analytical study on market linked insurance at tata aig life

8/6/2019 Analytical Study on Market Linked Insurance at Tata AIG Life

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Summer Project

(Internship)

Done with



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Project Title



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INDEX:

⇒ ACKNOWLEDGEMENT⇒ SUMMARY OF PROJECT⇒ WHY?⇒ OBJECTIVE OF PROJECT⇒ RESEARCH METHODOLOGY⇒ CONTENTS OF PROJECT

O SECTION-1: COMPANY PROFILE OF TATA-AIG LIFE INSURANCE COMPANY LTD

O SECTION-2: ANALYTICAL STUDY ONMARKET LINKED INSURANCE PLANS,(ULIP’S) IN INDIAN INSURANCE MARKET

⇒ CONCLUSION⇒ RECOMMENDATIONS⇒ BIBLIOGRAPHY



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AcknowledgementIt has been an immense pleasure and inspirational experience doing my project with Tata-AIG Life

Insurance Company Ltd.

I take this opportunity to thank all those people who have made this experience a memorable one.

Firstly, I would like to thank Mr. Parikshit Abroal (Cluster Head, Tata-AIG Life Insurance), Nitish

Beohar (Regional Manager), I would like to extend my sincere and hearty thanks to my guide Ms

Anamika Dixit (Assistant Business Manager) without whose help it would be difficult to complete

this project.

This gratitude will remain uncompleted if I won't mention the names of other persons who helped

me not only in my projects but also morally which makes my stay full of charm. I would like tothank Mr. Rahul Bendre (Agency Manager), for being a constant trainer and motivator for me for

successful completion of the project. During the course of time he has given me valuable tips

related to my project and was more like a friend who guided me throughout the project.

Last but not the least I extend my special gratitude to Tata-AIG Life Insurance Advisors who have

contributed a lot in my project completion and college library staff.



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Summary of Project

The Project title is itself self-explanatory the first part i.e. comparative study on ULIPS (UNIT

LINKED INSURANCE PLANS) in Indian Insurance Market. It includes how Insurance Market

in India looks like, how it is growing and booming and helping the Indian economy. Their current

trend helps us to know about the Insurance sector and the current scenario Of ULIPS in Insurance

market. Wherein a market study is also done, it tells how ULIPS are popular with the Indians. Also

a comparison is done with Mutual Funds as the ULIPS similar to Mutual Funds.



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Why?After the LPG norms the Insurance sector has been boosted and gave sharp edge for the private’s

players and also open doors for foreign players to spread their hands .Thus many foreign insurance

companies came to India but they joint their hands with Indian companies, i.e. they came withJoint Venture. Many such companies include Bajaj Allianz, ICICI Prudential, and many more,

Tata – AIG Insurance is one of them.



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Objective:-

A comparative analysis of ULIPs (Unit Linked Insurance Plans) in the Indian Insurance Market is

the main objective of the practical. We know that now a day’s people have become aware of the

investment opportunities in capital market and also they like to take risk in their life. ULIPs is such

a product which offers a good combination of risk and also security, i.e. it gives investment

opportunity and also protection to one’s life.



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Research Methodology:-• Research design –descriptive

• Data sources- primary data and secondary data

• Research approach – face to face interview, observation, individual depth interview

• Research instrument –questionnaire, list of contacts



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Contents of Project: -

Sections Particulars Pages1 Company Profile Of Tata _ AIG Life Insurance Company Ltd 1-52 Analytical Study on Ulip’s 6-61

2.1) Introduction of Insurance 72.2) Indian Insurance Market Trends 8-122.3) About Life Insurance 13-142.4) Brief History of Life Insurance in India 152.5) ULIPs 16-182.6) ULIPs V/s MFs(Mutual Fund) 19-222.7) Comparative Analysis of ULIPs (Plans) 23-362.8) Analytical Study on :-

• NAV Performance• Fund Performance

37-47

2.9) ULIPS as Retirement Planning 48-492.10) Case Study(SSI Illustration) 50-512.11) Overall Analysis 52-532.12) Market Research 54-592.13 Popularity Of ULIPs 60-61

Conclusion 62

Recommendations 63-64

Bibliography 67-67

Tables & Charts• Glimpse Of Joint Venture Of Tata-AIG Life Insurance

Company Ltd5

• Statistics of Life Insurance in India 10• Share of Private Companies and LIC 11• Market Share Of Private Players(2006-2007) 12• Charges:-

o Mortality Chargeso Top-up Chargeso Switching of fund Chargeso

Policy Administration Chargeso Fund Management Charges

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• NAV & Fund Performance:-o Intra-Company-Equity Fundo Fund Performanceo Inter Company

37-47

• Market Research (Charts) 53-58



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Section 1



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About Tata Group :-

About 130years Tata‘s have stood as India’s most respected corporate group. Also Tata‘s

have stood for their quality of leadership with trust.

The Tata group is an industrial tycoon. Their revenue over US is $8.47Billion. The Group has been

a market leader in steel, commercial vehicles, electric power generation in the private sector and

computer software.

The Corporate profile unfolds the spectrum of businesses that the Tata group is in. It covers

around 92 companies under the Group’s

Seven chosen Business Sectors., which are as follows.• Engineering – Automotive , engineering products and Services

• Materials

• Energy

• Chemicals – Tata Chemicals , Rallis India

• Consumer Product - Tata Tea ,Tata Coffee, Titan• Services – Indian Hotels , Tata Housing Development Company , Tata – AIG

General Insurance , Tata – AIG Life Insurance

• Communications and Information Systems – Tata Teleservices , Tata Telecom,

Birla AT & T , Tata Internet Services , Tata Consultancy Services, Tata InfoTech

Even if Tata Group is enjoying its dominant position in the Traditional Businesses, Tata

has also focused on modernization and adoption of world class processes and practices to change

the way the business is been done in these areas. Tata simultaneously continues to be the first

movers in merging businesses and technologies that will impact on the Indian economy.



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About AIG Group:-

American International Group (Inc) is the leading U.S. based international insurance,

underwriter and a financial services organization. It presence all over world is around 130

countries. Its global businesses also include financial services and asset management, including

aircraft leasing, financial products, trading and market making, consumer finance, institutional,

retail and direct investment fund asset management, real estate investment management, and

retirement savings product.

AIG, (Inc) common stock is listed on the New York Stock Exchange, as well as the stock

exchanges in London, Paris, Switzerland and Tokyo. It employs 40,000 people through a wide

network of offices all around the world.

Its core business consists of:

• General and Life insurance business• A portfolio of highly targeted financial services business

• Growing global investment business.

Revenues over US $ 81.3billionRanked 4 th on the Forbes 500 List of 2003



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About Tata – AIG Insurance :-

Tata - AIG Insurance as said is a joint venture ,and was licensed to operate on 12 th

February 2001.Around 190 branch offices are spread all over India. It provides wide variety of life

insurance products. Its working is based on Business brought up by Business Associates who arethe advisors/agents for the company. The company is based in Mumbai .

Areas of business

Tata AIG Life Insurance products include a broad array of life insurance coverage to both

individuals and groups. For groups, the company has life products whereas for individuals, it has

term products, endowment products as well as money-back products. For groups and individuals,

various types of add-ons and options are available to give consumers flexibility and choice. The

company has also designed specific products for the financially challenged and underprivileged .



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Glimpse at the Joint Venture:-

Tata (74%)

Rata TataChairman

CEO

Tata – AIG Insurance

Mr. Farrokh K. KavaranaChairman Tata – AIG Insurance Companies

Tata – AIG General

Insurance

Dalip VermaManaging Director

Tata - AIG life

Insurance

Trevor BullManaging Director

AIG (26%)

Martin J SullivanChairman

CEO



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Section 2



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“ Insurance is not about death but living happily”

2.1. Introduction to Insurance :-

Insurance is a concept which was introduced many years ago. In India it has been growing

and booming drastically specially after LPG (Liberlisation, Privatisation, & Globalisation). LIC

which was the only player now it has many private players which are posing competition.

Insurance itself is a competitive sector because there are many other fields also, as in Life

Insurance, General Insurance; Health Insurance etc are few of them which are growing at a very

faster rate. Life Insurance sector is growing at 80%. LIC is moving at 35% and other privateplayers at 100%.The insurance market is growing with an increasing trend.

