birla sun life insurance company limited

8/6/2019 Birla Sun Life Insurance Company Limited

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Introduction

Birla Sun Life Insurance Company Limited was founded in 2001 as a privatelife insurance company in India. It is based in Mumbai in India. It operates

as a subsidiary of Aditya Birla Management Corporation Limited. It offers

life insurance and retirement solutions to individuals and corporates, as well

as for NRIs. The company also provides protection, savings, retirement,

children, rural, and rider plans for individuals; and protection solutions,

group superannuation plans, group gratuity plans, credit guard plans, and

single premium group term plans for groups. It sells its plans through multi

channel distribution network and Internet.

Birla Sun Life is a joint venture between Aditya Birla Group and Sun Life

Financial Inc. of Canada. It started operations in March 2001 after receiving

its registration licence from Insurance Regulatory Development Authority in

January 2001.

Birla Sun Life Insurance Company (BSLI), the life insurance arm of Aditya

Birla Nuvo, has brought in pioneering insurance-related wealth

accumulation products and services for individuals, groups and NRIs.

Innovatively designed, these products take care of the customers financial

security, or cater to their savings or retirement needs.

BSLI has contributed significantly to the growth and development of the life

insurance industry in India by introducing unique Unit Linked Life

Insurance Solutions, pure term plan and a slew of innovative products. By

adopting multi-distribution channels such as Direct Sales Force, alternate

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channels and convenient points of purchase, including selling its policies

through the bancassurance route and through the internet, BSLI has

revolutionised the entire insurance policy-buying experience.

BSLI offers a spectrum of products to meet the growing needs of individuals

and group insurance through a multi channel distribution network. The

company has quadrupled its distribution network to over 600 branches and

more than 100,000 advisors. With a rapidly growing national footprint, the

company is now positioned to capture an increased market share in the fast

growing life insurance market.

Birla Sun Life Insurance Company Limited is the result of a joint venture

between The Aditya Birla Group and Sun Life Financial, a leading

international financial services organization. The AdityaBirla Group is the

second largest business house in India, with a turnover exceeding Rs 260

billion and an asset base in excess of Rs 180 billion. The group's market

capitalization is approximately Rs 150 billion. It has 7 lakh investors and

employs around 72,000 people. It is a multinational conglomerate in it's own

right, with 75 diversified business units in India and overseas, including

operations in Canada, USA, UK, Thailand, Indonesia, Philippines, Malaysia

and Egypt.

Sun Life Financial has evolved from a single mutual fund life insurance

company into one of the most highly rated insurance and wealthmanagement institutions in the world. Sun Life Financial group offers a

wide range of financial solutions to individuals and corporates and these are

in the areas of life, health and disability; pension funds and plans;

investment management; annuities and savings; trust, brokerage and

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banking. Sun Life Assurance Company of Canada, Sun Life's primary

insurance arm, is among the largest international financial services

organizations in the world, with assets under management of over US$ 201

billion.

The two groups have had a partnership in India for a long time in the areas

of asset management, retail distribution and stock broking. It was natural

therefore that when the insurance sector was opened up in India, the

partnership was extended to life insurance. Thus was born Birla Sun Life

Insurance Company Ltd.

The company has set for itself the following Business Management

Philosophy:

Vision : To be a world class provider of financial services to individuals

over their lifetime

Mission : To be the first preference of their customers as a leading

Integrated Insurance Provider of insurance solutions through superior value

creation and technology.

Core Values :

Operating with integrity to the very highest standards of business

conduct.

Always working with the customer's needs in mind.

Relentlessly pursuing excellence through the people they employ and

the work they do.

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Providing products and services that add value for customers, channel

partners and build value for the shareholders.

Goals : To be a world-class player in insurance business and amongst the

top insurers in the country.

Philosophy : To create value for all customers, rural and urban, big and

small.

Innovation : To lead with innovative product and customer service

offerings.

Professionalism : To adhere to strict compliance and professional

standards.

Technology : To achieve national connectivity using the backbone of

Aditya Birla information highway. To enable better customer service

standards through Superior Technology. To add web and call centers in a

phased manner.

Risk management against a huge loss is very necessary, and insurance is

transfer of risk from one entity to another. Several companies have come up

these days with life, health, medical and travel insurance. One such company

is Birla Sun Life Insurance. Providing a number of insurance products, Birla

Sun Life is a prestigious company to bond with.

Birla Sun Life Insurance Company Limited is a joint venture between the

Sun Life Financial Inc and the Aditya Birla Group. Birla Sun Life Insurance

was the first company in the sector of financial solutions to begin Business

Continuity Plan. In fact, policies were first issued by this insurance company

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on the Internet. This insurance provider company has pioneered the unique

Unit Linked Life Insurance Solutions in India. It is one of the top players in

the industry of Private Life Insurance Scheme.

The company believes in passion, integrity, speed, commitment and

seamlessness. The mission of the company is to help people with risk

management. It also helps in managing the financial situation of firms as

well as individuals.

Some of the Birla Life Insurance products include:

Insurance for protection

Insurance for retirement

Insurance for saving

Insurance for children

Insurance for riders

Insurance for rural

Birla Sun Life Insurance for Protection includes insurance such as Birla Sun

Life Insurance Term Plan and Birla Sun Life Insurance Premium Back Term

Plan. Birla Sun Life Insurance Term Plan is apt for those seeking insurance

benefits at economic costs. The plan covers all the liabilities and provides

absolute security. The minimum age limit for acquiring the insurance is 18

years and maximum is 55 years. One can pay the premium either annually,

monthly, quarterly or semi-annually. One can pay it through the ECS mode

of payment or on a one-time basis.

The Birla Sun Life Flexi SecureLife II- Retirement Plan is segregated into 2

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sections. One is the Accumulation or build up phase and the other is the

Annuity or the payout phase. With this plan one can enjoy tax benefits.

Surrender scheme is also applicable to this plan. One can give up the policy

after the 3 years of policy till the vesting age.

Other Birla Sun Life Insurance for Savings include:

Birla Sun Life Insurance Flexi Save Plus

Birla Sun Life Insurance Dream Plan

Birla Sun Life Insurance Gold-Plus II

Birla Sun Life Insurance ClassicLife Premier

Birla Sun Life Insurance PrimeLife Premier

Birla Sun Life Insurance Saral Jeevan Plan

Birla Sun Life Insurance PrimeLife

Birla Sun Life Insurance LifeCompanion

Birla Sun Life Insurance SimplyLife

Birla Sun Life Insurance Flexi Cash Flow

Birla Sun Life Insurance Flexi Life Line

Birla Sun Life Insurance Supreme-Life

Birla Sun Life Insurance Single Premium Bond

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Products

Birla Sun Life Insurance Co. Ltd. is a joint venture between Aditya Birla

Group, an Indian multinational corporation, and Sun Life Financial Inc, a

leading global insurance company. Birla Sun Life Insurance is distinguished

as the first company in the sector of financial solutions to begin Business

Continuity Plan. This insurance company has pioneered the unique Unit

Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI

became one of the leading players in the industry of Private Life Insurance

Scheme.

