products and unit linked investment plans. HDFC Standard Life

insurance is India's premier insurance enabling company. HDFC Standard Life insurance is the

one-stop-shop for requirements of services in the areas of insurance, optimum investment,

financial coverage and losses, mortality benefit, and health option etc. This is backed by HDFC

Standard life insurance service support infrastructure - the widest in the country.

It was a great opportunity to work with such a reputed organisation in its sector HDFC Life is a

subsidiary of HDFC which is formed by the collaboration of HDFC and Standard Life. In the

project we will get to know about the various factors that affects the investment behaviour of an

individual and the importance of Life Insurance in an Individual’s life.

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

ahead. Delivering service, building trust and being innovative are key areas in which any

company will have to excel in order to do well in the long road ahead. Different companies will

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

Indian customer.

The main objective of the project is to Compare and analyze the importance of different factors

in Investment in Life Insurance. The data gave knowledge about customer satisfaction,

perception and their preference among life policies of different companies. The information

about various factors which influence customers to purchase insurance policies was collected

through questionnaire. All the data collected, primary data was filtered and analyzed, represented

in the forms of charts and graphs. Secondary data was also used in report such as company

profile, on the basis of analyzed data, conclusion is drawn. On the basis of findings and

conclusion, suggestions are given.

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TABLE OF CONTENT

Particulars Page no.

(a) Title Page I(b) Student Declaration II(c) Certificate of the company III(c) Certificate of the college IV(d) Acknowledgement V(f) Executive Summary VI(g) Chapter 1 (Profile of the Company) (1-35)

Industry Overview 2 Indian Insurance Sector 10 Profile of the company 16 Company’s vision and mission 20 Product range of the company 23 SWOT Analysis of the Company 32

(h) Chapter 2 (Objectives and Research Methodology) (35-39) Research design 36 Research objectives of the study 37 Research methodology of the study 38 Data collection 38 Sample Size 39

(i) Chapter 3 (Analysis and Interpretation) (40-53)(j) Chapter 4 (Findings and Suggestions) (54-56)(k) Conclusion (57)(l) Limitations (58)(m) Bibliography (59)(n) Annexure (60-64)

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CHAPTER I

PROFILE OF THE COMPANY

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THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

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 15-20 per cent annually and

presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with

banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross

premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of

the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health

insurance and non-life insurance continues to be below international standards. A large part of

our population is also subject to weak social security and pension systems with hardly any old

age income security. This in itself is an indicator that growth potential for the insurance sector in

India is immense.

A well-developed and evolved insurance sector is needed for economic development as it

provides long term funds for infrastructure development and strengthens the risk taking ability of

individuals. It is estimated that over the next ten years India would require investments of the

order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in

infrastructure development to sustain the economic growth of the country. (Source:

www.indiacore.com)

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a means to

provide for English Widows. Interestingly in those days a higher premium was charged for

Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The

Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to

charge the same premium for both Indian and non-Indian lives.

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The Oriental Assurance Company was established in 1880. The General insurance business in

India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first

general insurance company established in the year 1850 in Calcutta by the British. Till the end of

the nineteenth century insurance business was almost entirely in the hands of overseas

companies.

Insurance regulation formally began in India with the passing of the Life Insurance Companies

Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's

sullied insurance business in India. By 1938 there were 176 insurance companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided

strict State Control over the insurance business. The insurance business grew at a faster pace

after independence. Indian companies strengthened their hold on this business but despite the

growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident

societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC)

was born. Nationalization was justified on the grounds that it would create the much needed

funds for rapid industrialization. This was in conformity with the Government's chosen path of

State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their

operations were restricted to organized trade and industry in large cities. The general insurance

industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped

into four companies- National Insurance Company, New India Assurance Company, Oriental

Insurance Company and United India Insurance Company. These were subsidiaries of the

General Insurance Company (GIC).

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KEY MILESTONES

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

insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of

protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over by the

central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956-

with a capital contribution of Rs. 5 crore from the Government of India.

Important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes of

general insurance business.

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

conduct for ensuring fair conduct and sound business practices.

1972: The general insurance business in India nationalized through The General Insurance

Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurers

amalgamated and grouped into four companies- the National Insurance Company Limited, the

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

India Insurance Company Ltd. GIC incorporated as a company.

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Prior to liberalization of Insurance industry, Life insurance was monopoly of

LIC.

In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.

Malhotra- was formed to evaluate the Indian insurance industry and recommend its future

direction. The Malhotra committee was set up with the objective of complementing the reforms

initiated in the financial sector. The reforms were aimed at creating a more efficient and

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

structural changes currently underway and recognizing that insurance is an important part of the

overall financial system where it was necessary to address the need for similar reforms. In 1994,

the committee submitted the report and some of the key recommendations included:

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

take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as

independent corporations.

CompetitionPrivate Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter

the sector. No Company should deal in both Life and General Insurance through a single entity.

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

companies.

Regulatory Body

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

Controller of Insurance- a part of the Finance Ministry- should be made independent

InvestmentsMandatory Investments of LIC Life Fund in government securities to be reduced from 75% to

50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current

holdings to be brought down to this level over a period of time)

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Customer ServiceLIC should pay interest on delays in payments beyond 30 days. Insurance companies must be

encouraged to set up unit linked pension plans. Computerization of operations and updating of

technology is to be carried out in the insurance industry.

STATISTICS (INDIAN & GLOBAL)

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

insurance industry. These statistics would give important insights of where the respective

markets are headed for.

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

market is placed at $922.4 billion.

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

insurance market and Japan stands next with a 20.62% share.

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

meager 0.41% share.

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

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

The income derived by GIC and its subsidiary companies through investment was

Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-2000.

Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per

cent real annual growth in GDP.

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NATURE OF INDUSTRY

The insurance industry provides protection against financial losses resulting from a variety of

perils. By purchasing insurance policies, individuals and businesses can receive reimbursement

for losses due to car accidents, theft of property, and fire and storm damage; medical expenses;

and loss of income due to disability or death.

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

agencies and brokerages. In general, insurance carriers are large companies that provide

insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell

insurance policies for the carriers.

