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    A

    REPORT

    ON

    COMPARATIVE STUDY AND FINANCIAL ANALYSIS

    OF ULIP PLANS AND MARKETING RESEARCH

    BY

    ANKIT KUMAR SHAH

    (09BS0000276)

    IDBI FORTIS LIFE INSURANCE COMPANY LIMITED.

    A report submitted in partial fulfilment of the requirements of MBA program of

    the ICFAI University, Dehradun.

    Faculty Guide: Company Guide:

    Prof Aparna Hawaldar Mrs Shanthi Yagyanath

    (Faculty Guide) (Company Guide)

    Date of Submission: 24th May, 2010

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    AUTHORISATION

    This is to certify that the project entitled Comparative study and financial analysis of ULIP

    Plans and Marketing Research is submitted in partial fulfilment of the requirement of MBAProgram of ICFAI University, Dehradun and is a record of the bonafide work carried out by

    Ankit Kumar Shah of ICFAI Business School, Bangalore at IDBI FORTIS LIFE INSURANCE

    COMPANY LTD.,Bangalore under my supervision and has not been submitted else for any

    other purpose.

    Prof. Aparna Hawaldar Mrs. Shanthi Yagyanath

    (Faculty, IBS Bangalore) (Manager distribution

    Chief,IDBI FORTIS)

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    ACKNOWLEDGEMENTSA summer internship project is a golden opportunity for learning and selfdevelopment. I consider myself very lucky and honoured to have so manywonderful people lead me through in completion of this project.

    My grateful thanks to Mrs. Shanthi Yagyanatha, Manager distribution Chief ,who in spite of being extraordinarily busy with her duties, took timeout to hear, guide and keep me on the correct path. I do not know where Iwould have been without her guidance. A humble Thank you Madam.

    Prof. Aparna Hawaldar whose patience I have probably tested to thelimit. She was always so involved in the entire process, shared herknowledge, and encouraged me to think. Thank you, Dear Madam.

    Last but not the least I would like to thank all the respondents who offeredtheir opinions and suggestions and sometimes critical views throughout thesurvey which made me constantly update myself come out with a successfulproject.

    Ankit Kumar Shah09BS0000276

    IBS, Bangalore

    ContentsAUTHORISATION........................................................................................................3

    ACKNOWLEDGEMENTS..............................................................................................4

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    EXECUTIVE SUMMARY...............................................................................................7

    1. INTRODUCTION.....................................................................................................9

    1.1 OVERVIEW.......................................................................................................9

    1.2 PURPOSE.......................................................................................................11

    1.3 SCOPE OF THE STUDY....................................................................................11

    1.4 OBJECTIVES OF THE PROJECT.........................................................................11

    1.5 METHODOLOGY..............................................................................................11

    2. INDUSTRY PROFILE............................................................................................12

    2.1 LIST OF PRIVATE SECTOR LIFE INSURANCE COMPANIES...............................14

    2.2 FINANCIAL YEAR 2009-10(LIFE INSURANCE).................................................15

    3. COMPANY PROFILE..............................................................................................17

    3.1 ABOUT IDBI FORTIS........................................................................................17

    3.1.1 VISION.....................................................................................................18

    3.1.2 MISSION..................................................................................................18

    3.1.3 VALUES...................................................................................................18

    3.2 PRODUCT MIX OF IDBI FORTIS.......................................................................19

    3.2.1 WEALTHSURANCE- A wealth building plan protected by insurance.........19

    3.2.2 INCOMESURANCE - A versatile product that suits every need................22

    3.2.3 RETIRESURANCE.....................................................................................23

    3.2.4 HOMESURANCE.......................................................................................233.2.5 BONDSURANCE.......................................................................................23

    4. UNIT LINKED INSURANCE PLANS........................................................................24

    4.1 STRUCTURE OF ULIPs...................................................................................25

    4.2 EXAMPLE TO ELABORATE HOW ULIPS WORK................................................27

    4.3 ADVANTAGES OF ULIPS..................................................................................28

    5. COMPARATIVE SECONDARY DATA ANALYSIS OF UNIT LINKED INSURANCE PLANS

    (ULIPs).....................................................................................................................29

    5.1 IDBI FORTIS LIFE INSURANCE COMPANY........................................................295.2 TATA AIG vsIDBI FORTIS.................................................................................32