This industry has got such a lot of potential in it and has high opportunity because of the

changes are taking place in the economy. Bancassurance, Ombudsman, CRM etc are the few

topics which are at a rise in this sector. Bancassurance i.e. a well developed banking system for

marketing of insurance products, Ombudsman which is like redressal cell for the customers. Then

the Customer Relationship Management, all these are at rise.



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2.2. Indian Insurance Market Trends:-

The year 1999 saw a revolution in the Indian Insurance sector, as major structural changes

took place with the ending of government monopoly and the establishment of IRDA which gave a

way for private players and allowing foreign players to enter the market with some limits on direct

foreign ownership. The existing rule says that a foreign partner can hold 26% equity in an

insurance

company. Since opening up of the insurance sector in 1999, foreign investments of Rs 8.7billion

have poured into Indian market and 21 private companies have been granted licenses.

Innovative products, smart marketing and aggressive distribution have enabled fledgling private

insurance companies to sign up Indian customers faster than anyone .Indian, who had always seen

life insurance as a tax saving device is suddenly turning into different innovative products.

Most private insurance companies in India are joint – ventures with a foreign partner and has

helped Indians enter the global arena.

[Indian Insurance Industry Forecast Report provides extensive research and analysis of

the growing insurance industry (2007-2009). It provides a report which analyses the leading -

edge opportunities critical to success of Insurance Industry in India. It gave following findings

- The changing socio-economic demographics, rate of GDP growth, changing consumer

behaviour and occurrences of natural calamities at regular intervals, the Indian Life

Insurance market is expected to reach the value of around Rs 1683 Billion in the year

2009. The market is expected to grow more than 200% YOY from the year 2006.

- In 2006-2007, pension premium contributed about 22.11% to total premium income of

insurers. In December 2005 it was 25.22%.

- In non-life segment, the established player’s controls 65% of market .In motor

Insurance Business, Public sector covers almost 68% of the market value with New

India as leading player followed by united India.

Key players in Insurance Industry include :-• Tata-AIG Life Insurance,

• Bajaj Allianz,

• ING Vysya,• AMP Sanmar Assurance ltd,

• SBI life , HDFC Standard,



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• ICIC Prudential Life Insurance ,

• Birla Sunlife,• Aviva Life Insurance,

• Kotak Mahindra ,

• Max New York Life,• Met Life, Sahara Life,

• Royal Sundaram,

• Tata – AIG General ,

• Reliance General,

• IFFCO- Tokio,

• ICICI Lombard,• HDFC Chubb,

• New India Assurance Company Ltd,

• National Insurance Company Ltd,• United India Insurance Company Ltd & Oriental Insurance Ltd.

The private players , in life a well as non-life segments , gained more market share than the

public sector players in 2004-2005.This gain was more in Life insurance sector because of certain

factors, which include:-

- Increasing Gross Financial household savings

- Deregulation in the Indian Insurance Market- Increase in Dependency ratio.

With an annual growth rate of 15-20% and the largest number of life insurance policies in

force, the potential of the Indian insurance industry is huge. The 14 private insurers increased their

market share from about 13% to about 22% in a year’s time .The share of LIC for this period

(2005-06) has further come down to75% while private players have grabbed over 24%.



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Statistics:-

LIFE INSURANCE

Indian population 1bn

GDP as on 2000 (Rs Bn) 20000BnGross Domestic Savings as % of GDP 23%

NCAER estimate of insurable population 240mn

Estimated market by 2005 650mn

The life insurance industry in India grew by an impressive 36%, with premium income from new

business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from

private insurers. The market share, LIC, has 21.87% growth in business at

Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to

arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in

2004-05 from Rs. 24.29 billion in 2003-04. The 14 private insurers increased their market share

from about 13% to about 22% in a year's time.

Private Companies & LIC's Market Share

LIC 78%

PRIVATE22%

PRIVATE TOTAL LIC



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Market Share of LIC &Private Players

Market Share

0%

20%

40%

60%

80%

100%

S h a r e

LIC Private Players

Private Players 2% 6% 22% 22% 29%

LIC 98% 94% 87% 78% 71%

2001-02 2002-03 2003-04 2004-05 2005-06



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Market Share (2006-37) :-

Market Share (2006-07)

Bajaj Allianz Life ING Vysya Life Reliance LifeSBI life Tata - AIG life HDFC Standard LifeICICI Prudential Birla Sunlife Aviva LifeKotak Mahindra Max New York MetlifeSahara Life Shriram Life Bharati AXA Life

Name of Company Market Share (2006-07)Bajaj Allianz Life 5.66ING Vysya Life 0.62Reliance Life 1.23

MetLife 0.46SBI life 3.4 Tata - AIG life 0.85HDFC Standard Life 20.15ICICI Prudential 6.97Birla Sunlife 1.17Aviva Life 0.96Kotak Mahindra 0.82Max New York 1.22Sahara Life 0.06Shriram Life 0.24

Bharati AXA Life 0.01



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2.3. About Life Insurance :-

Life Insurance is a contract in which the insurer, in consideration of a certain premium,

either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person

for whose benefit the policy is taken, the assured sum of money, on happening of a specified eventcontingent on the human life or at the expiry of certain period.

Life Insurance is a fundamental part of sound financial plan. Life insurance helps to insure

the following for ones family and loved ones.

• Protection against financial difficulties in case of premature death.

• Protection with investments , retirement and estate planning

• Protection towards regular income now and in future.

Following are the benefits:-

In Life Insurance there are many products which were floated early in the market according

to conditions prevailing like

• Term life plans,

• Whole life plan,• Endowment plan,

Savings: -

Education:- Retirement:-BENEFITS

Of INSURANCE



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• Combination of whole life & endowment,

• children’s assurance plan, &• Annuity & Pension plans.

These were called as traditional plans .After the LPG and from the year 2000 onwards

many foreign players came into India. They brought in ULIPS in Indian Market.



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2.4. Brief history Of Life Insurance in India :-

The story of Insurance in India is as old as the story of mankind. In India Insurance was

brought by England company, it was the first insurance Company on Indian soil .It came in the

year 1818. Oriental Life Insurance Company started by Europeans in Calcutta. Bombay MutualLife Assurance Society heralded the birth of first Indian Life Insurance Company in 1870.

Some milestones in Indian insurance business in India are:-• 1912: -the Indian life Assurance Companies Act enacted as the first statute to regulate the

Life Insurance Business.

• 1928:-The Insurance Companies Act enacted to enable the government to collect statistical

information about both life and Non-life Insurance Business• 1956 :-245 Indian and foreign insurers and provident societies are taken over by the central

government and nationalized .LIC was formed by an Act of Parliament such as LIC act1956 with a capital contributed of Rs 5 crore from Government On India

The Insurance Companies which were established are as follows:-

• United India In Calcutta• National Indian and national Insurance in Calcutta

• Co-operative Assurance in Lahore (Prior to Independence)

These were the insurance companies which came during the swadeshi movement and were the

part of formation LIC.

To have a control on these insurance companies government decided to have a regulatory authority

thus in 1996 .IRDA (Insurance Regulatory and Development Authority) was formed under an act

of IRDA passed in Parliament. After LPG i.e. after 1999 the doors of India were opened for the

foreign private player to enter the market and pose competition to LIC and also which would help

in growth of Indian Economy. In the year 2001 many players came and now there around

seventeen insurance companies who have settled down.



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2.5. ULIPS (Unit Linked Insurance Plans):-The introduction of Unit Linked Insurance Plans has possibly been the single largest

innovation in the field of life insurance .It has addressed and overcome many difficulties and

concern s that customers had about life insurance – liquidity, flexibility, and transparency.These benefits are possible because ULIPs are differently structured products and leave

many choices to the policyholder. They are structured such that the protection (insurance) element

and the savings element (investment) can be distinguish and hence managed according to one’s

specific needs, offering flexibility and transparency. Thus we can say it is such a product that takes

care of multiple needs.

There were some factors which gave entry for ULIPs in the insurance market: - Firstly was

the arrival of private of private players, and ULIPs were the most significant innovation done by

them, and secondly was the decline of assured returns in endowment plans. Besides this as thestock markets were booming which now has become the primary factor. As mentioned earlier

enhanced flexibility and merging of investment and insurance in a single entity that have really

endeared them to individuals.