Insurance companies assume the risk associated with annuities and insurance policies and assign

premiums to be paid for the policies. In the policy, the companies states the length and

conditions of the agreement, exactly which losses it will provide compensation for, and how

much will be awarded.

The premium charged for the policy is based primarily on the amount to be awarded in case of

loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be

able to compensate policyholders for their losses, insurance companies invest the money they

receive in premiums, building up a portfolio of financial assets and income-producing real estate

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

There are two basic types of insurance carriers:-

1. Direct

2. Reinsurance.

Direct carriers are responsible for the initial underwriting of insurance policies and annuities,

while Reinsurance carriers assume all or part of the risk associated with the existing

insurance policies originally underwritten by other insurance carriers.

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Direct insurance carriers offer a variety of insurance policies.

Life insurance provides financial protection to beneficiaries—usually spouses and

dependent children—upon the death of the insured.

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

work due to injury or illness

Health insurance pays the expenses resulting from accidents and illness.

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

regular intervals for a specified period) provides a steady income during retirement for

the remainder of one’s life.

Property-casualty insurance protects against loss or damage to property resulting

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

Liability insurance shields policyholders from financial responsibility for injuries to

others or for damage to other people’s property. Most policies, such as automobile and

homeowner’s insurance, combine both property-casualty and liability coverage.

Companies that underwrite this kind of insurance are called property-casualty carriers.

About Life Insurance

Human life is subject to risks of death and disability due to natural and accidental causes. When

human life is lost or a person is disabled permanently or temporarily, there is a loss of income to

the household. The family is put to hardship. Risks are unpredictable. Death/disability may occur

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

and also coupled with savings.

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

contract.

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

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An Endowment Assurance product provided a fixed amount of money either on death during

the period of contract or at the expiry of contract if life assured is alive.

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

specified dates during the period of contract, but also the full amount of money assured on death

during the period of contract.

An Annuity product provides a series of monthly payments on stipulated dates provided that the

life assured is alive on the stipulated dates.

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

which are linked with the underlying value of assets on the desired dates.

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

—children, youth, women, middle-aged persons, old people; and also rural people, film actors

and unorganized laborers.

Life insurance products could be purchased from registered life insurers notified by the IRDA.

Insurers appoint insurance agents to sell their products.

As per regulations, insurers have to give the various features of the products at the point of sale.

The insured should also go through the various terms and conditions of the products and

understand what they have bought and met their insurance needs. They ought to understand the

claim procedures so that they know what to do in the event of a loss.

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INDIAN INSURANCE SECTOR

REGULATORY BODY

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

in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.

The Insurance Regulatory and Development Authority (IRDA)

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

December 1999. The IRDA since its incorporation as a statutory body in April 2000 has

fastidiously stuck to its schedule of framing regulations and registering the private sector

insurance companies.

The other decision taken simultaneously to provide the supporting systems to the insurance

sector and in particular the life insurance companies was the launch of the IRDA’s online service

for issue and renewal of licenses to agents. Since being set up as an independent statutory body

the IRDA has put in a framework of globally compatible regulations.

MISSION-IRDA

“To protect the interests of the policyholders, to regulate, promote and ensure orderly

growth of the insurance industry and for matters connected therewith or incidental

thereto.

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

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COMPANY NAME MARKET SHARE

LIC 79.30

ICICI PRUDENTIAL 5.63

BAJAJ ALLIANZ 3.27

HDFC STANDARD LIFE 3.11

BIRLA SUNLIFE 2.32

TATA AIG 1.45

SBI LIFE 1.24

MAX NEWYORK 0.90

AVIVA LIFE 0.82

ING VYSYA 0.66

OM KOTAK LIFE 0.54

AMP SANMAR 0.38

METLIFE 0.33

RELIANCE LIFE 0.05

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CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA

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

in the insurance industry. Saturation of markets in many developed economies has made the

Indian market even more attractive for global insurance majors. The insurance sector in India has

come to a position of very high potential and competitiveness in the market.

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Innovative products and aggressive distribution have become the say of the day. Indians, have

always seen life insurance as a tax saving device, are now suddenly turning to the private sector

that are providing them new products and variety for their choice. Life insurance industry is

waiting for a big growth as many Indian and foreign companies are waiting in the line for the

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

market is going to give them an array of products, different in price, features and benefits. How

the customer is going to make his choice will determine the future of the industry.

CUSTOMER SERVICEConsumers remain the most important centre of the insurance sector. After the entry of the

foreign players the industry is seeing a lot of competition and thus improvement of the customer

service in the industry. Computerization of operations and updating of technology has become

imperative in the current scenario. Foreign players are bringing in international best practices in

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

now going through a through revision and training programs to catch up with the other private

players. Though lot is being done for the increased customer service and adding technology to it

but there is a long way to go and various customer surveys indicate that the standards are still

below customer expectation levels.

BANCASSURANCE

Bancassurance is the distribution of insurance products through the bank's distribution channel. It

is a phenomenon wherein insurance products are offered through the distribution channels of the

banking services along with a complete range of banking and investment products and services.

To put it simply, Bancassurance, tries to exploit synergies between both the insurance companies

and banks.

LIFE INSURANCE OFFERINGS…

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

paid on time. For others it offers liquidity since cash can be borrowed when needed. For the

investment-minded, it denotes a constantly growing capital account and numerous other

benefits. 

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

regulated financial industry operating in the Indian sub-continent today.

1) Insurance Buys Time and Money

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

proceeds are paid to the insured's beneficiaries in case of death. The money proffered by life

insurance helps buy time to adjust to the change of circumstances. Insurance provides large

amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's

death.

2) Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete peace of mind. He

or she knows that the decision made by him will provide sound benefits in the future, whether or

not the individual may live to see it.

3) Multiple Applications

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

investment benefit is paid to the insured's beneficiaries after his death or it can be used during the

life as well. Life insurance policy owners can turn to the cash value of the policy in case of a

financial emergency when all avenues are either blocked or denied.

4) Enduring Elasticity

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

term goals in mind once he or she invests in the insurance plan. The cash value of the policy can

be allocated towards augmenting the monthly income during the retirement years. Leisure years

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

long-term flexibility.