    5.3 HDFC STANDARD vs IDBI FORTIS...................................................................36

    5.4 LIC vs IDBI FORTIS..........................................................................................39

    5.5 ICICI PRUDENTIAL vs IDBI FORTIS...................................................................42

    5.6 FUND OPTIONS AVAILABLE UNDER ULIPs......................................................45

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    5.7 COMPARISON OF EQUITY FUNDS(2009-10)....................................................46

    5.7.1 EQUITY OUTLOOK.....................................................................................46

    5.7.2 TERMS TO UNDERSTAND.........................................................................47

    5.7.3 TATA AIG LIFE EQUITY FUND..................................................................50

    5.7.4 ICICI PRUDENTIAL EQUITY FUND..............................................................51

    5.7.5 HDFC STANDARD - UNIT LINKED ENDOWMENT PLUS EQUITY MANAGED

    FUND.................................................................................................................52

    5.7.6 RELIANCE GOLDEN YEARS PLAN - EQUITY FUND.....................................53

    5.7.7 IDBI FORTIS WEALTHSURANCE EQUITY GROWTH FUND...........................54

    5.7.8 SBI LIFE HORIZON....................................................................................55

    5.7.9 Kotak Easy Growth Plans(5 Times)...........................................................56

    5.8 ANALYSIS......................................................................................................57

    5.8.1 Returns:...................................................................................................57

    5.8.2 Fund Standard Deviation........................................................................59

    5.8.3 Fund Sharpe Ratio....................................................................................61

    6. SURVEY ANALYSIS...............................................................................................63

    6.1 AIM.................................................................................................................63

    6.2 METHODOLOGY..............................................................................................63

    6.3 FINDINGS & ANALYSIS....................................................................................63

    6.4 FACTOR ANALYSIS (USING SPSS)..................................................................72

    OUTPUT SHEET & DETAILED ANALYSIS................................................................73

    7 .ULIP BUSINESS IN INDIA......................................................................................79

    7.1 The Battle Of Ulips.........................................................................................80

    7.2 ULIPS vs MUTUAL FUNDS...............................................................................88

    7.3 EFFECT OF INTRODUCTION OF DIRECT TAX CODE(DTC) ON ULIPS................92

    8. FINDINGS & CONCLUSION...................................................................................94

    9. RECOMMENDATION AND SUGGESTIONS.............................................................96

    9. RECOMMENDATION AND SUGGESTIONS

    EXECUTIVE SUMMARY

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    As part of the academic requirement of a B-School, I Ankit Kumar Shah (09BS0000276), a

    student of IBS Gurgaon, did my Summer Internship Project at IDBI FORTIS LIFE

    INSURANCE COMPANY LTD from Feb 20, 2010 to May 25, 2010. IDBI FORTIS is a joint

    venture between IDBI Bank, FORTIS and Federal Bank

    The project aims at making a detailed comparative study of the Unit linked Insurance plans

    (ULIPs) of IDBI Fortis with that of other selected players in the Insurance industry operating in

    India and in the process identify the strengths and weaknesses of IDBI Fortis. In addition to this,

    the project tries to capture the consumer perception towards various Insurance products.

    The different selected companies apart from IDBI Fortis on which the project is entirely focused

    on are namely:

    1. Life Insurance Corporation of India

    2. ICICI Prudential

    3. TATA AIG Life

    4. HDFC Life Insurance

    5. Bajaj Allianz

    6. Reliance Life Insurance

    7. Kotak Om

    The project can be divided into 4 parts

    Comparison of the ULIP plans i.e comapison of the features offered by Ulips offered by

    various Insurance companies with that of IDBI Fortis.The features include various

    charges levied, maturity benefits, fund options, riders, tax benefits to name a few.

    Comparison of the performance of equity funds of the above companies and IDBI

    FORTIS.Performance was measured on various factors such as returns, standard

    deviation of funds and Sharpe Ratio.These were then compared to the benchmark i.e

    Nifty A primary research was conducted in which 240 people were surveyed .The method of

    collecting primary data was approaching people in the malls, online surveys and

    telephonic interviews. The sample of respondents has been carefully selected, targeting

    respondents from all age groups. The data gathered from the primary data was analysed

    using various charts and SPSS and thus factors were extracted.

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    considerations. The same is also true with the insurance companies in India who are constantly

    revamping their strategies and coming out with innovative options to stay in the competition.