Birla Sun Life Insurance offers the following policies and products :

1. Protection Plans

Birla Sun Life Insurance Term Plan

Birla Sun Life Insurance Premium Back Term Plan

2. Saving Plans

Birla Sun Life Insurance Guaranteed Bachat Plan

Birla Sun Life Insurance Money Back Plus Plan

Birla Sun Life Insurance Gold-Plus II

Birla Sun Life Insurance Saral Jeevan Plan

Birla Sun Life Insurance Supreme-Life

Birla Sun Life Insurance Dream Plan



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Birla Sun Life Insurance Flexi Cash Flow

Birla Sun Life Insurance Flexi Save Plus

Birla Sun Life Insurance Flexi Life Line


3. Health Solution Plans

BSLI Health Plan

BSLI Universal Health Plan

4. Retirement Plans

Birla Sun Life Insurance Freedom 58

Birla Sun Life Insurance Flexi SecureLife Retirement Plan II

5. Children Plans

Birla Sun Life Insurance Children's Dream Plan

6. Rural Plans

Birla Sun Life Insurance Bima Suraksha Super

Birla Sun Life Insurance Bima Dhan Sanchay

Birla Sun Life Insurance Bima Kavach Yojana

7. Group Plans

Birla Sun Life Insurance Group Unit Linked Plan

Birla Sun Life Insurance Group Protection Solutions

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Birla Sun Life Insurance Group Superannuation Plan

Birla Sun Life Insurance Group Gratuity Plan

Birla Sun Life Insurance Credit Guard Plan

Birla Sun Life Insurance Single Premium Group Term Plan

8. NRI Plans



Birla Sun Life Insurance Flexi Life Line Plan

Birla Sun Life Insurance Flexi Save Plus Birla Sun Life Insurance Flexi Cash Flow




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Life Insurance

Insurance, in law and economics, is a form of risk management primarily

used to hedge against the risk of a contingent loss. Insurance is defined as

the equitable transfer of the risk of a potential loss, from one entity to

another, in exchange for a premium. Risk management, the practice of

appraising and controlling risk, has evolved as a discrete field of study and

practice.

Term life insurance is the original form of life insurance and is considered tobe pure insurance protection because it builds no cash value. This is in

contrast to permenant life insurance such as whole life, universal life, and

variable life insurance.

Term life insurance provides coverage for a limited period of time, the

relevant term. After that period, the insured can drop the policy or pay

annually increasing premiums to continue the coverage. If the insured dies

during the term, the death benefit will be paid to the beneficiary. Term

insurance is often the most inexpensive way to purchase a substantial death

benefit on a coverage amount per premium dollar basis.

Term insurance functions in a manner similar to most other types of

insurance in that it satisfies claims against what is insured if the premiums

are up to date and the contract has not expired, and does not expect a return

of Premium dollars if no claims are filed. As an example auto insurance will

satisfy claims against the insured in the event of an accident and a home

owner policy will satisfy claims against the home if it is damaged or

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destroyed by say an earthquake or fire. Whether or not these event will occur

is uncertain, and if the policy holder discontinues coverage because they

have sold the car or home the insurance company will not refund the

premium. This is a pure risk protection.

Thus, Life insurance or life assurance is a contract between the policy owner

and the insurer, where the insurer agrees to pay a sum of money upon the

occurrence of the policy owner's death. In return, the policy owner (or policy

payer) agrees to pay a stipulated amount called a premium at regular

intervals.

As with most insurance polices, life assurance is a contract between the

insurer and the policy owner (policyholder) whereby a benefit is paid to the

designated Beneficiary (or Beneficiaries) if an insured event occurs which is

covered by the policy. To be a life policy the insured event must be based

upon life (or lives) of the people named in the policy.

Insured events that may be covered include:

death,

accidental death

Life policies are legal contracts and the terms of the contract describe the

limitations of the insured events. Specific exclusions are often written into

the contract to limit the liability of the insurer; for example claims relating to

suicide, fraud, war, riot and civil commotion.

Life based contracts tend to fall into two major categories:

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Protection policies - designed to provide a benefit in the event of specified

event, typically a lump sum payment.

Investment policies - where the main objective is to facilitate the growth of

capital by regular or single premiums.

Principles of Insurance :

Insurance is based on the following principles :-

1. Indemnity

2. Utmost Good Faith

3. Risk

4. Insurable Interest

5. Causa Proxima

6. Mitigation of Loss

7. Subrogation

8. Contribution

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Research Methodology

Methodology adopted for the present project is that we are trying to study

the recruitment of insurance advisor and relevance of the various ULIP

schemes under Birla Sun Life Insurance the charges made in the schemes

and the impact it has on the sales of the insurance Policies. In the process of

the study we have made extensive interaction with the insurance agents and

the policy holders to find out what makes the policy sell among the

customers considering the fact that there are so many companies selling

insurance in the market.

We have made use of the following types of the data :

Secondary Data

The secondary data are those that have already been collected by

someone else and have already pass through the statistical process. It has

been collected from Internet, books, journals, and newspapers. In the

present study we have only made use of secondary data published in the

brouchers , web site, and the corporate communications released from

time to time by Birla Sun Life Insurance.

I. Secondary Data

Search Engines

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www.google.com

www.yahoo.com

II. Related Information Brochures

2. Research Design

The descriptive research design has been used in the present study .

We have only described the impact of charges on the policies of BirlaProject.

According to this design, the one determining frequency with which

something occurs or how two variables vary together.

Limitations:

The present project has made use of only the secondary sources of data so it

contains the limitations that come with secondary data.

The accuracy of the present project depends on the information available

from the data sources used.

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Recruitment Of Insurance Advisor

In the insurance company, I had to recruit insurance advisor by calling them

on phone and then to ask them to became insurance advisor. The manager

under whom I had worked, give me a list of names of person to whom I had

to call them to become insurance advisor. In this way I had conducted my

summer training. Now I will tell about of ULIP products of the company

which I had studied in my summer training period.

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ULIP (Unit Linked Insurance Plan) & Its Rationale

Meaning of ULIP

A ULIP is a unit linked insurance plan. This is the type of investment where

the characteristics of insurance and mutual fund are combined. Some part of

the money invested goes into the insurance cover and the remaining goes

into an asset class.