5) Financial Security

The insurance policy offers contractual guarantees to people looking for peace of mind when

they buy life insurance. Life insurance offers complete financial security. The purchase of life

insurance demonstrates concern for a family's future financial well being.

6) Regard for Family

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

loves.

7) Insurance is Safer

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

reserves and surplus as sound as those of the insurance industry.

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

adverse of conditions is a matter of pride for the entire insurance industry. For generation after

generation, life insurance has been acclaimed as the very benchmark of security against which

the other industries are measured.

OPPORTUNITIES FOR INSURANCE COMPANIES

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

the company in particular and the industry in general:

A change in the attitude of the population

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Indians have always been wary of employing their hard-earned money in a venture that will pay

them on their death. Insurance has always been used as a Tax saving tool. No more, no less. It is

upon the insurers to educate the people to secure/insure their future against any unknown

calamity and make a shield around their families and businesses.  

An open and transparent environment created under the IRDA.The reason for this being on the top of our understanding is that when ever we have seen any

sector open up in India there are always grey areas and unsure policies. These are not exactly

what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the

decision making process. Insurance as a sector requires players who are strong financially and

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

transparent policy guidelines. This will also help the consumers feel safe that the regulatory is an

active one and cares to do everything possible to keep things under control and help the

insurance environment grow maturely.  

A well-established distribution network.To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits are

directly related to number of insured and this is in turn related to the reach.

Trained professionals to build and sell the product.It is said that the insurance agent is the best salesman in the world. He makes you pay, regularly,

an amount promising to pay back only on your death. Thus the players will require an excellent

sales team to sell their products in the now competitive environment. 

COMPANY PROFILE

INTRODUCTION

Helping Indians experience the joy of home ownership.

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

largest residential mortgage finance institution in the country. The corporation has had a series of

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share issues raising its capital to Rs. 119 crores. HDFC operates through 75 locations throughout

the country with its Corporate Headquarters in Mumbai, India.

OBJECTIVES AND BACKGROUND

Background

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

promoting home ownership by providing long-term finance to households for their housing

needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives

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

the provision of housing finance in a systematic and professional manner, and to promote home

ownership. Another objective is to increase the flow of resources to the housing sector by

integrating the housing finance sector with the overall domestic financial markets..

ORGANIZATION AND MANAGEMENT

HDFC is a professionally managed organization with a board of directors consisting of eminent

persons who represent various fields including finance, taxation, construction and urban policy &

development. The board primarily focuses on strategy formulation, policy and control, designed

to deliver increasing value to shareholders.

FOUNDER – Mr. Hasmukhbhai Parekh

BOARD OF DIRECTORS

Mr. D S Parekh – Chairman

Mr. Keshub Mahindra – Vice Chairman

Ms. Rene S. Karnad – Executive Director

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Mr. K M Mistry – Managing Director

Mr. Shirish B. Patel

Mr. N M Munjee

Mr. B S Mehta

Mr. D M Sukthankar

Mr. D N Ghosh

Dr. S A Dave

Mr. S Venketaraman

Dr. Ram S. Tarneja

Mr. N M Munjee

Mr. D M Satwalekar

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

accountancy, engineering and marketing.

SUBSIDIARY & ASSOCIATE COMPANIES

HDFC Bank

HDFC Mutual Fund

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HDFC Standard Life

Intelenet Global Services Ltd.

HDFC Chubb General Insurance Company Ltd.

HDFC Reality

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.

HDFC Developers Ltd.

HDFC Venture Capital Ltd.

HDFC Ventures Trustee Company Ltd.

HDFC Investments Ltd.

HDFC Holdings Ltd.

Home Loan Services India Pvt. Ltd.

Credit Information Bureau (India) Ltd

HDFC STANDARD LIFE INSURANCE

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

license by the IRDA to operate in life insurance sector. Each of the JV player is highly rated and

been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,

Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect the

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

600,000 Cr respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is

the majority stakeholder in the insurance JV with 72.38% stake and Standard Life has a stake of

27.62%. Mr. Deepak Satwalekar is the MD and CEO of the venture.

THE PARTNERSHIP:

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

Insurance market, in January 1995. It was clear from the outset that both companies shared

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

companies signed a 3 year joint venture agreement.

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

relationship.

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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 handpicked team from HDFC to form the core project team,

based in Mumbai.

The company is present across 700 cities in India and has a network of over 500 branches.

Distribution Channels HDFC Life distributes its products through a multi channel network

consisting of Insurance agents, Bancassurance partners (HDFC Bank, Saraswat Bank, Indian

Bank), Direct channel, Brokers, Online buy channel.

Principal products category of the HDFC Life include Protection plans, Children’s plans,

Savings plans, Investment plans, Health plans, Women’s Plan and Group insurance solutions.

The company’s portfolio currently consists of 28 retail, 9 group products and 10 rider benefits

under savings, investment, protection and retirement product category.

COMPANY’S VISION

'The most successful and admired life insurance company, which means that we are the most

trusted company, the easiest to deal with, offer the best value for money, and set the standards in

the industry'.

‘'THE MOST OBVIOUS CHOICE FOR ALL'’

COMPANY’S MISSION:

To be the top life insurance company in the market.

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This not only means being the largest or the most productive company in the market, but a

combination of several things like-

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

COMPANY’S VALUES:

SECURITY: Providing long term financial security to our policy holders will be our

constant endeavor. This is done by offering life insurance and pension products.

TRUST: Company appreciates the trust placed by our policy holders in us. Hence,

company will aim to manage their investments very carefully and live up to this trust.

INNOVATION: Recognizing the different needs of our customers, company will be

offering a range of innovative products to meet these needs.

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

values that will guide us in this.

KEY STRENGTH

Financial Expertise

As a joint venture of leading financial services groups. HDFC standard Life has the financial

expertise required to manage long-term investments safely and efficiently.

Range of Solutions

HDFC SLIC has a range of individual and group solutions, which can be easily customized to

specific needs. These group solutions have been designed to offer complete flexibility combined

with a low charging structure.