ULIPs are also called as “Bundled Policies”.

According to Vijay Sinha (Assistant Director –Agency, Tata-AIG Life Insurance,) “ULIP is

ideal for someone who is looking for a long term investment product, is under-insured and is

averse to taking a traditional life insurance product. Ulip should be looked at from an

investment as well as insurance point of view and not isolation”

Unit Linked Insurance Plans:-Early the market of ULIPs was taken up Birla Sun; they were the first to capture the

market in this field. These are the insurance plans which are attached to Units – Mutual Funds. The

premium amount received in this policy, some part is used in investment of funds and

remaining is used for insurance cover.

ULIPs are remarkably similar to, mutual fund in terms of structure and functioning: premium

payments are converted into units and net asset value (NAV) is declared regularly. Investors have

an option of choosing their fund according to their risk taking ability. They disclose all the

material facts most frequent and consistent (often quarterly or half-yearly) .Also investor has a

fairly good idea about expenses. The expenses which are considered are as follows:-



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1) Mortality Rate : - These are charged by the life insurance company to cover the risk of an

eventuality to the individual.

2) Administration, sales/marketing Charges : - All life insurance companies incur certain

expenses on regular basis. Agent’s commission, sales & marketing expenses and

overhead costs incurred to run the day to day basis are some examples.3) Fund Management Charges : - These charges are levied by the insurance company to

cover the expenses incurred by them on managing Ulip monies.

4) Ulip-fund Switch Charges : - These charges are borne by the individuals when they

decide to switch their, money from one type of fund to another.

5) Top-up Charges : A certain percentage is deducted from the top-up amount to recover the

expenses incurred on managing the same.

ULIPs are very different from the traditional policies because they are based on somefundamentals of Mutual funds as different types of funds which are created wherein the premiums

which are received on the policy these are invested in these funds basically these funds are of

following types:-

a) Aggressive/Growth Fund :-Such funds invest a major portion in equity markets. They are

therefore considered to be high on risk parameter.

b) Debt Funds : - These types of funds invest the premium money in debt instruments like

gsecs, bonds and AAA rated securities. Such funds are low risk in nature.

c) Balanced Funds : - This fund is combination of growth & debt fund. This means itsportfolio consists of both equities and debt instruments. The risk for this fund is moderate.

d) Money Market/Liquid Funds :- Such a fund invests the premium money in short term

liquid instruments like bank deposits and money market instruments.



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Returns

These are the main funds which are used, but the companies give the combination of these

funds to their customers. According to their risk taking ability they offer their fund.

The features of ULIPs are as follows:-

a) Flexibility: - Flexibility in choosing your own funds how you would like to invest your

own money.

b) Transparency: - It discloses all your material facts, i.e. you know where your money is

been invested.

c) Liquidity : - Here you can withdraw certain amount from your Units which have been

collected.

d) Tax Benefits : - tax benefits are available under Section 80C subject to a maximum limit of

Rs 100,000.

The other features of ULIPs are like, life protection which can be adjustable, many investment

options, benefits like disability, critical illness, surgeries, and also financial planning etc.

Money Market/Liquid Funds

Aggressive/Growth/EquityFunds

BalancedFunds

Debt Funds



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2.6. ULIPs Vs Mutual FundsULIPs are all set to pose serious competition to mutual funds. Though ULIPs as an investment

avenue are closest to mutual funds in terms of their structure and functioning like disclosing their

NAV’s daily etc. ULIPs are essentially a long term commitment between the policyholder and the

insurance company and mutual funds are built to cater to the relatively short –term need of the

investor. The investments are made with a shorter- term duration profile when compared to ULIPs.

The seemingly similar structure of both of them makes it vital for investors to be aware of the fine

distinctions in both the offering and make informed decisions. Following are some insurance

companies who offer ULIPs:-

-Bajaj Allianz, ING Vysya, HDFC Standard, HDFC Standard, HDFC Standard, -Birla Sun life,

Aviva Life Insurance, Kotak Mahindra, Max New York Life, Met Life, Sahara Life, etc Sahara

Life, etc

Following are Difference between ULIPs & Mutual Fund :-



Difference between ULIPs & Mutual Fund:-

Points of Difference ULIPs(Unit Linked Insurance Plans) MF’s(Mutual Funds)1) Meaning :- These are the Insurance policies which are linked to

units of Mutual Fund.It is an investment organof collecting funds fromand investing the same in

2) Primary Objective :- Its main objective is investment & protection Its objective is only investmen3) Investment Duration :- It works out for long term investment only. It works out to medium term

Risky for short term inve4) Insurance Cover :- ULIPs provide insurance cover (except annuity

products which may be issued with/ without risk cover) and from the amount invested in ULIPs afternetting out the risk premium for life risk cover andadministrative expenses, the insurer invests thebalance as per the objective of the specific ULIPproduct.

MF schemes do not covinvested, net of expensinvestment objectiv

5) Expenses :- Insurance companies have a relatively free hand inlevying expenses on their ULIP products with noupper limits being prescribed by the regulator, theInsurance Regulatory and Development Authority(IRDA)

In MFs, expenses chargsales/marketing, adminisare capped (for exampfunds, expenses are cappthe guidelines of the SecIndia (SEBI). Similarlyinvestors entry (at the timand exit (at the

6) Flexibility :- Flexibility is limited to moving across different fundsoffered with policy. Correcting mistakes can turn out

to be expensive. Moving funds from one ULIP toanother ULIP of a different fund house can beexpensive.

Very flexible. Plenty of swrong investment decisio

easily shuffled in MFs.



7) Liquidity :- Limited liquidity .It need to stay invested forminimum years before redeeming.

Very liquid. MF units cELSS).

8) Investment Objective :- ULIPs can be used for achieving only long termobjectives (Children education, marriage, Retirementplanning).

MF's can be used as vehdifferent objectives. (E.from now. Down paymenow. Children’s educaChildren’s marriage 15 planning 25 years fromretirement 25

9) Flexibility of Switch-overs :- Insurance companies permit their ULIP investorsusually 3-4 switch overs free of charge and thereafterevery additional switch over beyond the permissiblelimit is permitted at some cost.

In MFs an investor usuand/or entry load when option.

10) Minimum Lock - in - Period ULIPs currently are with a minimum lock-in of threeyears.

MF schemes (except ELSyears) do not ha

11) Investment styles andPortfolio Disclosures :-

Insurance companies declare their portfolios once in aquarter and their investment style are less aggressiveand they resort to less churning.

Most MFs usually declabasis and MFs are generafund management

12) Tax benefits andImplications :-

Irrespective of the nature of the plan chosen by theinvestor, all ULIP investments qualify for deductionsup to 1 lakh under Section 80C of the Income TaxAct.

In the7 case of ULIPs the maturity proceeds are tax-free

In the case of mutual fusaving funds i.e. Equity-lare eligible for Section 80On the other hand, in the

funds, if the investmentsmonths, the gains are tamonth period they attraat10 Similarly, debt-oriented



gains tax @ 10 percent wtaxed at the inve

Thus we can say that ULIPs are different from Mutual funds, and the basic difference between the two is the Insurance co

the ULIPs are for long term investments and Mutual Fund’s long as well as short term.



2.7. Comparative Analysis of ULIPS:-Companies have designed ULIPs for various purposes like plans made for retirement, for children, investment purpose etc

that people can plan for their future of their family and also for their future.

E.g.:- You are in the age bracket of 25-35 yrs age and your financial objectives are providing for child’s future and your

will help you in achieving both the objectives. Although you can make a single endowment ULIP to achieve both the o

prudent to make decision between the needs and take separate ULIPs dedicated to each objective. Opt for a ULIP child

child’s future and seed capital for the business to make a few needs.

The other important plan that the individuals must consider taking earlier on their lives is a pension plan. Building a cor

retirement should be given the priority .As a long term investment objective for retirement planning it could do with an

pension plan can add value to your retirement planning.

Following is the distinction about the plans offered by the different company which will give a fair view of how a person

himself according to his needs and financial conditions.