The three important things to remember about a ULIP are: -

Entry costs are high and the brokerage, commission

could be as high as 30% of the premium in the first year.

Management fee is low in a ULIP at around. The price of

an insurance cover is higher in a ULIP than in a plain vanilla insurance

policy. To that extent if a person has the time and inclination toresearch he would be better off buying separate insurance and mutual

funds.

In India one gets a tax rebate of a maximum of Rs.

100000 on investing in ULIPs.

For the generation of insurance seekers who thrived on insurance policies

with assured returns issued by a single public sector enterprise, unit-linked

insurance plans are a revelation.

Traditionally insurance products have been associated with attractive returns

coupled with tax benefits. The returns part was often so compelling that

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insurance products competed with investment products for a place in the

investor's portfolio.

Perhaps insurance policies then were symbolic of the times when high

interest rates and the absence of a rational risk-return trade-off were the

norms.

The subsequent softening of interest rates introduced a degree a much-

needed rationality to insurance products like endowment plans; attractive

returns at low risk became a thing of the past. The same period also

coincided with an upturn in equity markets and the emergence of a newbreed of market-linked insurance products like ULIPs.

While in conventional insurance products the insurance component takes

precedence over the savings component, the opposite holds true for ULIPs.

More importantly ULIPs (powered by the presence of a large number of

variants) offer investors the opportunity to select a product which matches

their risk profile; for example an individual with a high risk appetite can

shun traditional endowment plans (which invest about 85% of their funds in

the debt instruments) in favour of a ULIP which invests its entire corpus in

equities.

In traditional insurance products, the sum assured is the corner stone; in

ULIPs premium payments is the key component. ULIPs are remarkably

alike to mutual funds in terms of their structure and functioning; premium

payments made are converted into units and a net asset value (NAV) is

declared for the same.

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Investors have the choice of enhancing their insurance cover, modifying

premium payments and even opting for a distinct asset allocation than the

one they originally opted for.

Also if an unforeseen eventuality were to occur, in case of traditional

products, the sum assured is paid along with accumulated bonuses;

conversely in ULIPs, the insured is paid either the sum assured or corpus

amount whichever is higher.

Insurance seekers have never been exposed to this kind of flexibility in

traditional insurance products and it would be fair to say that ULIPsrepresent the new face of insurance.

While few would dispute the value-add that ULIPs can provide to one's

insurance portfolio and financial planning; the same is not without its

flipside.For the uninitiated, understanding the functioning of ULIPs can be

quite a handful! The presence of what seem to be relatively higher expenses,

rigidly defined insurance and investment components and the impact of

markets on the corpus clearly make ULIPs a complex proposition.

Traditionally the insurance seeker's role was a passive one restricted to

making premium payments; ULIPs require greater participation from both

the insured and the insurance advisor.

As is the case with most evolved investment avenues, making informed

decisions is the key if investors in ULIPs wish to truly gain from their

investments.

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Features of ULIP

The renovated ULIP would now be an open-ended tax saving cum insurance

plan. Minor children above the age of 12 are now eligible for insurance

cover and can join the plan, subject to the condition that the minor has

his/her own source of regular and independent income. The scheme would

also have a personal accident insurance cover of Rs 50,000. The minimum

and maximum investment limit, under the plan is Rs 15,000 and Rs 75,000,

respectively.

Payment can be made either, annually or semi-annually. A further option to

pay renewal contribution every month through pay roll may be introduced in

association with employers, subject to certain terms. The 10-year and 15-

year plans carry a bonus of 5 per cent and 7.5 per cent, respectively, payable

on maturity. Investors continuing in the plan after the maturity will get a

post-maturity bonus of 0.5 per cent of the target amount for each completed

year after the maturity date, provided the investor has not withdrawn any

amount earlier.

Advantages of ULIP

During the previous financial year (2006-07), most investors would have

interacted with their investment advisors and agents for tax planning. And

there's a fair chance that unit linked insurance plans featured prominently in

the advisor's recommendation. In recent times, few investment avenues

(especially in the tax-saving space) can claim to match ULIPs in terms of

their sheer popularity.

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ULIPs essentially combine the benefits of an insurance policy and a market-

linked investment. A certain proportion of the premium paid is invested in

market-linked instruments like equities and bonds (in line with the stated

mandate) and the balance is used to provide for the expenses incurred on

providing the investor with an insurance cover. Like most other products in

the tax-saving segment, ULIPs are also designed to achieve the twin

objectives of tax benefits and capital appreciation

The following are the benefits of ULIPs: -.

The attractive agency commission

An advisor selling a ULIP is likely to pocket a commission in the range

of 30.00 per cent of the premium paid in the first few years. Conversely,

an investment in a tax-saving mutual fund (which offers the same tax

benefits under Section 80C of the Income Tax Act) would fetch him an

upfront commission of 2.00-2.50 per cent of the investment value.

Also the commission in the following years (known as trail commission)

amounts to about 5.00 per cent for ULIP investments vis--vis around

0.70 percent in case of mutual funds. The attractive commissions on

ULIPs compared to other avenues like mutual funds and term plans

certainly works as a major incentive for the advisor. It is not difficult to

understand why an advisor would hard sell ULIPs to every prospective

insurance seeker regardless of whether ULIPs are suited to meet the

latter's needs.

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In India, insurance is sold, not bought

Traditionally, insurance has been bought for tax saving, rather than from

the perspective of insuring oneself. Hence, the 'insurance' aspect typically

takes a backseat. Furthermore, awareness among investors in terms of

insurance products tends to be low. Most rely solely on their insurance

agent for recommendations.

For most individuals, a term plan should be the first product to feature in

their insurance portfolios; investment-linked products like endowment

and ULIPs can be bought as and when the need arises.Term plans provide the insured's nominees with the sum assured if an

eventuality occurs during the term of the policy. There are no maturity

benefits; hence if the insured were to survive the policy term, he would

not get anything. Sadly, buying term plans is never considered because of

the mindset - "I have paid money (premium) towards the insurance

policy, so I should get a return".

Advisors under the pretext of allaying investors' apprehensions of not

getting any returns on maturity offer products like ULIPs. Such products

with their promise of providing returns easily catch the fancy of most

investors.

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 favour of ULIPs as well. But one must take

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note of the fact that nearly all the ULIPs in the market are of recent origin

and they have not yet been tested over a prolonged bear phase.

Retail investors tend to get carried away by recent performances without

realizing that there is no guarantee that a similar performance will be

sustained in the future. The advisor on his part tends to underplay the

recent origin of ULIPs and instead utilizes their performance as a selling

proposition.