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Strong Ethical Values

HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the

customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class

Magazine Business World for Integrity, Innovation and Customer Care.

KEY MANAGEMENT PERSONNEL

ChairmanMr. Deepak S. Parekh

Board Of DirectorsMr. K. M. Mistry

Ms. Renu S. Karnad

Mr. A. M. Crombie

Ms. Marcia D. Campbell

Mr. Norman Keith Skeoch

Mr. G. R. Divan

Mr. G. N. Bajpai

Mr. Ranjan Pant

Mr. Ravi Narain

Managing Director & CEOMr. D. M. Satwalekar

Audit Commitee

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Haribhakti & Company

Chartered Accountants

B.K. Khare & Co.

Chartered Accountants

BankersHDFC Bank Ltd.

Union Bank of India

Indian Bank

The Saraswat Co-operative Bank Ltd.

Federal Bank

PRODUCT PROFILEHDFC Standard Life offers a bouquet of insurance solutions to meet every need. HDFC Standard

Life, cater to both, individuals as well as to companies looking to provide benefits to their

employees.

For individuals, a range of protection, investment, pension and savings plans that assist and

nurture dreams apart from providing protection.

For organizations a host of customized solutions that range from Group Term Insurance,

Gratuity, Leave Encashment and Superannuation Products. These affordable plans apart from

providing long term value to the employees help in enhancing goodwill of the company.

(1) INDIVIDUAL PRODUCTS

HDFC Standard Life realizes that not everyone has the same kind of needs. Keeping this in

mind, they have varied range of products that we can choose from to suit all our needs. These

will help secure our future as well as the future of our family.

Protection Plans

30

Protection plans protect our family against the loss of our income or the burden of a loan in the

event of our unfortunate demise, disability or sickness. These plans offer valuable peace of mind

at a small price.

Protection range includes:

Term Assurance Plan

A pure risk cover plan, which gives us protection against the uncertainties of life. The HDFC

Term Assurance Plan is an insurance policy that is designed to help secure our family's financial

needs. The plan does this by providing a lump sum to the family of the life assured in case of

death or critical illness (if option is chosen) of the life assured during the term of the contract.

One can choose the lump sum that would replace the income lost to one's family in the

unfortunate event of one's death.

Loan Cover Term Assurance Plan

Home Loan Protection Plan

Investment Plans

HDFC Standard Life provides you with attractive long term returns through regular bonuses.

Investment range includes:

Single Premium Whole Of Life Plan

HDFC Single Premium Whole of Life Insurance Plan is a tailor-made plan well suited to meet

our long-term investment needs. This participating plan offers us the following benefits:

Whole of life plan aimed at providing long-term real growth of your money.

Single premium investment plan.

In case of your unfortunate demise during the policy term, this participating (‘With

Profits’) insurance plan will pay your family the Sum Assured and compound

Reversionary Bonuses, which are usually added annually. An additional Terminal Bonus

may be paid depending on the performance of the underlying investments.

During Guaranteed Surrender Periods you get the Sum Assured and all bonuses vested

as at the date of surrender.

31

Pension PlansPension Plans help us to secure our financial independence even after retirement.

Pension range includes:

Personal Pension Plan

HDFC Personal Pension Plan is an insurance policy that is designed to provide a post -

retirement income for life with the freedom to choose our retirement date. We can choose our

premium, the Sum Assured and our retirement date. At the end of the policy term, We will

receive the Sum Assured plus any attaching bonus, which will provide our post retirement

income. The HDFC Personal Pension Plan is an insurance policy, which can benefit us in the

following ways:

Provides a post retirement income in our golden years.

Gives us the flexibility to plan our retirement date.

Gives us tax benefits on our premiums.

The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of

the term an additional Terminal Bonus may be paid depending on the performance of the

underlying investment.

Unit Linked Pension

Unit Linked Pension Plus

Savings Plans

HDFC Standard Life Savings Plans offer flexible options to build savings for our future needs

such as buying a dream home or fulfilling our children’s immediate and future needs.

Savings range includes:

Endowment Assurance Plan

The HDFC Endowment Assurance Plan gives us:

An ideal way to secure your long-term financial goals.

Valuable protection to your family by way of lump sum payment in case of your

unfortunate demise within policy term.

32

Lump sum payment (basic Sum Assured plus any bonus additions) on survival up to

maturity date.

Very flexible benefit options and payment options.

In case of our unfortunate demise during the policy term, this participating ('With Profits')

insurance plan will pay our family the Sum Assured (together with the attached bonuses) we had

chosen.

The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of

the term an additional Terminal Bonus may be paid depending on the performance of the

underlying investment.

Assurance Plan

Savings Assurance Plan

Children’s Plan

HDFC Children's Plan gives us:

Invaluable financial support to our child.

A choice to customize an ideal plan for our child.

Multiple options for multiple benefits.

The HDFC Children's Plan is designed to secure our child's future by giving our child (the

beneficiary) a guaranteed lump sum, on maturity or in case of our unfortunate demise, early in

the policy term. The premiums, paid by us, are invested by the company to give you good long-

term returns.

The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of

the term an additional Terminal Bonus may be paid depending on the performance of the

underlying investment.

Money Back

Unit Linked Endowment Suvidha

33

The HDFC Unit Linked Endowment Suvidha gives us:

An outstanding investment opportunity by providing a choice of thoroughly researched and

selected investments.

Valuable protection to your family in case you are not around.

Flexible premium payment options.

Access to your accumulated fund before maturity.

No need to go for medical. Just signing a “Declaration of Health” statement will do!

We can choose our premium and the investment fund or funds. They will then invest our

premium, net of premium allocation charges in our chosen funds in the proportion we specify. At

the end of the policy term, we will receive the accumulated value of our funds.

In case of our unfortunate demise during the policy term, they will pay the greater of our Sum

Assured (less any withdrawals we have made in the two years before our claim) and our total

fund value to our family.

Use HDFC Standard Life’s excellent investment options to maximize our savings & secure our

and our family’s future. They will provide financial security for our family in our absence.

All Unit Linked Life Insurance plans are different from traditional insurance plans and are

subject to different risk factors.