    There were days when Life Insurance Corporation of India (LIC) was the only insurance

    company available to people in India and where people synonymised Insurance to LIC. Also

    since it was a Public Sector Undertaking (PSU) it has a great support from people. But now

    times have changed a lot of private players have entered into the fray. There have been a lot of

    Indian companies collaborating with foreign insurance giants like ICICI Prudential, Bajaj

    Allianz etc who have already made their presence felt in the Indian Insurance industry.

    Even though LIC is still the market leader with more than over 60% of the market share, the

    private players are giving it a tough time. Since the last decade the market share of LIC had

    fallen down by about more than 20%.

    The new private players have started offering a variety of unlimited schemes right from

    insurance plans for a 30 day old baby to that of a 70 year old senior citizen. Also the private

    companies have started creating the importance and need of insurance in todays life. They have

    started positioning their brands and are marketing their products in such a way the people have

    started feeling the need of security in their lives.

    Taking into account the huge population and growing per capita income besides several other

    driving factors, a huge opportunity is in store for the insurance companies in India. According to

    the latest research findings, nearly 80% of Indian population are without life insurance cover

    while health insurance and non-life insurance continues to be below international standards.

    And this part of the population is also subjected to weak social security and pension systems

    with hardly any old age income security. As per our findings, insurance in India is primarily

    used as a means to improve personal finances and for income tax planning; Indians have a

    tendency to invest in properties and gold followed by bank deposits. They selectively invest in

    shares also but the percentage is very small (4-5%). This in itself is an indicator that growth

    potential for the insurance sector is immense. It's a business growing at the rate of 15-20% per

    annum and presently is of the order of around more than $55 billion.

    India is a vast market for life insurance that is directly proportional to the growth in premiums

    and an increase in life density. With the entry of private sector players backed by foreign

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    expertise, Indian insurance market has become more vibrant.

    Competition in this market is increasing with companys continuous effort to lure the

    customers with new product offerings. However, the market share of private insurance

    companies remains low in the 25-35% range. Even to this day, Life Insurance Corporation

    (LIC) of India dominates Indian insurance sector. The heavy hand of government still

    dominates the market, with price controls, limits on ownership, and other restraints. They

    private players are still in their initial days and would take some more time to capture a good

    market share. At present they are coming up with new and innovative ideas

    A ULIP is a life insurance policy which provides a combination of risk cover and investment.

    ULIPs have gained high acceptance due to attractive features they offer like flexibility,

    transparency, liquidity and a vast variety of fund option. Unit linked plans are suitable for all

    customer profiles; however as a general belief the risk averse investors tend to choose

    traditional plans and an informed customer prefers a ULIP. ULIPs offer the kind of flexibility

    that no insurance product can. ULIPs essentially combine the benefits of an insurance policy

    and a market-linked investment. 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. Simply

    put, ULIPs are structured in such a way that the protection element and the savings element are

    distinguishable, and hence managed according to your specific needs. In this way, the ULIP

    plan offers unprecedented flexibility and transparency.

    So with many players around for a company to really be successful it has to really be very

    efficient on all fronts. It has to constantly adapt to the changing consumer preferences with a lot

    of new innovations and implementing new technology try to different from the lot. Especially if

    it is a new player in the market the company has to really work very hard to get into the

    completion and stay afloat.

    1.2 PURPOSEThe project is being done as a part of summer internship program of ICFAI University,

    Dehradun. The completion of the project is a partial fulfilment requirement for being awarded

    the Masters in Business Administration (MBA) degree from the university.

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    1.3 SCOPE OF THE STUDY

    This study aims to make a comparative study of the Unit Linked Insurance

    Plans (ULIPs) of IDBI FORTIS Life Insurance Company with that of some

    major selected players in the Indian insurance market and in the process

    identify the strengths and weaknesses of IDBI Fortis. In addition to this the

    project tries to capture the consumer perception towards various insurance

    products. The comparative analysis is based on the empirical data collected

    through surveys.

    1.4 OBJECTIVES OF THE PROJECT

    To compare the features of the Unit Linked Insurance Plans (ULIPs) of

    IDBI Fortis with that of some other selected players in the Indian

    Insurance industry.