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.

Also ULIP investors have the opportunity to 'manage' their monies.

When equity markets seem overheated, investors can shift their corpus

into a debt-oriented portfolio, and in the process insulate it from volatility

in the equity markets. Similar changes can be incorporated when the

investor's risk profile undergoes a change.

Then there are advantages like the top-up facility (which is like a one-

time premium payment) that can be used to gainfully utilize surplus

monies. Another reason for buying a ULIP is the benefit it offers, by

bundling insurance with an investment product. Thus for anyone who

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wants to avoid the hassle of taking care of numerous kinds of investment

and life insurance products, ULIPs can be a good option.

ULIP Vs Mutual Fund

Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum

investments or investing using the systematic investment plan (SIP)

route, which entails commitments over longer time horizons. The fund

house lays out the minimum investment amounts.

ULIP investors also have the choice of investing in a lump sum (single

premium) or using the conventional route, i.e. making premium payments

on an annual, half-yearly, quarterly or monthly basis. In ULIPs,

determining the premium paid is often the starting point for the

investment activity.

This is in stark contrast to conventional insurance plans where the sum

assured is the starting point and premiums to be paid are determined

thereafter.

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ULIP investors also have the flexibility to alter the premium amounts

during the policy's tenure. For example an individual with access to

surplus funds can enhance the contribution thereby ensuring that his

surplus funds are gainfully invested; conversely an individual faced with

a liquidity crunch has the option of paying a lower amount (the difference

being adjusted in the accumulated value of his ULIP). The freedom to

modify premium payments at one's convenience clearly gives ULIP

investors an edge over their mutual fund counterparts.

Expenses

In mutual fund investments, expenses charged for various activities like

fund management, sales and marketing, administration among others are

subject to pre-determined upper limits as prescribed by the Securities and

Exchange Board of India.

For example equity-oriented funds can charge their investors a maximum

of 2.5% per annum on a recurring basis for all their expenses; any

expense above the prescribed limit is borne by the fund house and not the

investors.

Similarly funds also charge their investors entry and exit loads (in most

cases, either is applicable). Entry loads are charged at the timing of

making an investment while the exit load is charged at the time of sale.

Insurance companies have a free hand in levying expenses on their ULIP

products with no upper limits being prescribed by the regulator, i.e. the

Insurance Regulatory and Development Authority. This explains the

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complex and at times 'unwieldy' expense structures on ULIP offerings.

The only restraint placed is that insurers are required to notify the

regulator of all the expenses that will be charged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higher

expenses translate into lower amounts being invested and a smaller

corpus being accumulated. ULIP-related expenses have been dealt with

in detail in the article "Understanding ULIP expenses".

Portfolio disclosure

Mutual fund houses are required to statutorily declare their portfolios on

a quarterly basis, albeit most fund houses do so on a monthly basis.

Investors get the opportunity to see where their monies are being invested

and how they have been managed by studying the portfolio.

There is lack of consensus on whether ULIPs are required to disclose

their portfolios. During our interactions with leading insurers we came

across divergent views on this issue.

While one school of thought believes that disclosing portfolios on a

quarterly basis is mandatory, the other believes that there is no legal

obligation to do so and that insurers are required to disclose their

portfolios only on demand.

Some insurance companies do declare their portfolios on a

monthly/quarterly basis. However the lack of transparency in ULIP

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investments could be a cause for concern considering that the amount

invested in insurance policies is essentially meant to provide for

contingencies and for long-term needs like retirement; regular portfolio

disclosures on the other hand can enable investors to make timely

investment decisions.

Flexibility in altering the asset allocation

Offerings in both the mutual funds segment and ULIPs segment are

largely comparable. For example plans that invest their entire corpus in

equities (diversified equity funds), a 60:40 allotment in equity and debt

instruments (balanced funds) and those investing only in debt instruments

(debt funds) can be found in both ULIPs and mutual funds.

If a mutual fund investor in a diversified equity fund wishes to shift his

corpus into a debt from the same fund house, he could have to bear an

exit load and/or entry load.

On the other hand most insurance companies permit their ULIP inventors

to shift investments across various plans/asset classes either at a nominal

or no cost (usually, a couple of switches are allowed free of charge every

year and a cost has to be borne for additional switches).

Effectively the ULIP investor is given the option to invest across asset

classes as per his convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull

market when the ULIP investor's equity component has appreciated, he

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can book profits by simply transferring the requisite amount to a debt-

oriented plan.

Tax benefits

ULIP investments qualify for deductions under Section 80C of the

Income Tax Act. This holds good, irrespective of the nature of the plan

chosen by the investor. On the other hand in the mutual funds domain,

only investments in tax-saving funds (also referred to as equity-linked

savings schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax-free. In case of equity-oriented

funds (for example diversified equity funds, balanced funds), if the

investments are held for a period over 12 months, the gains are tax free;

conversely investments sold within a 12-month period attract short-term

capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @

10%, while a short-term capital gain is taxed at the investor's marginal

tax rate.

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Difference between ULIP and Mutual Fund

BASIS ULIP MUTUAL FUNDInvestment

amounts

Determined by the investor

and can be modified as well

Minimum investment

amounts are determined

by the fund house

Expenses No upper limits, expenses

determined by the insurance

company

Upper limits for

expenses chargeable to

investors have been set

by the regulator

Portfolio

disclosure

Not mandatory Quarterly disclosures are

mandatory

Modifying asset

allocation

Generally permitted for free

or at a nominal cost

Entry/exit loads have to

be borne by the investor

Tax benefits Section 80C benefits are

available on all ULIP

investments

Section 80C benefits are

available only on

investments in tax-

saving funds

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How ULIP Can Make You Rich

Ever since unit-linked insurance plans (ULIPs) made their debut, they have

become a subject of much discussion and debate. On the one hand, they

were a trifle too complicated for individuals not yet exposed to the stockmarkets; on the other hand, they were much maligned because of the

'unusually high' costs.

As ULIPs made their presence felt, insurers were more open to discussing

the costs and how they evened out over the long term. This and the

flexibility that ULIPs offer became important points that made individuals

consider adding them to their portfolios.

Today, more individuals are open to using the ULIP-way to create wealth

over the long term. Here we outline exactly how ULIPs can help you fulfill

that responsibility.

If you are between 25 and 35 years of age

You are young, probably married and even have kids. If you are the sole

breadwinner in the family, then you have quite a few responsibilities to

fulfill right from planning for your child's education / marriage to

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planning for your own retirement to providing for the family in your

absence. The last responsibility is the most critical and ironically it is the

easiest and cheapest one of the lot to fulfill. At Personal, term insurance

is the cheapest way to get a life cover for you.