Unit Linked Endowment Suvidha Plus

Unit Linked Endowment Plus II

Unit Linked Young Star Suvidha

Unit Linked Young Star Suvidha Plus

Unit Linked Young Star Plus II

Unit Linked Enhanced Life Protection II

Simplilife

The HDFC SimpliLife gives:

Valuable protection to your family in case you are not around.

An outstanding investment opportunity by providing a choice of thoroughly researched and

selected investments.

34

One we have chosen our investment fund or funds, they will then invest our premium, net of

premium allocation charges in the proportion we specify. At the end of the policy term of 15

years, you will receive the accumulated value of our funds.

In case of your unfortunate demise during the policy term of 15 years, they will pay the

following to our family.

The Unit Fund Value.

Plus Sum Assured of Rs. 1 Lakh.

All Unit Linked Life insurance plans are different from traditional insurance plans and are

subject to different risk factors.

(2) GROUP PRODUCTS

HDFC Standard Life has the most comprehensive list of products for progressive employers who

wish to provide the best and most innovative employee benefit solutions to their

employees. HDFC Standard Life offer different products for different needs of employers

ranging from term insurance plans for pure protection to voluntary plans such as superannuation

and leave encashment. They offer the following group products to our esteemed corporate

clients.

Group Term Insurance

The Group Term Insurance (GTI) plan meets this need and serves as an ideal way for companies

to reinforce their bond with their employees. The sort of needs, we, as an employer need to cater

to could be in form of:

Employee benefits.

Cover for housing or vehicle loans given by us to our employees.

35

A GTI cover for future service gratuity liability to be taken along with the HDFC Group

Unit Linked Plan.

The HDFC Group Term Insurance is a cost-effective plan that addresses these needs. In addition

we have the choice to opt for a GTI with an experience discount feature ("Profit Share"), where

a discount is given on future premiums in case of favorable claim experience (subject to group

size).

The HDFC group term insurance plan will have the following structure:

One year renewable term insurance plan.

One master policy issued covering all members of the group.

Sum assured is payable on death (either due to natural causes or accidents).

The plan covers death due to any cause; accidental or natural, and hence is more comprehensive

than Group Personal Accident Insurance. Several multinational corporations, large Indian

companies, foreign banks and software companies have already chosen the HDFC Group Term

Insurance, an innovative product from HDFC Standard Life Insurance, to protect their

employees.

Optional Rider Benefits:

Accidental Death Benefit.

Total Permanent Disability.

Total Permanent and Partial Disability Benefit.

Critical Illness Benefit.

Terminal Illness Benefit.

Group Variable Term Insurance

Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with Gratuity,

Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of

your company

Also suitable for other employee benefit schemes such as salary saving schemes and wealth

management schemes

36

(3) SOCIAL PRODUCTS

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members of a

Development Agency for a term of one year. On the death of any member of the group insured

during the year of cover, a lump sum is paid to that member’s beneficiaries to help meet some of

the immediate financial needs following their loss.

Eligibility

Members of the development agency and their spouses with:    

Minimum age at the start of the policy 18 years last birthday

Maximum age at the start of policy 50 years last birthday

Employees of the Development Agency are not eligible to join the group. The group to be

covered is only eligible if it contains more than 500 members.

Premium Payments

The premium to be paid will be quoted per member in the group and will be the same for all

members of the group. The premium can only be paid by the Development Agency as a single

lump sum that includes all premiums for the group to be covered. Cover will not start until the

premium and all the member information in our specified format has been received. The

premium rate is Rs.25 per Rs.10,000 of lump sum, per member.

Benefits

On the death of each member covered by the policy during the year of cover a lump sum equal to

the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of

an accident, an additional lump sum will be paid equal to half the sum assured. There are no

benefits paid at the end of the year of cover and there is no surrender value available at any time.

The role of the Development Agency

37

Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the premium

charged can be lower. These tasks would include:  

Submission of member data in a specified computer format

Collection of premiums from group members

Recording changes in the details of group members

Disbursement of claim payments and the mortality rebate (if any) to group members

These tasks would be in addition to the usual duties of a policyholder such as:

Payment of premiums

Reporting of claims

Keeping policy holder information up to date

Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development Agency, the

Development Agency may charge Rs.10 administration fee to their members.

 Prohibition of rebates

Section 41 of the insurance act1938 states

No person shall allow or offer to allow, either directly or indirectly ,as an Inducement to

any person to take out or renew or continue as insurance in respect Of any kind of risk

relating to lives or property in India ,any rebate of the whole or Part of the commission

payable or any rebate of the premium shown on the policy, nor shall any person taking out

or renewing or continuing a policy accept any Rebate, except such rebate as may be

allowed in accordance with the published prospectus or tables of the insurer

If any person fails to comply with sub regulation(previous point) above, he shall be liable

to payment of a fine which may extend to rupees five hundred

38

COMPETITIVE STATUS

Amitabh Chaudhry is fresh from a meeting on technological transformation and is visibly

charged up. HDFC Life has recently committed to spending Rs 100 crore over the next five years

on customer relationship and knowledge management and the groundwork’s just starting. It’s not

the sum involved that’s got the insurance company’s managing director and CEO so excited —

although that’s pretty good, too — it’s the very fact that the company is taking such key strategic

decisions. For a company that got its insurance license in 2000 and that has the backing of a

giant like HDFC, the Mumbai-based private insurer didn’t really live up to expectations. In just a

few years, HDFC Life’s cautious and ultra-conservative approach had pushed it to a rather

unimpressive No. 5 slot in the private life insurance space. “I think we lost the ability to take

risks. If we got it right on putting in place the right practices, the question relating to serving the

customer was not always answered,” says Chaudhry candidly.

About two years ago, HDFC Life finally woke up. One of Chaudhry’s first tasks after taking

over the company’s leadership in early 2010 was to chalk out a comprehensive change in

strategy. It was clear to him that while the company had a trusted brand legacy, not enough

action was taking place and change would have to happen all along the value chain to get HDFC

Life back on track.