    To compare the performance of Equity funds of selected players in the

    financial year 2009-10

    To identify the strengths and the weaknesses of IDBI Fortis and

    suggest areas where it could focus more and improve upon.

    To study the consumer perception towards various Insurance products

    and their preferred investment pattern.

    To discuss the various changes arising and controversies surrounding

    the product and its effect in the near future

    1.5 METHODOLOGYThe project report is based on Primary as well as Secondary data collection.For the primary

    data, a questionnaire had been prepared, It was formulated on the basis of information carefully

    gathered by me about the various mindsets of the people. This questionnaire was mainly

    formulated to target the common man to see his perception and awareness of various investment

    options available through online surveys, approaching people directly in Bangalore and even

    tele-calling.This data was analyzed critically using SPSS ans a factor analysis done on the data

    brought out the top most factors affecting the consumer minds in insurance products.

    Secondary data was needed for comparing the ULIP plans of various life insurance players and

    their funds.The internet served as a very important medium as the plans of all the competitors

    would be available on their respective websites and the monthly Fund Performance sheets were

    very help in further claculations. Besides various books and journals on the insurance industry

    were referred to.

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    2. INDUSTRY PROFILE

    As is evident from its very name, it deals with insurance of human life. Life insurance

    corporation of India- a public sector undertaking has the monopoly in this sector since its

    nationalization.

    In our wordily life, whenever there is uncertainty, there is an involvement of risk. The instinct

    for security against such risk is one of the basic motivating forces determining human attitudes.

    As a squeal to this quest for Security, the concept of insurance must have been born. The urge to

    provide insurance or protection against the loss of life & property must have prompted people to

    make some sort of sacrifice willingly in order to achieve security through

    COLLECTIVE CO-OPERATION, in this sense; story of insurance is probably as old as the

    story of mankind.

    All life insurance companies in India have to comply with the strict regulations laid out by

    Insurance Regulatory and Development Authority of India (IRDA). Therefore there is no risk in

    going in for private insurance players. In terms of being rated for financial strength like

    international players, only ICICI Prudential is rated by Fitch India at National Insurer Financial

    Strength Rating of AAA (Ind) with stable outlook indicating the highest claims paying ability

    rating.

    90.00

    80.00

    70.00

    60.00

    50.00 Life

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    40.00Non-life

    30.00

    20.00

    10.00

    0.00

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

    The trend of the Indian insurance industry ($Bn) 2000-2011

    Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the largest

    player in the market with a market share of over 65%. Among the private sector players, ICICI

    Prudential Life Insurance(JV between ICICI Bank and Prudential PLC)is the largest followed

    by Bajaj Allianz Life Insurance Company Limited (JV between Bajaj Group and Allianz).

    The Indian Insurance sector has gone through several phases and changes, especially after 1999,

    when the Govt. of India opened up the insurance sector for private companies to solicit

    insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a

    flourishing market amongst global insurance companies

    The private companies are coming out with better products which are more beneficial to the

    customer. Among such products are the ULIPs or the Unit Linked Insurance Plans which offer

    both life cover as well as scope for savings or investment options as the customer desires.

    Further, these types of plans are subject to a minimum lock-in period of three years to prevent

    misuse of the significant tax benefits offered to such plans under the Income Tax Act.

    At present there are a total twenty three(23) life insurance companies operating in India, of

    which one (Life Insurance Corporation) is a Public Sector Undertaking and the remaining are all

    private sector enterprises.

    2.1 LIST OF PRIVATE SECTOR LIFE INSURANCE COMPANIES

    Sl

    No.

    Insurer Foreign Partner Year of

    Operation

    1. HDFC Standard Life Insurance Co.

    Ltd.

    Standard Life Assurance,

    UK

    2000-01

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    2. Max New York Life Insurance Co.

    Ltd.

    New York Life, USA 2000-01

    3. ICICI-Prudential Life Insurance Co.

    Ltd.