Term insurance is also insurance in its 'purest' form, in other words there

is no savings element in it, which ensures your premiums are very low.

There is no better product to provide for your family in case of an

eventuality and all individuals must consider taking a term plan.

Term insurance of course takes a huge burden off your chest as also your

wallet. But it still leaves you with a problem. If term insurance is only

going to take care of the 'risk' element, who is going to take care of the

'savings' part.

This is where ULIPs come in. Of course, that is not to say that ULIPs do not

have an insurance element, they do, but it is limited largely to the earlier

years.

So how can ULIPs help you save for child's education/marriage, planning

for retirement and other investment-related objectives? ULIPs can do all this

and more because they come with a lot of variety.

Consider this- except for term insurance (because it does not make sense),

just about every life insurance product has a ULIP option. So you have

endowment ULIP, children plan ULIPs and pension ULIPs. As a matter of

fact, there are some life insurance companies that only have ULIP products;

they don't have traditional endowment, pension and child plans at all!

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What that tells you is that if you are willing to take on some risk, a ULIP can

help you meet a lot of your financial objectives.

If you are looking to set aside some money for your child's education, the

5%-6% return on an endowment plan may not even take care of inflation, let

alone provide for a medical or MBA degree. The return you earn on a child

plan should not just counter inflation; it should be enough to cover the cost

of education.

And the way cost of education is spiraling, your insurance plan must work

very hard. Given their equity component, ULIPs are ideally placed to fulfill

this role.

As we mentioned before, ULIPs are flexible; there are various options

within a ULIP with the equity component varying right from 0% to 100%.

This ensures that you are able to select an option that best suits your risk

profile. Let us understand how ULIPs can be tailor-made to serve your

financial planning needs

.

You are in the 25-35 years age bracket. Your most pressing financial

objectives are providing for your child's future and your own retirement.

ULIPs can help you achieve both. Although you can take a single

endowment ULIP to achieve both objectives, we think it is more prudent to

make a demarcation between the needs and take separate ULIPs dedicated to

each objective.

Opt for a ULIP child plan to provide for your child's higher education,

marriage and seed capital for business to name a few needs. One-way to

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handle this multi-faceted objective is to take a ULIP money-back plan. This

way you get monies at regular intervals to address multiple needs.

The other important plan that individuals must consider taking earlier on

their lives is a pension plan. Building a corpus to face the rigours of

retirement should be given the priority it deserves.

Again, a long-term investment objective like retirement planning could do

with equity 'push'. Here is where a ULIP pension plan can add value to your

retirement portfolio. Likewise a ULIP endowment plan can help you meet

investment objectives like buying property or setting up a business for

instance.

If you are between 35 and 45 years of age

By the time you reach the 35-45-age bracket, some of your existing

ULIPs are probably nearing maturity. For instance, if you had taken a

ULIP child plan earlier on, it is likely to mature in this age bracket to

coincide with the need (higher education/marriage) you had in mind at

the time of taking the ULIP.

However, if you married late or did not begin planning your finances at

an early stage in your life, now is the time. If you haven't insured yourself

as yet, go for a term insurance plan.

The advantage of taking a term plan at a slightly advanced age is that you

have a better idea of how your lifestyle is likely to pan out going forward.

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In terms of costs, term plans remain your cheapest option no matter when

you take one.

You can opt for some of the ULIPs we mentioned for individuals in the

25-35 years age bracket depending on your needs. Unlike endowment,

which gets really expensive at an advanced age, ULIPs because of the

way they are structured do not turn out that expensive.

If you are over 45 years of age

In this age bracket, it is likely that you are insured. However, you still

need to review your insurance cover taking into consideration the

changes in your lifestyle, income, needs and financial commitments. Beef

up your insurance cover through a term plan.

By this time, your ULIP pension plan will have matured. You can then opt

for an annuity, immediate or deferred, depending on your requirements.

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Some Important Points About ULIP

Since ULIPs offer a lot of flexibility, you need to keep some points in mind

to optimize the benefits associated with them.

ULIP child plans/pension plans and even term insurance for most

individuals has been recommended. When you opt for these plans, it

is important that you do this after taking your insurance consultant

into confidence. He is the one who is going to help you with the

numbers, so you need to tell him exactly what you are looking for in

an insurance plan.

There is an insurance cover associated with ULIPs. Since it is also

likely that you have other insurance plans like term and/or

endowment, it is important you have a clear idea of exactly how much

your insurance cover is worth after considering all your insurance

plans. This number will prove helpful when you review your

insurance cover at regular intervals.

ULIPs also have an investment element. You are likely to have

investments in mutual funds, stocks, bonds and fixed deposits as well.

You need to add up the market value of all these investments while

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calculating your investment worth. This number will prove useful

when you wish to beef up your investments in a particular asset.

ULIPs derive their 'power to perform' from equities. When you have a

lot of aggressive ULIPs in your portfolio it means that you are

overweight on equities. Add to this your investments in stocks and

equity funds, and your exposure to equities increases even further. To

temper your equity exposure, it is generally advisable to opt for

conservative/balanced ULIPs (maximum 50% equity exposure).

Even if you are a high-risk investor, you must gradually shift your

assets to a conservative ULIP option as your age advances. Financial

prudence dictates that risk reduces as age increases; this needs to

reflect in all your investments including ULIPs.

Like with all investments, it is prudent to diversify your ULIP

investments. This is necessary due to several reasons with financial

prudence being the most important reason. Varying flexibility levels

in ULIPs across insurance companies is another factor that should

make you opt for a ULIP from more than one insurance company.

Varying level of expenses in ULIPs is another reason to opt for ULIPs

across insurance companies to keep expenses on the lower side

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5Steps To Selecting The Right ULIP

Understand the concept of ULIPs

Do as much homework as possible before investing in an ULIP. This way

you will be fully aware of what you are getting into and make an

informed decision.

More importantly, it will ensure that you are not faced with any

unpleasant surprises at a later stage. The experience suggests that

investors on most occasions fail to realize what they are getting into and

unscrupulous agents should get a lot of 'credit' for the same.

Gather information on ULIPs, the various options available and

understand their working.

Focus on your need and risk profile

Identify a plan that is best suited for you (in terms of allocation of money

between equity and debt instruments). Your risk appetite should be the

deciding criterion in choosing the plan.

As a result if you have a high risk appetite, then an aggressive investment

option with a higher equity component is likely to be more suited.

Similarly your existing investment portfolio and the equity-debt

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allocation therein also need to be given due importance before selecting a

plan.