Tata-AIG Life: - Invest Assure Gold

Bajaj Allianz: - Capital Unit Gain

LIC: - Money Plus

ING Vysya: - High Life

Tata’s others ULIP policies are:-• Invest Assure

• Invest Assure II

• Invest Assure Plus

Distinguish between schemes of Tata-AIG Life with Bajaj Allianz, LIC & ING Vysya:-



Tata – AIG Life InsuranceCorporation(Invest Assure Gold I)

Bajaj Allianz Life Insurance(Capital Unit Gain )

ING Vysya

(High Life)1) Policy is about:-

This policy offers a uniqueadvantage of combining theprotection and tax advantages of lifeinsurance with the attractiveprospects of investments.

This policy is a regular premiumplan with the benefit of lifeprotection and good returns.

This policy is systematically beenbuilt up its savings and alsonurtured with investments .

2) Eligilibility Criteria (Minimum, Maximum) :- Minimum :- 30Days Maximum:- 70yrs Age at maturity:- 100yr s

Minimum:- 0yrs (risk commences atage of 7)Maximum:- 60yrs

Minimum:- 0 yrs (age lastbirthday)Maximum :- 70yrs

3)Policy Terms:-Minimum- 5, policy is till the age of 100yrs .

Minimum- 10yrs Maximum- 70yrs less at age at entry

Minimum- 5yrs Maximum- 25yrs

4) Premium Conditions(Minimum, Maximum):- Minimum Regular Premium is Rs50000per annum. Premium payingmode can also be annually, semi-annually, quarterly, or even monthly.

Minimum Premium :- Rs 10000, foryearly , Rs 1000 for monthly ,(Monthly mode is available throughECS and Salary Savings Scheme)

Minimum:-Yearly – 50000Half yearly :- 25000Quarterly :- 15000

Monthly :- 6000



5) Top –up Premium :-Top-up premium is available .Top-ups can be even done in case theterm of 5yrs is complete. It can bedone for a maximum 4times ayear - with each top-up being at aminimum of Rs 25000 or theruling minimum amount.

Top-up premium is available and isRs 5000. At the time of making payment of top-up a level of sum assured whichis between 1.25 to 5 times has to bechosen.There would be 3 year lock –in –period on the top-up premium.

The plan provides with top-uppremium facility in addition to theregular premium .However total

of top-up should not exceed 25%of the total regular premiumpaid . The minimum amount is Rs5000

6) Premium Holiday If after payment of regular paymentof premium at least for the threecomplete years, for any reason if premium is not paid then policy willnot lapse immediately but will beput on premium holiday for amaximum period of two years

No such conditions of Premiumholiday are mentioned.

No such conditions of Premiumholiday are mentioned.

7) Investment Options:-Gives the policyholder to choosefund based on his risk profile-

• Whole Life Mid-cap Equity Fund :- Very Risky

• Whole Life Aggressive Fund :- Risky venture

• Whole Life Stable Growth :-

This is balanced, moderate• Whole Life Income :- This is

fully debt, lowest risk • Whole Life Short Fixed

Income :- Lowest risk

Bajaj Allianz offers five types of funds which are:-

• Liquid Fund : Low Risk profile

• Bond Fund : - Moderate risk profile.

• Equity Growth Fund :- Very

High Risk profile• Equity Index Fund II :- High

Risk profile• Accelerator Mid-cap Fund :-

very high risk profile

This company offers 5 differenttypes of funds which are asfollows:-

• Growth Fund :-Providesfor opportunity of highgrowth.

• Debt Fund : - Provides

safety and growth withminimum risk.

• Balanced Fund : - providesfor higher growth withreasonable security.



(This shows that the funds are moretowards equity capital)

• Equity Fund : - Providesfor equity linked marketreturns.

• Secure Fund :-Provides forgrowth with low risk

8) Benefits:- Death Benefit: - If the insured dieswhile the policy is in force andbefore the maturity the company willpay the amount to the nominee.Following are the conditionsa) the higher of (I) e SA net of alldeductible partial withdrawals , if any from the Regular PremiumAccount, or(II) the regular premiumfund value of this policy at theapplicable Unit priceb) The higher of (I) the approvedTop-up SA net of all deductiblepartial withdrawals , if any from thetop-up account or (II) top-up Fundvalue of this policy at the applicableUnit PriceMaturity Benefit:- The maturitybenefit you receive at the end of thepolicy term is the balance of yourtotal Fund value which is sum of the

regular premium fund value and top-up fund value .If any. The maturitybenefit is payable on attainment of age 100yrs.

Death benefit : - On the deathamount payable would be the fundvalue in respect of regular premiumand fund value in respect of top-uppremiums as on the date of receipt of intimation of death.Maturity Benefit:- On maturity, the

fund value in respect of regularpremium and the top-up premiumwill be paid out and the policy willterminate.

Death Benefit: - On Death beforethe maturity date, the sum assuredor the fund value whichever ishigher will be given.Maturity Benefit: - On thematurity of the policy thepolicyholder receives the amountin lump sum or in 3 to 5installments annually in terms of units.



then the policy can be reinstated i.e.revival. This has to be done withintwo years from the date of lapsesubject to fulfillment of

reinstatement of requirements.

has lapsed due to non-payment of premiums within 2yrs from suchdate of lapse. A written applicationhas to be given to the company to

revive the policy with all the dueunpaid premiums.

in this policy .

13)Grace Period:- If the regular premiums are not paid,grace period of 31days from theduedate is provided.

A grace period of 30days for yrlymode and 15days of grace period isprovided for monthly mode.

It is provided. G

14) Free look Period:-The policy can be cancelled afterwithin period of 15days .A writtenapplication has to be given.

Within period of 15 days if theprospect is dissatisfied with policyconditions, then he can cancel thepolicy. With a written application tothe company.

Conditions about free look inperiod not mentioned.

15)Tax Benefits:-Premiums paid under this plan areeligible for tax benefits as per taxlegislations and are subject toregulatory changes made thereinfrom time to time.

Tax benefits are available. Tax benefits are available. All

16) Charges:-The charges which are applicable inthis policy are mortality charges,

fund management charges, fundallocation charges, policyadministration charges, top-uppremium charges, fund switchingcharges.

In this plan the charges are policyadministration charges, fund

management charges, switchingcharges, premium allocationcharges, mortality charges, top-upetc.

In this plan most of the charges aresimilar.



Following are the tables showing the charge for respective companies

Switching Of Fund Charges

0

50

100

150

200

250

300

Tata-AIGlife

BajajAllianz Life

LIC INGVysyaLife

Companies

C h a r g e s

Series1

Top-up premium charg

2%

0.75%

Tat a- A IG l if e B aj aj A l li anz Li f e LIC

Switching Of Fund Charges

Tata-AIG life

Bajaj Allianz Life

LIC

ING VysyaLife

Top-up Charges

Tata -AIG life 1.50%

Bajaj Allianz Life 2%

LIC -

ING Vysya Life 0.75%



Policy Administration Charges

0200

400

600

800

1000

1200

Tata-AIGlife

BajajAllianz Life

LIC INGVysyaLife

C h a r g e s

Series1

Policy Administration Charges/E

Tata-AIG life

Bajaj Allianz Life

LIC

ING VysyaLife



Fund management Charges:-

Tata-AIG Life

1.20%

1.10%1.00%

0.80%

0.65%

Whole Life Mid-CapEquity Fund

Whole Life AggressiveFund

Whole Life StableGrow th Fund

Whole Life Income Fund

Whole Life Short TremFixed Income Fund

Tata - AIG life

Whole Life Mid-Cap Equity Fund 1.20%

Whole Life Aggressive Fund 1.10%

Whole Life Stable Growth Fund 1.00%

Whole Life Income Fund 0.80%

Whole Life Short Term Fixed Income Fund 0.65%

Bajaj Allianz Life

Equity Growth Fund 1.75%

Accelerator Mid-cap Fund 7.75%

Equity Index Fund II 1.25%

Bond Fund 0.95%liquid Fund 0.95%



- 41 -

Bajaj Allianz

1.75%

7.75%

1.25%

0.95%

0.95%

Equity Grow th Fund

Accelerator Mid-capFund

Equity Index Fund II

Bond Fund

liquid Fund

ING Vysya

0.75%

1.00%

1.25%1.25%

1.50%Debt Fund

Secured Fund

Balanced Fund

Grow th Fund

Equity Fund

ING VysyaDebt Fund 0.75%

Secured Fund 1.00%

Balanced Fund 1.25%

Growth Fund 1.25%

Equity Fund 1.50%



- 42 -

LIC

0.75%

1.00%

1.25%

1.50% Bond Fund

Secured Fund

Balanced Fund

Grow th Fund

Mortality Charges

Ages Tata-AIG life Bajaj Allianz Life LIC ING VysyaLife

20 1.016 1.12 - 1.08

30 1.171 1.29 - 1.26

40 2.15 2.37 - 2.22

50 5.532 6.08 - 5.66

LIC Fund Management Charges

Bond Fund 0.75%Secured Fund 1.00%

Balanced Fund 1.25%

Growth Fund 1.50%



- 43 -

Mortality Charges

0

1

2

3

45

6

7

20 30 40 50

Age

R a t e

Mortality ChargesTata-AIG life

Mortality ChargesBajaj Allianz Life

Mortality Charges LIC

Mortality Charges INGVysyaLife

Interpretation:-Certain parameters are same for most of the Plans but in following its different

Premium- Premium of Bajaj & LIC are the lowest from

which Bajaj is the lowest. Tata’s Highest

Top-up-Premium:- Tata’s is the highest Rs 25,000 and others is

Rs 5,000.