    Prudential , UK 2000-01

    4. Om Kotak Life Insurance Co. Ltd. Old Mutual, South Africa

    5. Birla Sun Life Insurance Co. Ltd. Sun Life, Canada 2001-02

    6. Tata-AIG Life Insurance Co. Ltd. American nternational

    Assurance Co., USA

    2000-01

    7. SBI Life Insurance Co. Ltd. BNP Paribas Assurance

    SA, France

    2000-01

    8. ING Vysya Life Insurance Co.Ltd. ING Insurance

    International B.V.,

    Netherlands

    2001-02

    9. Allianz Bajaj Life Insurance Co. Ltd. Allianz, Germany 2001-02

    10. Metlife India Insurance Co. Ltd. Metlife International

    Holdings Ltd., USA

    11. Reliance Life Insurance Co. Ltd. --- 2001-02

    12. AVIVA Life Insurance Aviva International

    Holdings Ltd., UK

    2001-02

    13. Sahara Life Insurance Co. Ltd --- 2001-02

    14. Shriram Life Insurance Co. Ltd. Sanlam, South Africa 2001-02

    15. Bharti AXA Life Insurance Co. Ltd. AXA Holdings, France 2002-03

    16. Future Generali India Life Insurance

    Company Ltd.

    Generali, Italy 2004-05

    17. IDBI Fortis Life Insurance Company

    Ltd.

    Fortis, Netherlands 2005-06

    18. Canara HSBC OBC Life Insurance

    Company Ltd.

    HSBC, UK 2006-07

    19. Aegon Religare Life Insurance

    Company Ltd.

    Religare,

    Netherlands

    2007-08

    20. DLF Pramerica Life Insurance Co.

    Ltd.

    Prudential of America,

    USA

    2007-08

    21. Star Union Dai-ichi Dai-ichi Mutual

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    Life Insurance, Japan 2008-09

    22. IndiaFirst life Insurance company Legal & General Middle

    East Limited, UK

    2009-10

    2.2 FINANCIAL YEAR 2009-10(LIFE INSURANCE)The first year premium collection of life insurance companies surged 68.3% to Rs 25399.02

    crore in March 2010, accounting for 23.2% of the total new business premium collection during

    2009-10. During March 2010, the strong growth in premium income was supported by 82.7%

    and 46.7% increase in premium collection of Life Insurance Corporation (LIC) and Private Life

    Insurer to Rs 16570.82 crore and Rs 8828.20 crore, respectively.

    The life insurance industry has breached the Rs 1 trillion mark for new premium collection

    during 2009-10. The premium collection surged 25.5% to Rs 109290.37 crore in 2009-10, while

    snapping 7.0% fall for last financial year.

    The new business premium collection of private life insurers increased 12.4% to Rs 38399.32

    crore in 2009-10. Meanwhile, the new premium collection of LIC zoomed 33.9% to Rs

    70891.05 crore compared to 11.7% fall recorded in 2008-09. However, the market share of LIC

    rebounded to 64.86% in 2009-10 from 60.79% in 2008-09, which was declining continuously

    since the sector was opened in 2000.

    SBI Life Insurance has emerged as the leading private insurer in terms of new business

    premium collection during 2009-10, displacing the ICICI Prudential Life. The new

    business premium collection for SBI Life increased 30.7% Rs 7040.66 crore in 2009-10. SBI

    Life has improved its share in the life insurance market to 6.44% in 2009-10 from 6.18% in

    2008-09. Among the 13 life private life insurers, which have been operating for more than 6

    years, SBI Life was the only life insurer to strengthen its market as rest have lost their market

    shares during 2009-10, to LIC and new private players.

    ICICI Prudential Life recorded a 7.0% fall in new premium collection to Rs 6334.31 crore,

    while its market share dipped to 5.80% in 2009-10 from 7.82% in 2008-09. Further, Metlife and

    Sahara life posted 6.8% and 5.5% fall in new premium income during 2009-10. The premium

    collection of Bajaj Allianz eased 0.9% to Rs 4451.09 crore, while its markets share also

    declined to 4.07% in 2009-10 from 5.16% in 2008-09.

    Among the newer private insurers, the premium collection of Future Generali has more than

    trebled to Rs 485.82 crore during 2009-10 compared to Rs 152.44 crore in 2008-09. The

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    premium income of Canara HSBC Life has more

    than doubled to Rs 640.27 crore, while that Aegon

    Religare has zoomed 381.8% to Rs 150.37 crore in

    2009-10 over 2008-09.

    Star Union Dai-ichi life which stared operations in February 2009, has posted a multi-fold

    increase in new premium collection to Rs 519.49 crore in 2009-10, compared to Rs 51.75 crore

    in 2008-09. IndiaFirst Life that started operations in November 2009 has touched the premium

    income of Rs

    201.6 crore in

    its first year's of

    operation, 2009-10.