Opting for a plan that is lop-sided in favour of equities, only with the

objective of clocking attractive returns can and does spell disaster in most

cases.

Compare ULIP products from various insurance companies

Compare products offered by various insurance companies on parameters

like expenses, premium payments and performance among others. For

example, information on premium payments will help you get a better

picture of the minimum outlay since ULIPs work on premium payments

as opposed to sum assured in the case of conventional insurance

products.

Compare the ULIPs' performance i.e. find out how the debt, equity and

balanced schemes are performing; also study the portfolios of various

plans. Expenses are a significant factor in ULIPs, hence an assessment on

this parameter is warranted as well.

Enquire about the top-up facility offered by ULIPs i.e. additional lump

sum investments that can be made to enhance the policy's savings

portion. This option enables policyholders to increase the premium

amounts, thereby providing presenting an opportunity to gainfully invest

any surplus funds available.

Find out about the number of times you can make free switches (i.e.

change the asset allocation of your ULIP account) from one investment

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plan to another. Some insurance companies offer multiple free switches

every year while others do so only after the completion of a stipulated

period.

Go for an experienced insurance advisor

Select an advisor who is not only conversant with the functioning of debt

and equity markets, but also independent and unbiased. Ask for

references of clients he has serviced earlier and crosscheck his service

standards.

When your agent recommends a ULIP from a given company, put forth

some product-related questions to test him and also ask him why the

products from other insurers should not be considered.

Insurance advice at all times must be unbiased and independent; also

your agent must be willing to inform you about the pros and cons of

buying a particular plan. His job should not be restricted to doing paper

work like filling forms and delivering receipts; instead he should keep

track of your plan and offer you advice on a regular basis.

Does your ULIP offer a minimum guarantee?

In a market-linked product, protecting the investment's downside can be a

huge advantage. Find out if the ULIP you are considering offers aminimum guarantee and what costs have to be borne for the same.

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Are ULIP Right For You

The introduction of unit-linked insurance plans (ULIPs) has been, possibly,

the single-largest innovation in the field of life insurance in the past several

decades. In a swoop, it has addressed and overcome several concerns that

customers had about life insurance liquidity, flexibility and transparency

and the lack thereof. These benefits are possible because ULIPs are

differently structured products and leave many choices to the policyholder.

Hence as a customer, you must carefully consider whether you can make

such a product work well for you. Broadly speaking, ULIPs are best suited

for those who have a conceptual understanding of financial markets and are

genuinely looking for a flexible, long-term savingscum-insurance solution.

Put simply, ULIPs are structured such that the protection (insurance)

element and the savings element can be distinguished and hence managed

according to ones specific needs. Traditionally, the savings element of

insurance has been opaque, giving policyholders no control over asset

allocation, no transparency, no flexibility to match ones lifestyle,

inexplicable returns and an expensive, complicated exit. ULIPs, by

separating the two parts within the same product, and managing them

independently, offer insurance buyers what no traditional policy had

continuous information about how their policy is working for them. Often,

people wonder whether its better to purchase separate financial products for

their protection and savings needs. Certainly, this is a viable option for those

who have the time and skill to manage several products separately.

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However, for those who want a convenient, economical, one-stop solution,

ULIPs are the best bet.

For Long Term Investment

If you are opting for long-term investment, it is better you go for equity

linked investment schemes. Longer the period of investment, greater the

chances of risk mitigation.

Nowadays, more and more parents are buying insurance policies for their

children. This not only takes care of expenses that may be incurred on

children's education, but also funding for their education abroad.

Life insurance as an investment for kids

This year, children's insurance has grown at 250% as compared to 100%

last year. Bajaj Allianz sold two times more policies this year than lastyear. This year, LIC (Life Insurance Corporation) sold three lakh policies

in the children's category. Looking at the market, LIC and Bajaj Allianz

are planning to increase the number of children's policies in the portfolio.

While this trend certainly seems to reveal that a lot of people are going for

child insurance policy, the questions really is how aware are they about

investments for children?

Investment consultant Sandeep Shanbhag says, "Demand for life insurance

policies has increased in the last couple of years. However, people think of

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insurance policies as a way of investment and PPF (Public Provident

Fund), RBI (Reserve Bank of India) bonds, equity mutual funds are

thought of as investment for adults. But it is not like that. There is no

product labeled as `for adults only'. Similarly, children's investment

products are not the only products that are meant for children. This kind of

mentality should go."

ULIP vs. normal insurance

Quite often, we are confused as to what are better ULIPs, normal insurance

or investment in mutual fund? Manpreet Singh, who is 34 years old, has

two kids. He has taken three ULIPs.

One was taken three years back for which he is paying Rs 12,000 every year

while for the other two he is paying Rs 2,000 per month. He wants to know

what is the best investment option - ULIPS or normal life insurance?

According to Yashmohan Prasad, Zonal Manager, HDFC Standard Life

Insurance, the difference between ULIPs (Unit Linked Investment Plans)

and traditional products is the way your money is invested.

In a traditional product, the companies invest the investible portion of the

premium as per IRDA (Insurance regulatory and Developmental Authority)

guidelines. "However in ULIP, the company's fund manager invests in

different asset classes and gives you three to four varieties of funds in one

policy. ULIP should be preferred if the investor is inclined towards the

market and feels that he should actively participate in fund management,"

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He adds that you should plan out with your fund manager if you think you

may require money at different stages. You should go for ULIP only if you

are comfortable with the markets.

Equity is best for the long term

Shanbhag feels, if you are opting for long-term investment, it is better

you go for equity linked investment schemes. Longer the period of

investment, there are more chances of the risk mitigation. But if you put

the entire amount in equity you may not be able to withdraw money at

your convenience, especially when the market is low.

"If you invest Rs 10,000 per year in PPF (Public Provident Fund), you will

get Rs 10,000 at the interest rate of 8% after 10 years. No insurance policy

will give you this kind of returns. So you go for a right mix of equity and

debt. I suggest that instead of taking insurance cover for your child; open a

PPF account in the child's name. Every year, deposit Rs 70,000 in the

account and when he/she turns 20, he will get Rs 32 lakh (Rs 3.2 million)."

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ULIP Capital Guarantee Scheme

A ULIP is an insurance product that offers you the best of both worlds-

insurance and investment. When you purchase a ULIP, a part of the

premium that you pay goes towards your insurance cover and meeting

administration expenses. The rest is channeled into an investment fund,

which works like a mutual fund. This investment fund invests in various

equity and debt financial instruments that fit within the pre-specified broad

criteria, which are outlined by the insurance company.