And that’s exactly what he did, with impressive results, too. HDFC Life is a much stronger No.2

player now, with a 13% share of the private life insurance market. The Porter Prize jury was

impressed with both the insight and its impact, pointing out that “the company has taken

significant initiatives to ensure that all its efforts are aligned towards a common goal”, which

made it a winner in the “Leveraging unique activities” category. Take a look at how these efforts

dovetailed.

Step by step

Chaudhry’s game plan centers on five simple steps. Trouble was, HDFC Life had got used to a

very narrow approach of doing business — it asked for endless, time-consuming documentation,

for instance, and was slow in expanding to new territories. So, while none of the five measures

was revolutionary, it wasn’t easy getting the organization to implement them. Still, the company

39

started off by changing its logo to get closer to parent HDFC’s brand symbol. “This was

important since we needed to extract the best value from the HDFC brand,” Chaudhry explains.

“I don’t think we are still doing enough of that.”

Meanwhile, the other measures were rolled out. The first was to expand distribution to new

markets, even as HDFC Life rationalized its existing branch network, weeding out oversized and

poorly located offices in a bid to become the least-cost service provider. From 568 in FY10, its

network came down to 483 in end FY12, even as it moved to new locations like Nagaland.

“These were not easy decisions, but they had to be done,” says Chaudhry pragmatically.

Then came a variety of products aimed at differentiating the insurer in the market, including unit-

linked plans and a children’s plan, which Chaudhry says, is an attempt to reach out to a new

segment. The company’s recent products and ad campaign aimed at women customers is part of

the same plan but also fit in with the insurer’s desired positioning as a long-term insurance

player. The emphasis on customer experience was also upped and the Rs 100 crore tech budgets

is aimed at ensuring more focused selling and follow-up.

The revised strategy has worked. HDFC Life was in the black for the first time in FY12 with a

profit of Rs 270 crore on a total weighted received premium of Rs 3,084 crore (weighted

received premium is the total premium received with 10% weight age to total single premium).

New business WRP market share among private players, too, increased from 8.7% in FY10 to

15.5% in FY11. The expense ratio, which was as high as 20.9% is down to 11.5%. The impact

also shows in HDFC Life’s ambitions — in five years, it wants to be India’s largest private

insurer. Easier said than done: insurance remains one of the toughest industries, with intense

competition coupled with a lack of volumes. That doesn’t worry Chaudhry, though. “Ideally, we

want to be spoken of in the same breath as Life Insurance Corporation,” he says. Looks like he is

really charged up to dream that big.

40

SWOT ANALYSIS

SWOT Analysis

STRENGTH

1. Customized and Flexible Insurance Solutions and large product portfolio2. Robust Risk control Framework3. Network of 500 branches and agents across 700 cities4. Strong Financial Expertise and popular advertising5. Globally, Standard Life plc has 1.5 million shareholders in more than 50 countries and over 6 million customers6. Alliance between HDFC and Standard Life giving a strong brand backing

WEAKNESS

1. Less penetration in rural areas2. Controversies like job cuts, racism and data loss have affected image

OPPORTUNITY

1. Growing rural market and better opportunities in the semi-urban areas 2. Group Insurance through large employers

THREATS1. Economic instability and global crisis2. Entry of new NBFCs in the sector

41

CHAPTER II

RESEARCH DESIGN

RESEARCH DESIGN42

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

“A Study of Factors affecting Investment Behavior in Life Policies”

STATEMENT OF THE PROBLEM

This study was undertaken to identify how different factors influencing Investment

Behavior of Individual. A survey was undertaken to understand the preferences of

Indian consumers with respect to Investment in Insurance.

This research tries to analyze some key factors which influence the buying

behavior of individual in Life Insurance. Solutions and recommendations are made

based on qualitative and quantitative analysis of the data.

43

OBJECTIVES OF THE STUDY

To study how different factors influencing Investment Behavior of Individual.

To Study different Policies of HDFC Standard life Insurance Company limited.

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

To Compare and analyze the Importance of Different factors in Investment in Life Insurance.

To understand the perception of an individual about their knowledge in Life Insurance

SCOPE OF THE STUDY

A big boom has been witnessed in Insurance Industry in recent times. A large

number of new players have entered the market and are vying to gain market share

in this rapidly improving market. The study deals with HDFC Standard Life in

focus and the various segments that it caters to. The study then goes on to evaluate

and analyze the findings so as to present a clear picture of trends in the Insurance

sector.

44

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.

PRIMARY SOURCES

Data observed or collected directly from first-hand experience is called Primary

data.

These include the survey or questionnaire method i.e. personal interview method of

data collections.

SECONDARY SOURCES

Published data and the data collected in the past or other parties is called secondary

Data.

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

company website, 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

45

The sample was conducted on 129 people out of whom 29 persons did not have

any life insurance policy.

So, the sample size for the survey conducted was 100 respondents.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

A sampling method in which all members of a group (population or universe) have

an equal and independent chance of being selected is called Random Sampling.

PLAN OF ANALYSIS

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 have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in New Delhi.

46

CHAPTER III

ANALYSIS AND INTERPRETATION

47

AGE GROUP

18-2524%

26-4037%

Above 4039%

Age group

Highest number of Respondents (39%) from Age group ABOVE 40 yrs.

37% respondents are of age below age group of 26-40 yrs.

Lowest number of Respondents i.e. 24% from Age Group of 18-25 yrs.

48

EDUCATION QUALIFICATION

Saving Tool

Tax Saving Device

Future Protection

Others

7

6

9

3

15

17

8

6

7

11

7

4

Education QualificationUndergraduate Graduate Post Graduate

17% number of Respondents is graduate and invests mainly for tax saving and as a

saving tool.

9% respondents invest for their future protection so as to avoid uncertainties.

Only 7% respondents are postgraduate and invest in life insurance as a saving tool.

49

MARITAL STATUS

less than 2 lacs

2-5 lacs

5-8 lacs

above 8 lacks

4

22

27

12

2

13

16

4

Marital statusmarried unmarried

Highest, 43 respondents in income bracket below 5-8 lacs, in which 27 are married

and 16 are unmarried.

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

Minimum, 6 respondents comes in income bracket of less than 5 lacs, in which 4

people are married and 2 unmarried.