    SHARE OF PRIVATE LIFE INSURANCE COMPANIES AS ON 31st March 2010

    3. COMPANY PROFILE

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    3.1 ABOUT IDBI FORTIS

    IDBI Fortis Life Insurance Co Ltd is a joint venture between three leading financial

    conglomerates Indias premier development and commercial bank, IDBI Bank, one of Indias

    leading private sector banks, Federal Bankand Europes banking and insurance giant, Fortis,

    each of which enjoys a significant status in their respective business segments. In this venture,

    IDBI Bank owns 48% equity while Federal Bank and Fortis own 26% equity each.

    IDBI Fortis launched its first set of products across India in March 2008, after receiving the

    requisite approvals from the Insurance Regulatory Development Authority (IRDA). The

    company offers its services through a vast nationwide network across the branches of IDBI

    Bank and Federal Bank in addition to a sizeable network of advisors and partners. At IDBIFortis, people endeavor to deliver products that provide value and convenience to the customer.

    Through a continuous process of innovation in product and service delivery the company

    intends to deliver world-class wealth management, protection and retirement solutions to Indian

    customers IDBI Ltd. continues to be, since its inception, Indias premier industrial development

    bank. Created in 1956 to support Indias industrial backbone, IDBI has since evolved into a

    powerhouse of industrial and retail finance. Today, it is amongst Indias foremost commercial

    banks, with a wide range of innovative products and services, serving retail and corporate

    customers in all corners of the country from over 490 branches and more than 600 ATMs. The

    Bank offers its customers an extensive range of diversified services including project financing,

    term lending, working capital facilities, lease finance, venture capital, loan syndication,

    corporate advisory services and legal and technical advisory services to its corporate clients as

    well as mortgages and personal loans to its retail clients.

    Federal Bank is one of Indias leading private sector banks, with a national network and

    dominant presence in the state of Kerala. It has a strong network of over 550 branches and 450

    ATMs spread across India. The bank provides over four million retail customers with a wide

    variety of financial products. Federal Bank is one of the first large Indian banks to have an

    entirely automated and interconnected branch network. They operate on the core banking

    platform and are RTGS/ NEFT enabled through which the Bank offers state-of-the-art

    technology enabled products and services.

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    Fortis, a European financial services provider engaged in banking and insurance with a

    presence in over 50 countries, offers its personal, business and institutional customers a

    comprehensive package of products and services through its own channels, in collaboration with

    intermediaries and through other distribution partners. With a market capitalization of over EUR

    40 billion, Fortis ranks among the 20 largest financial institutions in Europe. Fortis sound

    solvency position and dedicated, professional workforce of over 80,000, enables it to combine

    global strength with local flexibility to provide its clients with optimum support and service.

    3.1.1 VISION

    To be the leading provider of wealth management, protection and retirement solutions that

    meets the needs of our customers and adds value to their lives.

    3.1.2 MISSION

    To continually strive to enhance customer experience through innovative product

    offerings, dedicated relationship management and superior service delivery while

    striving to interact with our customers in the most convenient and cost effective manner. To be transparent in the way we deal with our customers and to act with integrity.

    To invest in and build quality human capital in order to achieve the mission

    3.1.3 VALUES

    Transparency: Crystal clear communication to our partners and stakeholders.

    Value to Customers: A product and service offering in which customers perceive value.

    Rock Solid and Delivery on Promise: This translates into being financially strong,

    operationally robust and having clarity in claims.

    Customer-friendly: Advice and support in working with customers and partners.

    Profit to Stakeholders: Balance the interest of customers, partner employees,

    shareholders and community at large.

    3.2 PRODUCT MIX OF IDBI FORTIS

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    IDBI Fortis offers a variety of innovative and interesting Insurance products targeting each and

    every segment of the society , be it a three year old child or a seventy year old senior citizen it

    has products for everyone. The product basket consist of namely :

    Wealthsurance

    Incomesurance

    Retiresurance

    Homesurance

    Bondsurance

    3.2.1 WEALTHSURANCE- A wealth building plan protected by insurance.

    The Wealthsurance Foundation Plan enables you to save and build wealth to meet your financial

    goals. However, unlike other investment alternatives, it also enables you to achieve your wealth

    goals even in the event of unexpected death, accidents, disablement or serious illness.