Charges:-

Switch-over Charges:- Tata’s is the highest and others same Rs 100

Policy Administration Charges:- Bajaj & ING highest Rs 600& Rs 1000

respectively. Tata -38 (least) and LIC – 60

(moderate)

Top-up charges:- Tata’s is 1.5%less as compared to Bajaj’s

2%.

Mortality Charges:- Are almost same approximately of all thecompanies.

Fund management Charges(FMC’s ):-

These charges will differ from company to company because the company’s fund manager

decides about the allocation accordingly the charges are decide and disclosed.

Whole Life Mid-cap equity Fund:- 1.20% (Tata’s)



- 44 -

Accelerator Mid-cap equity fund:- 7.75% (bajaj’s)

Equity Fund:- 1.50% (ING ‘s)

Growth Fund: - 1.50 %( LIC’s)

Equity Fund Charges

1.20%

7.75%

1.50%

1.50%

Whole Life Mid-cap equity Fund:-(Tata’s)

Accelerator Mid-cap equity fund:-(bajaj’s)

Equity Fund:-(ING ‘s)

Growth Fund: -(LIC’s)

Here in this case Bajaj’s FMC are the highest and Tata’s lowest.

Investment Options:-

The companies try to offer all kinds of investments options, i.e. equity/growth/aggressive,

balanced, debt, and secured, liquid etc.These companies define their funds in their own ways.

But from the above distinction we can say that Bajaj’s most of the investment options areequity based, which shows that they concentrate more on equity and less of debt.

In other words we can say that are promising good and high returns for their customers.

After the distinction of the schemes of the respective companies the best suitable schemes

would be of Bajaj Allianz Capital Unit Gain and also LIC’s Money Plus. We know that

mostly people will opt for LIC because of its long Life i.e. it’s the oldest and is known to

every one. Thus if we consider today’s generation then after LIC, Bajaj‘s plan would be more

suitable one

Considering all the other features Bajaj’s plan is the most promising plan. The charges are

quite reasonable.



- 45 -

If we consider about middle income group the Bajaj’s plan will prove to be better option for

them.

As we know that the people who are salaried and who are self – employed they do more of

savings and investments in FD, Post office schemes, NSC’s etc but now in stock market too

as they have become aware of the opportunities in stock market and there are better returns

than the traditional avenues of investments.

Thus atlast I would conclude that the Capital Unit scheme of Bajaj Allianz will be more

promising than others.



2.8. Analytical Study on - NAV & Fund Performance :-(Tata-AIG Life, Bajaj Allianz, LIC, ING Vysya)Intra Company: - Equity Fund (Monthly, since inception 8-01-2007)

Jan-07 NAV Feb-07 NAV Mar-08/1/2007 10 1/2/2007 9.99 1/3/9/1/2007 10 2/2/2007 9.99 2/3/10/1/2007 10 5/2/2007 9.89 5/3/211/1/2007 9.999 6/2/2007 9.989 6/3/212/1/2007 9.998 7/2/2007 9.988 7/3/215/1/2007 9.998 8/2/2007 9.988 8/3/216/1/2007 9.997 9/2/2007 9.988 9/3/217/1/2007 9.996 12/2/2007 9.987 12/3/18/1/2007 9.996 13/2/2007 9.986 13/3/

19/1/2007 9.996 14/2/2007 9.986 14/3/22/1/2007 9.995 15/2/2007 9.986 15/3/23/1/2007 9.994 16/2/2007 9.985 16/3/24/1/2007 9.994 19/2/2007 9.984 20/3/25/1/2007 9.993 20/2/2007 9.984 21/3/29/1/2007 9.992 21/2/2007 9.983 22/3/30/1/2007 9.991 22/2/2007 9.983 23/3/31/1/2007 9.991 23/2/2007 9.983 26/3/

26/2/2007 9.982 27/27/2/2007 9.982 28/28/2/2007 9.83 29/

3



NAV Performance (Jan 2007)

9.9869.988

9.999.9929.9949.9969.998

1010.002

8 / 1 / 2 0

0 7

1 0 / 1 /

2 0 0 7

1 2 / 1 /

2 0 0 7

1 6 / 1 /

2 0 0 7

1 8 / 1 /

2 0 7

2 2 / 1 /

2 0 0 7

2 4 / 1 /

2 0 0 7

2 9 / 1 /

2 0 0 7

3 1 / 1 /

2 0 0 7

Date

N A V

February

9.75

9.8

9.85

9.9

9.95

10

10.05

1 / 2 / 2 0

0 7

5 / 2 / 2 0

0 7

7 / 2 / 2 0

0 7

9 / 2 / 2 0

0 7

1 3 / 2 / 2 0

0 7

1 5 / 2 / 2 0

0 7

1 9 / 2

Date

N A V

March 2007

9.69.79.89.910

10.1

1 / 3 / 2 0

0 7

5 / 3 / 2 0

0 7

7 / 3 / 2 0

0 7

9 / 3 / 2 0

0 7

1 3 / 3 /

2 0 0 7

1 5 / 3 /

2 0 0 7

2 0 / 3 /

2 0 0 7

2 2 / 3 /

2 0 0 7

2 6 / 3 /

2 0 0 7

2 8 / 3 /

2 0 0 7

3 0 / 3 /

2 0 0 7

Date

N A V

Series1



April-07 NAV May-07 NAV June-0

2/4/2007 9.807 2/5/2007 10.364 1/6/23/4/2007 9.839 3/5/2007 10.471 4/6/24/4/2007 9.878 4/5/2007 10.539 5/6/25/4/2007 9.921 7/5/2007 10.473 6/6/29/4/2007 10.044 8/5/2007 10.403 7/6/210/4/2007 10.12 9/5/2007 10.354 8/6/211/4/2007 10.154 10/5/2007 10.355 11/6/12/4/2007 10.106 11/5/2008 10.397 12/3/13/4/2007 10.25 14/5/2007 10.542 13/6/16/5/2007 10.359 15/5/2007 10.618 14/6/

17/6/2007 10.328 16/5/2007 10.684 15/6/18/4/2007 10.365 17/5/2007 10.689 18/6/19/4/2007 10.309 18/5/2007 10.741 19/6/20/4/2007 10.38 21/5/2007 10.806 20/6/23/4/2007 10.358 22/5/2007 10.9 21/6/24/4/2007 10.402 23/5/2007 10.827 22/6/25/4/2007 10.45 24/5/2007 10.809 25/6/26/4/2007 10.364 25/5/2007 10.791 26/6/27/4/2007 10.33 28/5/2007 10.89 27/6/30/4/2007 10.364 29/5/2007 11.038 28/6/2/4/2007 9.807 30/5/2007 10.918 29/6/