50

ANNUAL PREMIUM PAID BY CUSTOMERS

Below 7 Years 7-10 Years 10-15 Years Above 15 Years

9 9 73

10 610

4

11 12

91

4 3 11

Annual Premium PaidBelow 15k 15k-30k 30k-50k Above 50k

34 respondents are paying premium of below 15k for the time interval of less than 7

years. This shows that the Insurance industry is gaining popularity and the people

who hesitate to take the policy are now at least taking the policy.

The most feasible time period for taking a policy and getting good returns with

keeping in mind the effect of time is 10-15 years. After this tenure the insured gets a

handsome amount which helps in the ultimate goal of their life.

The moderate time period i.e., 7-10 yrs is the time period which is having the

maximum popularity on all others.

51

INVESTMENT PREFERENCE OF RESPONDENTS

17%

29%

13%12%

15%

11%3%

Investment PreferenceInsurance Bank deposits Gold SecuritiesShares Fixed Assets Others

29% respondents prefer banks deposits as an investment tool preference.

15% prefer shares, as they provide higher returns than banking investment tools.

Insurance ranks 2nd with 17% as an investment tool choice, which itself includes various

protection, saving and pension plans.

Govt. Bonds & securities are mostly preferred by 12% respondents.

Property as an investment option is also a lucrative choice with 11% respondents.

52

PERCEPTION ABOUT LIFE INSURANCE

Saving tool Tax Saving device Future protection tool

Other

2331

39

7

Perception about Life InsurancePerception about Life Insurance

Life Insurance has an all around image of Future Protection Tool and in India the

individual here also perceives Life Insurance to be a future protection tool which

could help as a yardstick in case of any casualties or at the later stage of life. 39%

takes insurance to safeguard their future.

The Life Insurance also plays an important role in the Tax Planning and due to its

deduction in Income Tax Act under Section 80C , it comes as a great Tax Saver

element in the Tax planning. 31% people invest in Insurance to save their Taxes.

In India Life Insurance is also taken as one of the best saving tools with its

competition with PF and PPF etc. For 23% people Insurance acts as a Saving Tool.

53

TYPES OF PLANS

Business Profession Service0

5

10

15

20

25

30

35

40

45

50

10 816

8 11

99

21

18

Traditional ULIPs Both

The Business men may generally invest in Traditional Plans. Insurance accounts to

a much lesser proportion to business man as compared to other persons as they

have many other options to invest on the preference.

Professionals, due to their deep knowledge they generally invest in a portfolio style

in which they include both the ULIPs and Traditional plans.

Service Class guys are more inclined towards the Traditional plans and they are

generally risk averters. So 16 out of 43 invest in Traditional plans and 18 in both.

54

COMPANY PROFILE

Below 30 yrs

30 to 45 yrs

Above 45 yrs

10

9

4

17

17

21

7

11

4

Company PreferenceBoth Only LIC Private Cos.

LIC is India’s most trusted Companies as of now. The elder persons are much fond of

the LIC name and they perceive Insurance means LIC. Out of 29 persons falling in

the age group of 45 Yrs and above 21 are the hardcore LIC policy holders.

As the young and more dynamic people are entering into the earning group they want

more of services and they know that the private companies are doing well. There is

still a mixed combination of the people interested in LIC and other Companies.

The person in rural areas or the villages knows only one name and i.e., LIC. So,

Private players need to put more efforts in Rural India as compared to the Urban

Cities. They need to be updated regularly with related news.

55

INVESTMENT PREFERENCE IN LIFE POLICIES

Individual Joint Group

68

239

Investment preference in Life policiesInvestment preference in Life policies

68% of the persons take their Insurance policy as an Individual. It is the most

common type of investment preference in life policies.

23% and 9% of the persons take Life Insurance Policies as Joint and Group

respectively. This generally takes place in the MNCs and the Business places.

56

TYPE OF PLAN BOUGHT

Money Back Endowment Pension Plans ULIPs0

5

10

15

20

25

30

35

40

35 37

1216

TYPE OF PLAN BOUGHT

Pension plans are generally take for the people who are previously salaried.

Endowment and Money Back policy are the most preferable instruments in

Insurance. Around 3/4th of the total instrument are of this category. It acts as a

saving as well as investment tool for the traditional people.

ULIPs constitute 16% of the total policies. It is more popular in the urban areas and

the people who are related to the Capital Market are keener in investing in these

kinds of instruments which are linked to the market.

57

PREFERRED TIME INTERVAL FOR PAYMENT OF PREMIUM

15% 4%

9%

23%

49%

Preferred time interval for payment of Premium

Lump Sum Payment Monthly QuarterlySemi- Annually Annually

Nearly half of the total premium payment is done on the annual basis.

23% respondents prefer on semi-annually basis.

15 % are done on Onetime payment or the Lump sum payment.

Very few people opt for monthly installments of premium.

58

INVESTMENT IN CURRENT COMPANY

Different Plans Low Charges Better Facilities Higher Returns Others0

5

10

15

20

25

30

35

1619

24

31

11

Investment in Current Company

Higher returns are the basis of investment in the present or the current company. It

means the persons are running towards having higher returns. So a great future for

ULIPs could be interpreted from this.

Better facilities and after sale service or the customer support are the basis for 24%

of the persons. In this, Private companies can outperform LIC and make this as

their edge over LIC.

The availability of different plans and the best suited plans also plays an important

role while going for the policy.

59

RESPONDENTS KNOW ABOUT HDFC LIFE

Yes86%

No14%

Do you know about HDFC Life?

While survey, it is clearly reflected that the persons living in Urban areas knows

about the HDFC as a brand and many of them perceives HDFC and all other sister

concern as one and the same thing.

In rural areas the persons are still not aware about the name. So the Company

needs to start a Campaign in the rural areas to boost up their sales.

60

CHAPTER 4

FINDINGS

AND

SUGGESTIONS

61

FINDINGS

Companies should introduce the portability system in life insurance. It will bring competition between them.

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

positioning as “worry free”.

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

investment.