According, a fund may have a high-risk-high-return profile, where a

substantial portion of the corpus is invested into equities, while another may

have low-risk-low-return profile, where the investment options are largely

restricted to debt and money market instruments. Yet another kind may have

a balanced mix of equity and debt, rendering a medium-risk medium return

profile. This gives an investor the freedom to choose an investment option

that suits his or her risk profile.

Maturity Benefit

On maturity of the plan, you are entitled to receive the policy fund value.

This sum is equal to the number of units held by you multiplied by the

funds NAV.

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The Risk

The risk involved here is that due to the fluctuations in the market, the

policy fund value at the end of the plan term might be less than the sum of

the premiums paid throughout the policy.

The Solution Introduction of Capital Guaranteed ULIP

Capital guaranteed ULIP promise to return at least the net premiums (total

premium less mortality and administrative charges) paid by the policy

holder on maturity. In some cases, the sum guaranteed also includes

bonuses.

Of course, if the policy fund value exceeds the amount guaranteed, then

you are entitled to receive the policy fund value. In other words, they not

only offer the benefit of any upside in the market, but at the same time

protect the capital invested from being eroded.

Capital guaranteed ULIPs are long-term investment-cum-insurance plans,

which offer the opportunity to reap long-term capital appreciation through

an exposure to the markets, while at the same time, protecting investors

from any capital erosion.

Guaranteed plans cater to the risk-averse investors who are stuck with cash

or fixed income products which may fail to generate wealth over time, as

they may not meaningfully outpace the cost of living.

With the uncertainty and volatility prevailing in the stock Markets, ULIPs

with a capital guarantee come as a boon. They not only offer the Benefit of

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any upside in the market, but at the same time guaranteed the capital

invested.

Charges Of ULIP

Unit-linked life insurance offers the interesting option of combining

protection and tax advantages of life insurance with the attractive prospectsof investing in equities.

A unit-linked plan works on a minimum premium basis and not on a sum

assured one. You decide the amount you can contribute at regular intervals.

ULIP offers you insurance cover till your insurance needs are fulfilled,

beyond that it becomes an investment avenue.

How they compare?

To explain how ULIP works we will compare HDFC ULIP Endowment plan

with HDFC Endowment plan.

Premium

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In case of ULIP, you pay a minimum premium of Rs 10,000 per annum

irrespective of age and term of the policy. Premiums levels can be either

reduced or increased if premiums have been paid regularly for three years

and the unit fund value is at least Rs 15,000. The flexibility of increasing

premium contributions in an existing account helps policyholders manage

their cash flows.

In normal/traditional endowment plans the premium is calculated on the

basis of age and the term and the amount you pay, as premium remains the

same for the full term. The minimum premium is Rs 1,500 annually.

Sum assured

The sum assured depends on your age and the cover you take in case of

ULIP.

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

- low, medium or high.

In the traditional plan, the sum assured is calculated by age and term of the

policy to which premium factor is applied.

Top-ups

Apart from your regular contributions, in case of ULIP, you can also make

additional payments to increase the savings component. These top-ups do

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not affect the sum assured. Normal endowment policy does not offer you

these benefits.

Investment

You choose the fund where you want to invest your money. HDFC offers a

choice of five funds - liquid, defensive, secure managed, secure defensive

and growth. The Liquid Fund is the least risky with investments in bank

deposits and short-term money market instruments. Growth Fund is the

riskiest with an investment of up to 100% in equities.

In traditional insurance plans your money is invested keeping in view the

IRDA specification i.e. minimum 85% in debt with the balance in equities.

Charges?

As is the case with unit-linked plans, this plan, too, imposes charges, on

both the funds invested by the policyholder and by cancellation of units.

These charges vary depending on the kind of premium payment option

chosen (single or regular).

Other charges include a fund management charge of 0.80% of the fund

value per annum, apart from a flat fee of Rs 15 per month deducted by

cancellation of units

In case of ULIP, for the first 2 years the investment content rate is 73% of

the premium and for the remaining years 99%. Risk cover charges (for

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death sum assured, critical illness, accidental death) are charged for

canceling units on each monthly charge date, based on the persons age at

that time. n traditional plans, the charges are not disclosed. There is an

annual fee of Rs 150 for regular premium policies and Rs 300 for single

premium ones.

Returns

In case of ULIP, in an eventuality you receive the sum assured or fund

value whichever is higher and on maturity the fund value. In normal

endowment plan, in either case you receive the same benefit i.e. the sum

assured and vested bonus.

In case you stop paying premiums?

If this is in the first 3 years then in case of ULIP, on cancellation of the

policy before paying regular premium for 3 years, there is a charge of 25%

of the outstanding premiums due during this 3-year period. In case of normal

endowment the policy lapsesand nothing is paid back

If you stop paying premiums after 3 years, in ULIP you have the option to

make policy paid up, provided the policy has accumulated sufficient policy

value. At present this amount is Rs 15,000. If the fund value of a paid up

policy falls below Rs 15,000 then the policy is cancelled and the fund value

is returned to you. The risk cover continues for the sum assured even though

the policy has reached the paid up status.

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In traditional plan the policy becomes a paid up policy.

Medicals

In both the plans the norms for medicals are similar i.e. medicals are

compulsory.

ULIP Portfolio Reveal

The popularity of unit linked insurance plans (ULIPs) has increased

considerably over the past few years. Not surprisingly, this has coincided

with the attractive returns posted by the stock markets over this period.

ULIPs, being market-linked, mirror to a large extent, the gains/losses of the

stock markets. That is why its important for investors to evaluate a ULIP

portfolio objectively before considering investing in it.

ULIPs have been marketed as instruments that basically are a mutual fund

and more. In this note we evaluate the portfolios of some leading ULIP

plans on offer today by applying yardsticks that we apply to portfolios of

mutual fund schemes. Of course, there is no denying that ULIPs are

inherently different from mutual funds as they offer a life cover also.

Nevertheless, in our view, such a study will help individuals select ULIPs

that suit their profile and needs better.

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For our evaluation, we have considered the Aggressive ULIP plans from

four life insurance companies whose portfolios were available to us (as on

March 31, 2006).

Allocation to Equities

The allocation to equities differs across the four companies under study.

True to its investment mandate, HDFC Standard Life (HDFCSL) had

invested 100.0% of its corpus in equities. Kotak Life Insurance (KLI) had

invested 62.2% of its corpus in equities against a mandate to invest upto

80.0% of its assets in equities. The other two companies, ICICI PruLife

and Aviva, have adhered to the limits set out for them with 94.8%

(mandated to invest upto100% in equities) and 80.8% (mandated to invest

upto 85%) respectively.