April 2007

9.49.69.810

10.210.410.6

2 / 4 / 2 0

0 7

4 / 4 / 2 0

0 7

9 / 4 / 2 0

0 7

1 1 / 4 /

2 0 0 7

1 3 / 4 /

2 0 0 7

1 7 / 6 /

2 0 0 7

1 9 / 4 /

2 0 0 7

2 3 / 4 /

2 0 0 7

2 5 / 4 /

2 0 0 7

2 7 / 4 /

2 0 0 7

Date

N A V

Series1

June 2007

10.210.410.6

10.811

11.211.411.611.8

1 / 6 / 2 0

0 7

5 / 6 / 2 0

0 7

7 / 6 / 2 0

0 7

1 1 / 6 /

2 0 0 7

1 3 / 6 /

2 0 0 7

1 5 / 6 /

2 0 0 7

1 9 / 6 /

2 0 0 7

2 1 / 6 /

2 0 0 7

2 5 / 6 /

2 0 0 7

2 7 / 6 /

2 0 0 7

2 9 / 6 /

2 0 0 7

Date

N A V

Series1

May

1010.210.410.610.8

1111.2

2 / 5 /

2 0 0 7

4 / 5 /

2 0 0 7

8 / 5 /

2 0 0 7

1 0 / 5 /

2 0 0 7

1 4 / 5 /

2 0 0 7

1 6

N A V



July-07 NAV

2/7/2007 11.669

3/7/2007 11.725

4/7/2007 11.755

5/7/2007 11.74

6/7/2007 11.783

9/7/2007 11.853

10/7/2007 11.808

11/7/2007 11.854

12/7/2007 11.957

13/7/2007 12.024

From the above charts I would like to conclude that, after the inception the NAV of the fund for the first three months flu

passed it started rising but at a slow pace, but it showed growth from the fourth month (April) .As it is just the beginnin

establish but in recent time it is showing a rising trend thus it is good for the company and also for investors.

July 2007

11.411.511.611.711.811.9

1212.1

2 / 7 /

2 0 0 7

3 / 7 /

2 0 0 7

4 / 7 /

2 0 0 7

5 / 7 /

2 0 0 7

6 / 7 /

2 0 0 7

9 / 7 /

2 0 0 7

1 0 / 7

Date

N A V

Series1



Fund Performance (Equity Fund) Tata-AIG Life Insurance

From the above chart it is seen that for the fist 2months there is negative growth i.e. there is no growth. In June it showed a

in July 20.24%.This show that the fund is performing very well. Thus from this we can say in future also the fund will grow

promising returns .

Fund PInception(08-01-2

Feb

Mar

April

May

J

Fund Performance Since Inception

-0.09%-1.70%

0.34%

3.64%

10.98%

15.64%

20.24%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Jan Feb Mar April May June July

Months

p e r f o r m a n c e

Series1



Inter Company –Equity Fund

Date:-(Month)Tata-AIGLife Bajaj Allianz ING Vysya LIC

15/6/2007 10.828 13.12 13.32 9.8118/6/2007 10.866 13.18 13.51 9.419/6/2007 10.941 13.28 13.45 9.8720/6/2007 11.144 13.3 13.61 9.9621/6/2007 11.295 13.32 13.86 9.9722/6/2007 11.251 13.34 13.86 9.9825/6/2007 11.284 13.36 13.86 10.0526/6/2007 11.347 13.79 13.85 10.0527/6/2007 11.336 13.84 13.78 10.0628/6/2007 11.442 13.82 13.81 10.08

29/6/2007 11.567 13.59 13.81 10.082/7/2007 11.669 13.62 13.94 10.123/7/2007 11.725 13.62 14 10.134/7/2007 11.755 13.75 14.14 10.145/7/2007 11.741 13.76 14.16 10.176/7/2007 11.783 13.69 14.2 10.199/7/2007 11.853 14.186 14.3 10.210/7/2007 11.808 14.151 14.24 10.2511/7/2007 11.854 14.156 14.22 10.312/7/2007 11.957 14.286 14.41 10.313/7/2007 12.024 14.325 14.56 10.313/7/2007 11.725 13.62 14 10.134/7/2007 11.755 13.75 14.14 10.145/7/2007 11.741 13.76 14.16 10.176/7/2007 11.783 13.69 14.2 10.199/7/2007 11.853 14.186 14.3 10.210/7/2007 11.808 14.151 14.24 10.2511/7/2007 11.854 14.156 14.22 10.312/7/2007 11.957 14.286 14.41 10.3

13/7/2007 12.024 14.325 14.56 10.31



Equity Fund Performance (15/6/2007 - 15/7/2007)

0

2

4

6

8

10

12

14

16

1 5 / 6

/ 2 0 0 7

1 8 / 6

/ 2 0 0 7

1 9 / 6

/ 2 0 0 7

2 0 / 6

/ 2 0 0 7

2 1 / 6

/ 2 0 0 7

2 2 / 6

/ 2 0 0 7

2 5 / 6

/ 2 0 0 7

2 6 / 6

/ 2 0 0 7

2 7 / 6

/ 2 0 0 7

2 8 / 6

/ 2 0 0 7

2 9 / 6

/ 2 0 0 7

2 / 7 /

2 0 0 7

3 / 7 /

2 0 0 7

4 / 7 /

2 0 0 7

5 / 7 /

2 0 0 7

6 / 7 /

2 0 0 7

9 / 7 /

2 0 0 7

1 0 /

N a v

Tata-AIG Life Bajaj Allianz ING Vysya LIC



Interpretation:-

From the above chart we can se that all the companies are growing at a normal pace, but there

were some fluctuations in the equity fund of Bajaj Allianz.

ING Vysya’s equity fund shows matured growth as constant rise which proves to be better

than all others because the NAV value is also more than the others .This shows that this fund

will prove to be better and promising returns to the investors.

LIC & Tata-AIG Life Insurance companies are also showing increasing trend but as the value

of their NAV is less than that of ING Vysya thus ING will be proved to be the better in terms

of returns and capital appreciation.

Individual how the Funds perform :-

Tata-AIG Life Equity fund NAV Performance

10

10.5

11

11.5

12

12.5

1

5 / 6 / 2 0 0 7

1

9 / 6 / 2 0 0 7

2

1 / 6 / 2 0 0 7

2

5 / 6 / 2 0 0 7

2

7 / 6 / 2 0 0 7

2

9 / 6 / 2 0 0 7

3 / 7 / 2 0 0 7

5 / 7 / 2 0 0 7

9 / 7 / 2 0 0 7

1

1 / 7 / 2 0 0 7

1

3 / 7 / 2 0 0 7

Dates

N A V ' s

Tata-AIG Life

Bajaj Allianz Equity Fund NAV Performance

12.5

13

13.5

14

14.5

1 5 / 6

/ 2 0 0 7

2 0 / 6

/ 2 0 0 7

2 5 / 6

/ 2 0 0 7

2 8 / 6

/ 2 0 0 7

3 / 7 /

2 0 0 7

6 / 7 /

2 0 0 7

1 1 / 7 /

2 0 0 7

Dates

N A V

Bajaj Allianz



ING Vysya Equity Fund Performance

12.5

13

13.5

14

14.5

15

1 5 / 6 /

2 0 0 7

1 9 / 6 /

2 0 0 7

2 1 / 6 /

2 0 0 7

2 5 / 6 /

2 0 0 7

2 7 / 6 /

2 0 0 7

2 9 / 6 /

2 0 0 7

3 / 7 / 2 0 0 7

5 / 7 / 2 0 0 7

9 / 7 / 2 0 0 7

1 1 / 7 /

2 0 0 7

1 3 / 7 /

2 0 0 7

Date

N A

V

ING Vysya

LIC Equity Fund NAV Performance

8.5

9

9.5

10

10.5

1 5 / 6

/ 2 0 0 7

1 9 / 6

/ 2 0 0 7

2 1 / 6

/ 2 0 0 7

2 5 / 6

/ 2 0 0 7

2 7 / 6

/ 2 0 0 7

2 9 / 6

/ 2 0 0 7

3 / 7 /

2 0 0 7

5 / 7 /

2 0 0 7

9 / 7 /

2 0 0 7

1 1 / 7 /

2 0 0 7

1 3 / 7 /

2 0 0 7

Date

N A V

LIC

Individually if we see then all the funds are showing increasing trend..