Lack of understanding: Training of Channels

To provide quality advice on products best suited

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

Need to promote the quality of awareness

The benefits: Leverage on Risk Protection or Returns oriented or both

The product: catering to life stages

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

competition insurance companies have to do a considerable brand building exercise at least

in urban India. Adequate time, investment and long-term management of the brand are

essential, not only for success but also survival. All brands need to be built around well

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

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

People still think that life insurance is a Tax saving device not a Future protection device.

Private companies have not made TRUST Factor in the people’s Minds. That is why mostly

people still go for LIC.

People don’t like to invest in insurance as Investing in life insurance is a long term process and

No one wants to withdraw or surrender their policy in between.

People prefer to invest in Traditional plans it shows that they are risk avoider

The study shows that people prefer to buy individual policy and not in the group.

The study shows that people just invests for higher returns.

62

RECOMMENDATIONS

As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its importance. The company should try to expand & build up its infrastructure because there is a large potential for insurance in India.

The government has come up with a proposal of allowing 49% FDI in Insurance and Pension sector. Now healthy competition will be seen in the market and it will ultimately benefit to the customers.

The government is introducing a new concept of DEMATERIALIZATION in Insurance sector which we have seen in capital market. After this, the people can invest in insurance through their De-mat account.

S i n c e H D F C S t a n d a r d L i f e I n s u r a n c e C o m p a n y L t d i s l e a d i n g w i t h s e v e r a l  policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.

The company can target the rural customers and can start various campaigns to make the rural person aware about the importance of life insurance in their life.

The company should launch some policies for the persons falling in the lower income level group as they constitute to a very high population in India.

63

CONCLUSION

Our research in the field of Life Insurance threw up some interesting trends which

can be seen in the above analysis. A general impression that we gathered during

Data collection was the immense awareness and knowledge among people about

various companies and their insurance products. People are beginning to

look beyond LIC for their insurance needs and are willing to trust private

players with their hard earned money.

Another heartening trend was in terms of people viewing insurance as a tax saving

and investment instrument as much as a protective one. A very high number of

respondents have opted for insurance for such purposes and it shows how

insurance companies a have been successful to attract public money in recent

times.

The general satisfaction levels among public with regards to policy and

agents still requires improvement. But therein lies the opportunity for a relative

new comer like HDFC Standard Life Insurance Company Ltd. LIC has never

been known for prompt service or customer oriented methods and HDFC

Standard Life can build on these factors.

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LIMITATIONS OF THE STUDY

1. The research is confined to a certain parts of DELHI & NCR and does not

necessarily shows a pattern applicable to all of Country.

2. Some respondents were reluctant to divulge personal information which

can affect the validity of all responses.

3. In a rapidly changing industry, analysis on one day or in one segment

can change very quickly. The environmental changes are vital to be

considered in order to assimilate the findings.

4. Sample size was only restricted to 100.

5. Lack of time is also a major limitation for the project.

6. Projections regarding environmental and political basis can be change.

7. Data Interpretation: After the data collection process, it was essential to

interpret them to figure out the result. The data collected are expressed with

the help of Bar graphs and Pie-Charts which is difficult to understand.

65

BIBLIOGRAPHY

Books referred: Sadhak , Hira Life Insurance In India: Opportunities, Challenges and Strategic

Perspective, 1st edition, 2009, SAGE Publications, New Delhi.

Kothari, C.R. Research methodology, 3rd edition, 1997, Vikas Publishing House Pvt. Ltd,

New Delhi.

Websites www.irdaindia.org

www.hdfcinsurance.com

www.businessworldonline.com

www.irda.gov.in

66

ANNEXURE

67

QuestionnaireDear Sir/Madam,

I am a BBA student of Hindu College, Sonepat and presently doing a summer project in “A

Study of Factor affecting Investment Behavior in Life Policies”. I request you to kindly fill the

questionnaire below and I assure you that the data generated shall be kept confidential.

1. Do you have any life Insurance?

a) Yes b) No

If yes, please specify which company________________________________________

2. Gender

a) Male b) Female

3. You belong to which age group? (Tick any one)

a) Below 30 b)30 to 45yrs c) 40 & Above

4. What is your Education Qualification? (Tick any one)

a) Undergraduate b) Graduate c) Post graduate

5. What is your Occupation? (Tick any one)

a) Business b) Profession c) Service

(Please mention the type of business/profession you are in incase of service please mention your

organization name and designation in the space below)

______________________________

6. What is your annual household income? (Tick any one)

a) Less than 2 lacs

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b) Between 2 to 5 lacs

c) Between 5 to 8 lacs

d) More than 8 lacs

7. Are you married?

a) Yes b) No

8. According to you which is the best form of investment?

a) Insurance b) Bank Deposits

c) Gold d) Securities, i.e bonds, mfs etc

e) Shares f) Fixed Assets

g) Others (please specify)

9. What is your perception about insurance sector?

a) Hard & profitable

b) Hard but not rewarding

c) Smooth &rewarding

d) No idea

10. What is your perception about Life insurance?

a) A saving tool b) A tax saving device

c) A future protection tool d)Any other

11. Which company do you prefer for Insurance?

a) Private Cos. b) Only LIC c) Both

12.Why you have invested in that company?a) Different Plansb) Low Chargesc) Better Facilitiesd) Higher Returns

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e) Others

13. Are you satisfied with the company?

a) Yes b) No

14. What type of Plan have you bought?

a) Traditional

b) ULIPs

c) Both

15. How much policies have you taken?

a) 1 b) 2

c) 3 d) above 4

16. How much amount do you pay as premium in 1 year?

a) Below 15k b) 15k-30k

c) 30k-50k d) above 50k

17. For how much time do you invest in life policies?

a) Below 7 years b) 7-10 years

c) 10-15 years d) above 15 years

18. How do you prefer your investment in life policies?

a) Individual b) Joint

a) Group

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

a) Government owned company

b) Public Limited Company

c) Private Company

d) Foreign based company

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20. Do you know about HDFC Life?

a) Yes b) No

Personal Details:

Name:

Address:

Age:

Contact No. :

Profile of respondent:

Student Housewife Working Professional Business Self – Employed Government Service Employee

Date:

71