In terms of market capitalisations, we have observed that the ULIPs under

review invest predominantly in large cap companies. However, Aviva is an

exception; it invests liberally in mid caps. This can be gauged from the fact

that close to half of its equity portfolio (i.e. approximately 42%) is invested

in midcap companies. This may not be the most prudent feature of a ULIP

that is investing individuals insurance monies. Investorswould do well to

appreciate that mid cap stocks typically tend to be high risk high return

investment propositions vis--vis their large cap peers.

All four insurers under review have invested in line with their investment

mandates. However, it is apparent that investment mandates for the

Aggressive ULIP plans vary significantly across insurers. On one hand,

you have a HDFCSL, which is necessarily invested upto 100.0% in

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equities, while on the other hand there is a KLI that can invest upto 80.0%

in equities. Another insurer Birla Sun Life Insurance Company (whose

portfolio for the Flexi Save Plus endowment plan we failed to acquire)

can invest only upto 35.0% of assets in equities in its Aggressive ULIP

plan. This kind of disparity in similar-natured ULIP offerings from

various insurers underscores the need for investors to make an informed

decision while buying ULIPs.

Top 10 Stocks

With respect to holdings in the top 10 stocks, HDFCSL is well diversified.

It holds 42.7% of its assets in its top 10 stocks. However, in terms of

number of stocks held, it remains the most concentrated with a total of 34

stocks in its portfolio.

ICICI PruLife had the most concentrated portfolio with 50.4% in its top 10

stocks. The total number of stocks it held (51 stocks) was the highest in its

peer group.

KLI comes across as the most diversified ULIP portfolio with only 25.7%

of its total holdings in the top 10 stocks. Likewise, Aviva with an

allocation of 28.0% is well diversified. Given that KLI and Aviva have an

equity cap in the 80%-85% range, their top 10 stock holdings are very well

diversified.

.

Sectoral Allocation

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In terms of sectoral allocation, ICICI PruLife emerges as the most

concentrated one with 65.0% of its assets in the top 5 sectors. So too is the

case with HDFCSL which holds 64.2% of its assets in 5 sectors.

Both Aviva and KLI fare better as compared to HDFCSL and ICICI

PruLife with 41.6% and 30.6% of assets in the top 5 sectors respectively.

Again, this comparison has to be seen in light of the lower equity

allocation for both these insurers.

Like with stock allocations, we believe that sectoral concentration can

expose a portfolio to above-average volatility. While such a strategy can

help the ULIP clock attractive returns during a market rally, it is likely to

expose investors to higher volatility when the markets witness a downturn.

With respect to the concentration in the portfolios, insurance seekers need

to appreciate that insurance companies invest monies from a very long-

term perspective; they are able to therefore take, say a 10-year call or a 20-

year call on a company or a sector. Since their inflows are committed and

locked in they are able to invest with greater freedom and also not

excessively worry about near term volatility.

Fund Management Charges (FMC)

Charges play an important role while calculating the returns on a portfolio- higher the charges; lower is the value of the investments. Over the long

term (over 15 years), charges have the potential to significantly impact the

returns generated by the ULIP portfolio.

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HDFCSL with an FMC of 0.80% surfaces as the most cost effective ULIP.

ICICI PruLife (FMC 1.50%) fails to redeem itself on this front. KLI (FMC

1.50%) and Aviva (FMC 1.00%) with additional expenses in the form of a

buy-sell spread fare poorly compared to the others alongside it. Simply put,

the buy-sell spread is the difference between the buying price and the

selling price at which the life insurance company buys and sells its units.

In addition to FMC, ULIPs also levy administration charges. Here too,

HDFCSL with charges of Rs 180 per annum (pa) emerges as the clear

leader. ICICI PruLife (Rs 720 pa) and Aviva (Rs 779 pa) fare poorly on

this front. For KLI, the administration charges are levied as a percentage of

the annual premium- for the first year, the charges are 7% for premium

upto Rs 20,000 pa and 3% for that portion of premium exceeding Rs

20,000 pa. Second year onwards, these charges drop to 4% (for premium

upto Rs 20,000 pa) and 2% (for premium exceeding Rs 20,000 pa). KLI

too fails to impress on this parameter.

Policy Returns

HDFCSL with a return of 86.7% for FY06 (financial year ending March

2006), towers head and shoulders over the competition. It has also

managed to outperform its benchmark, the BSE 100 (up 66.2%), by a wide

margin. Such a performance is not surprising given that the policy invests

its entire corpus in equities vis--vis peers. ICICI PruLife too fared well on

this front with 68.2% returns over FY06, although it just about managed to

outperform its benchmark, (BSE 100).

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Kotak with 49.2% returns over the said period fared poorly as compared to

its peers as well as its benchmark, the S&P CNX Nifty (up 64.6%). One

reason for the under-performance could be the controlled equity exposure

(62.2% as on March 31, 2006) as compared to its mandate (upto 80%).

Aviva (61.1%) managed to post reasonable returns vis--vis peers.

The evaluation of ULIP portfolios throws up some interesting learning:

The quality of data and its presentation need to improve significantly, if

investors, both existing and potential, are to be able to study portfolios andmake intelligent decisions.

ULIP portfolios need to be disclosed regularly. The reason you are seeing

only four ULIP portfolios is because others either dont disclose it or

disclose it only selectively.

By and large ULIP portfolios are well diversified in terms of stock

allocations, however we would like to see more diversification at the

sectoral level. As we have learnt with mutual funds, one without the other is

of little use during a market downturn like the one we are witnessing at

present.

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Conclusion

In the present study we have seen that the charges have minimal impact on

the sale of the scheme. It has been seen that Birla Sun Life has consistently

performed well in the insurance market of India. Following are some of the

figures of market performance to indicate this:

In this project, I had emphasized on Recruitment of Insurance Advisor and

about Unit Linked Insurance Plan (ULIP) schemes in the insurance

company. In the present scenario of this hectic lifestyle, it is very much

advisable that one should invest his / her money in ULIP plan.

In a laymans language it can be said that Unit Linked Insurance Plan

(ULIP) is life insurance solution that provides for the benefits of protectionand flexibility in investment. The investment is denoted as units and is

represented by the value that it has attained called as Net Asset Value

(NAV). The policy value at any time varies according to the value of the

underlying assets at the time.

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ULIP provides multiple benefits to the consumers: -

Life protection

Investment and Savings

Flexibility

Adjustable Life Cover

Investment Options

Transparency

Options to take additional cover against death due to accident

Disability

Critical Illness

Surgeries

Liquidity

Tax planning

birla sun life insurance company limited

Documents