Fund Performance of Companies since Inception:-

From this table above we can say that the equity fund has shown tremendous growth from its inception of each of the c

because of the booming of the stock markets. The Indian Economy is also at such a stage where the market condition

competitive which are courageous to show a promising growth and returns not only to the company’s but also to the investo

Company

(Equity Fund)

Date

of Inception

NAV as on inception

Rs

NAV as

on,15 July2007 Rs

Period

duration

Tata AIG(Invest Assure Gold) 8 .01. 2007 10 12.146 7

Months

Bajaj Allianz(Capital Unit Gain) 06.11.2006 10 14.442 9

Months

ING Vysya(High Life) 01.11.2006 10 14.558

9

MonthsLIC(Market Plus) 20.12.2006 10 10.310 8

months



2.9. ULIPs as Retirement Planning:-

“Retirement is the period when an individual stops working and enjoys the fruits of his

years of hard work”.

“Retirement” is a big question for most of the people. There are many problems

which come ahead .It can pose a number of challenges, especially if it is unplanned. We can

say that, when a person retires basic living costs may go down, loans would have been paid,

lesser income tax, no work related expenses, but as he gets older other costs may increase,

like the expenses for medical and health care, filling your increased leisure hours withenjoyable activities which may cost more, increasing inflation erodes purchasing power, also

cost of being a grandparent etc.These are the few of the challenges which the retire people

have to face.

One more thing is people depended upon traditional savings plans for their retirement

which include Provident Fund, public provident fund, Superannuation, Annuities, Gratuity.

These are the most important and the most common savings made by the people for their

retirement. Very few would go for other options in stock market or other long term/shortterm, investments.

Thus, Retirement planning is important to ensure that you have a comfortable retired life. For

this you need to begin investing systematically for your retirement.

Now-a-days we know there many investment opportunities for the planning of one’s

retirement besides, the traditional avenue. Now there are special insurance plans which are

called as ULIPs(Unit Linked Insurance Plans) which are designed in such a way that one can

invest in stock market also and also get life cover i.e. protection for his life. These plans arestructured for various purposes for children’s education, retirement planning, security &

profitable plan, tax saving plan.

Generally the retired people like to live their life very smoothly and relaxed, i.e. they will not

go for risky ventures. They will go for F.D. (Fixed deposits), or Post Office Schemes, or



- 58 -

NSC’s etc, as they give a steady income. They will not go for stock market because even if

the returns are high these are very risky because no guaranteed returns. But in the last few

years the stock market are booming thus there many and good opportunities for the investors

for the short term & long term investments. Especially because of the Mutual Funds people

can play safe. Thus if a person really wants to earn high returns then he should invest in stock

market and for life cover pure Life insurance plan.

It is also said that the ULIPs, the returns are not guaranteed returns and retired people want

steady income for their post retirement life.

Thus I can say that ULIPs will prove a better option for only those who have immense funds

with them i.e. financial backing is good, otherwise for middle income group it much better to

have a pure Insurance plan (Annuity Plan )for themselves rather than going for Two-in one

plan ULIPs.

Lastly I can say that to have our retired life to be very good one should start saving as early as

he starts earning.



2.10. Case Study:- (SSI Illustration)

SAMPLE SALES ILLUSTRATION OF INVEST ASSURE II (TATA AIG LIF

Name of the proposed insured: Miss Sukhada Vijay Totade Proposal no. : 2001

Age of the proposed insured : 22 yrs Date : 2

Name of the policy holder : Miss Sukhada Vijay Totade Currency : Rup

Age of the policyholder : 22yrs Payment Mode : An

Insurance plan Benefitperiod

PremiumPayingperiod

Premiummultiple

Annualpremium

Modalpremium

SumAssured

(SA)

Invest Assure II 20 yrs 20yrs 22.50 15000 15000 300000 3000



Policy: - Invest Assure II (Regular Premium Plan)Premium: - Rs 12,000per annumTerm: - 20yrsFund: - 100% EquityReturns: - 10%

1st YearPremium: - Rs 15000

50% Fund Allocation 50% Administration Charges

Thus of Rs 8250 units will be purchased @ Rs 10 =825 units

2nd YearPremium 15,000

25% Administration Charges 75% Fund Allocation

Thus of Rs11250 (11250+8250), units will be purchased @12 =1625

From 3rd Year onwardsPremium -15,000

1% Administration Charges 99% Fund Allocation

Thus Of Rs 16335 (11250+8250+16335) units will be purchased at Rs 15=2389

Above we saw that as the NAV changes the number of units changes.If NAV = 11, the units are 3257

NAV= 17, the units are 2107

Thus we can say that even if the NAV value increases the number of units decreases, whichmay not hold good for the respective investor.



- 61 -

2.11 Overall Analysis:-o Differentiation between ULIP’s and Mutual Fund:-

o The differentiation between the ULIP’s and the Mutual Funds thus tells that

even there are similarities between them they differ in serving to the people

ULIP’s will act Protection and investment, and Mutual Funds will only act as

Investment vehicle for the respective investor.

o ULIP’s will prove to be better for long term and Mutual Funds will prove to

be for long term as well as short term also.

o Comparison of the ULIP’s Plans of different Companies:-o The comparison done for the different ULIP’ plans done thus help the investor

to know in which of the plan he should take depending upon his risk appetite

and for what purpose, retirement, child’s plan , capital appreciation etc.

o From the companies like Tata’s Bajaj’s , LIC’s & ING’s of course people will

go for LIC but a man in today’s dynamic world as he is now aware of the

other investments avenues, like stock market, thus will go for Bajaj’s because

it the most affordable and its growth is also good.o LIC 1 ST

o BAJAJ ALLIANZ 2 ND

o TATA – AIG LIFE 3 RD

o Analysis of – NAV & Fund Performance:-o Fund Performance:-

Intra:- The Company’s equity fund is showing great potential .Also as

the market is growing and the market conditions are favoring for the

growth of the fund .Thus it will give returns to the respective investors.

Inter: - All the companies equity fund are on increasing trend .They are

showing a great potential But LIC, & Bajaj Allianz are having more

growth chances because their existence is good and also their



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fundamentals. Tata’s is also good but its existence only of few months,

and is still in introductory stage thus it has to go lot more ahead.

o NAV Performance

• Tata-AIG Life: - Growth is very fast

• Bajaj Allianz: - Fluctuating but is growing.

• ING Vysya Life: - Fluctuations but growing

• LIC: - Fall in value in the beginning but after certain time

slow growth.

The companies NAV’s are growing.

The lesser the fluctuations the better the fund performs and gives capitalappreciation.



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2.12. Market Research:

A market survey was done where agents were interviewed to knowa) How ULIPs were positioned in the marketb) Its popularity,c) Does it give good commission to them?A questionnaire was prepared which is as follows.

Q 1) What type or class of customers visit your office?a. Salaried 50%b. Housewives 10%c. self employed 40%d. retired 0%e. pensioner 0%

50%

10%

40%

0%

0%

salaried housewives self employed ret ired pensioner

Q 2) Which policies the client opts for?a. Traditional 10%b. ULIPS 90%

10%

90%

Traditional

ULIPS



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Q 3) Are ULIP schemes popular?a. Yes 100%b. No 0%c. can’t say 0%

100%

0%0%

yes

no

can’t say

Q 4) Are the clients aware of ULIP schemes?a. less than 10% 0%b. 10% --- 30% 30%c. 30%---- 60% 5%d. All 20%

0%

30%

50%

20%

less than 10% 10% --- 30% 30%---- 60% all



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Q 5) Out of ten, how many clients opt for ULIP?Ans: - 60% of clients opt for ULIP schemes.

Clients will Opt ULIPPS 60%

60%

40%

ULIPs Tradit ional

Q 6) How much commission do you get from the company on ULIP policy?a. 0--- 10% 20%b. 11—20% 10%c. 21---30% 50%d. 31--- 40% 20%

0%

30%

50%

20%

less than 10% 10% --- 30% 30%---- 60% all



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Q 7) How many clients have the background of finance?a.10—20% 40%b.20—40% 60%c.40% & above. 0%

40%

60%

0%

10—20% 20—40% 40% & above

Q8) Mode of payment of premium.a. Cheque 100%b. Demand Draft 0%c. Cash 0%

100%

0%

0%

a. cheque b. Demand Draft c. Cash



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Q9) What is the better positioning for ULIP?a. as a tax saving plan 20%b. as a retirement plan 0%c. as a child education plan 10%d. as a security cum profitable plan. 70%

20%

0%

10%

70%

a. as a tax saving plan b. as a retirement plan

c. as a child education plan as a security cum profitable plan

Q 10) Qualificationsa. HSC pass 20%b. Graduate 50%c. MBA 30%

20%

50%

30%

a. HSC pass b. Graduate c . MBA



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Q 11) How is ULIP different from the other policies?Ans: - ULIPs are different from the traditional in the following way.

Points Of Difference

ULIPs Traditional(Endowment Policy)

Sum Assured Higher of(Tenure of policy/or 2*

Annual premium)(5* Annualpremium

Known upfront premium based on it

Investments Allocation to equities bonds,gsecs, money market instrumentsdepending on the option.

Larger allocation to bonds , gsecs,money market instruments, smalleramount towards equities

Expenses Lower agent commission , higherfund management charges

Higher agents commission

Flexibility High Low

Transparency High Low

Liquidity High Low

Tax Benefits Available Available

Thus from the above distinction we can say that ULIPs are different from the traditional

plans.

Q 12) How does a client respond, if any new policy is suggested to him?

Ans: - Whenever the agent suggests any new policy the client responds according to the

information given to him be the agent. Depending upon the presentation about the product the

client is curious enough to know about the product.

Sometimes the clients also answer in the yes/no answer which gives a view that the customereither doesn’t want no about the product or he doesn’t no about the product.

The most frequently asked questions are about what are the returns are guaranteed or not.

Thus from the above all responses we can say that overall the response from them is positive

enough so that the agent can move ahead.



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2.13. Popularity of ULIPs:-

ULIP came into play in the 1960s and became very popular in Western Europe andAmerica .The reason that is attributed to the wide spread popularity of ULIP is because of the

transparency and the flexibility which it offers. As times progressed the plans were also

successfully mapped along with life insurance need to retirement planning.

In today’s times, ULIP provides solutions for insurance planning, financial needs,

financial planning for children’s future and retirement planning.

Unit Linked Insurance Policies (ULIPs) have become very popular during the last4-5-

yrs in India. Sensing the great demand for these because of their attractive features such as

insurance cover, scope for tax relief, and gains from a booming equity market. They

accounted for 82% of the private insurers’ new business in FY 2005-06.

They are emerging as overwhelming favorites with individuals wanting to buy life

cover complemented by a flavor of equities. Most of the investments advisors also

recommended their client, ULIPs as their investment avenues in the financial planning. As

they are also designed to achieve the twin objectives of tax benefits and capital appreciation.

There certain points which adds up more to popularity of ULIPs among the investors

as well as the investment advisors, which are as follows

1) The agency commission : - An advisor selling a ULIP is likely to get a commission in

the range of 30% of the premium paid in the first few years. Also the commission in

the following years amounts to about 5% for ULIP investments.

2) The stock market performance in the recent past : - The sustained Bull Run in the

equity markets over the past few years has resulted in most market-linked investments

witnessing considerable growth. This has worked in favor of

ULIPs as well. They have turned out a return of 15% on an average in one year.



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3) Flexibility offered by ULIPs : - ULIPs offer the kind of flexibility that no insurance

product can. For example, investors can select a ULIP with an equity-debt

combination that is in line with their risk profile. A risk-taking investor would

typically select one with a high equity component, while a risk-averse investor would

opt for a debt heavy one

Then there are advantages like top-up facility (which is like a one – time premium

payment) that can be used to gainfully utilize surplus monies. Another reason for buying

ULIP is the benefit it offers, by bundling insurance with insurance with an investment

product. Thus for anyone who wants to avoid the hassle of taking care of numerous kinds

of investment and life insurance products, ULIPs a good option.

According Sandeep Batra, Chief Financial Officer (CFO), ICICI prudential Life

Insurance Company, “ULIPs are the most transparent life Insurance products

available today.”

Thus from the study above (Topics - 2.6, 2.7, 2.8) I would like to say that ULIPs are

such a product which will fulfill one needs in a very systematic Way only If it is

PLANNED.

And this planning should be as early as one starts earning.

---------- End Section 2 ----------



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Conclusion:-

The Insurance Sector is growing since the LPG norms and they aregrowing at 80%.

LIC was the only player in Life Insurance sector but now many foreignplayers are competing with it.

ULIP’s as a new investment vehicle for the investor has given a newavenue for financial planning.

The NAV’s of the equity funds of the respective companies are showingtremendous growth.



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Recommendations to the Company :-

ULIPS:-• The schemes should be designed in such a way which would also suit

to the pockets of the lower and middle income groups.

• The premium should be quite less so that even lower class of people

can invest in such policy

• At the maturity the policyholder should not only get NAV (Net Asset

Value) amount but also the SA (sum Assured) i.e. guaranteed SA.

• The charges should be reduced.

• Term of the policy should be reduced.

• The premium amount should be reduced.

•

The charges can be revised.

Additional Support Required by the Agents from the Company:-

- Field support i.e. the company should provide a staff wherein they

will get a field work done from them.

- The company should provide proper database to their agents. For

the database the company can also have some tie-ups with some of

the companies.

- There should be monthly meetings held by the company for the

agents wherein they can solve their problems and suggest the new

ways for the marketing of products.

- There should be separates Claim Settlement Cell so that the

company as well as the agents do not face any problem while

settlement of claims.

- Also the company can support the agents by having some kind of

publicity.

Analysis:- Thus from this survey I would say that the company should not

only target the middle age and lower class group but also retired and

pensioners.



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Also the ULIPs are gaining lot of popularity but while taking these ULIPs one

should take few measures as in

1) To know to the ULIP plan, which of the insurance type is adjoined

term or endowment?

2) While choosing of fund there should be balanced of equity and debt or

if equity some small percentage of debt should be taken so that some

returns are fixed.

3) And consult to the investment advisor.



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Bibliography:-•

Primary Data: -

o Booklet of An Orientation Program for Employees from the

Company

o Career path presentation (COP – Career Opportunities

Presentation)

o Data given by Advisors (SSI illustrations)

o Company Brochures

o Questionnaire

• Secondary Data:-

o Internet,:-

--- www.irdaindia.org

--- www.tata-aig.com

--- www.licofindia.com

--- www.bajajallianz.com

--- www.etintelligent.com

--- www.economictimes.com

--- www.personalfn.com

--- www.indianmba.com

--- www.moneycontrol.com

--- www.ingvysyalife.com

(Note – The websites were browsed during a specific period of time from 21st

of May to 25 th of July)



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o Magazines:-

--- Money Simplified

(Volume xxx, Feb 2007 “ULIPs how they fit in”)

--- IRDA Journal

o Newspapers:-

--- Economic Time

--- Times of India

--- ESCOLIFE (Insurance newspaper)

o Reference books

--- Insurance

(Fundamentals, Environment and Procedures)

By, B. S. Bodla, M. C. Garg, K. P. Singh

--- Insurance Institute of India IC33



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Questionnaire:-

Questionnaire for Agents/Advisors

Q 1) What type or class of customers visit your office?

a. salaried

b. housewives

c. self employed

d. retired

e. pensioner

Q 2) Which policies the client opts for?

a. Traditional

b. ULIPS

Q 3) Are ULIP schemes popular?

a. yes

b. no

c. can’t say

Q 4) Are the clients aware of ULIP schemes?

a. less than 10%

b. 10% --- 30%

c. 30%---- 60%

d. all

Q 5) Out of ten, how many clients opt for ULIP?

Q 6) How much commission do you get from the company on ULIP policy?

a. 0--- 10%

b. 11—20%

c. 21---30%



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d. 31--- 40%

Q 7) How many clients have the background of finance?

a.10—20%

b.20—40%

d. 40% & above.

Q8) Mode of payment of premium.

a. cheque

b. Demand Draft

c. Cash

Q9) What is the better positioning for ULIP?

a. as a tax saving plan

b. as a retirement plan

c. as a child education plan

d. as a security cum profitable plan.

Q 10) Qualifications

a.

HSC pass

b. Graduate

c. MBA

Q 11) How is ULIP different from the other policies?.

Q 12) How does a client respond, if any new policy is suggested to him?

Q 13) What changes according to you are required in the present ULIP plan?

Q 14) What additional support is required to the agent from the company to convince the

customer?

analytical study on market linked insurance at tata aig life

Documents