    The Wealthsurance Foundation Plan can ensure that your plans for wealth creation are achieved

    by protecting that plan with insurance benefits.

    With Wealthsurance Foundation Plan, you can:

    Save into the Plan as much money as you want whether at one time, at regular intervals

    or as per your convenience.

    Build your wealth by choosing the investments your savings go into and change them

    from time to time as you wish.

    Get adequate life insurance cover with a unique built-in terminal illness benefit, so that

    the financial security of your loved ones is assured and your plans are always

    realised.

    Get health, accident and disablement benefits so you can ensure that your wealth-

    building plans are not affected by unexpected medical expenses or loss of earning

    capacity in case of serious ailments, accidents or disablement.

    Grow wealth faster with tax free income, thus making the whole package even more

    attractive.

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    All in all, the Wealthsurance Foundation Plan can be a complete financial plan that puts the

    power of choice in your hands.

    HOW DOES WEALTHSURANCE WORK ?

    Investment and Insurance in a 2-in-1 Account.

    Wealthsurance is a wealth-management account with sub-accounts for investments and

    insurance. It is designed to meet twin goals of wealth-building and insurance protection.

    Wealth building The Wealthsurance Investment Account holds all the investments you

    have chosen. The investments made out of your premium allow you to manage and build

    your wealth.

    Insurance Protection The Wealthsurance Insurance Account holds the insurance

    benefits you have chosen, which allows you to claim benefits in the event of a serious

    ailment, disablement, accident or death

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    My Investment Account

    The premiums you pay are fully invested into the investment options you choose in the

    proportion that you specify.There is no deduction of any allocation charge. IDBI Fortis

    InvestmentBasket contains all the investment options we offer.The balance in your Investment

    Account reflects the wealth built over time from your premium contributions and the returns

    from the investment options chosen by you.

    My Insurance Account

    You can also choose any of the insurance benefits we offer under IDBI Fortis InsuranceBasket.You pay for only those benefits you choose and the charges are deducted from your Investment

    Account.

    3.2.2 INCOMESURANCE - A versatile product that suits every need

    Incomesurance is loaded with lots of benefits which ensure that you get Guaranteed Annual

    Payout along with insurance protection which will help you to reach you goals with full

    confidence. Incomesurance Plan is very flexible and allows you to customise your Plan as per

    your individual and familys future requirements. Moreover it also allows you to choose

    Premium Payment Period, Payout Period, Payout Options and more.

    HOW DOES INCOMESURANCE WORK ?

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    3.2.3 RETIRESURANCE

    Retiresurance is a pension plan without life cover that allows a longer policy term so that thecustomers investment can get the benefit of compounding. The customer has to choose any

    vesting age between 40 -75 years. The vesting age chosen can also be postponed or pre-poned

    within the above range by informing the company 30 days in advance. It is specially for people

    who wish to lead a happy and prosperous life even after their retirement.

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    3.2.4 HOMESURANCE

    The Homesurance Protection Plan is a reducing term plan, which provides insurance cover

    equal to the outstanding balance of your home loan. In the unfortunate event of death of the

    home loan borrower, the insurance cover enables repayment of the home loan liability.

    3.2.5 BONDSURANCE

    Bondsurance is a single premium plan which allows you to make a one-time investment and get

    a guaranteed amount on maturity. You can choose a maturity period of 5 or 10 years for your

    investment. At the end of the chosen period you will receive a guaranteed maturity amount.

    Bondsurance also provides life insurance cover. In case of death before the maturity death, a

    death benefit which is also guaranteed will also be paid. Thus you can also get a life insurance

    cover, while earning an assured return on your investment.

    4. UNIT LINKED INSURANCE PLANS

    Unit linked insurance plan (ULIP) is a life insurance solution that provides the client with the

    benefits of protection and flexibility in investment. It is a solution which provides for life

    insurance where the policy value at any time varies according to the value of the underlying

    assets at the time. The investment is denoted as unit and is represented by the value that it has

    attained called as Net Asset Value (NAV).

    ULIPs are a category of goal-based financial solutions that combine the safety of insurance

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    This is a percentage of the premium appropriated towards charges before allocating the units

    under the policy. This charge normally includes initial and renewal expenses apart from

    commission expenses.

    Mortality Charges

    These are charges to provide for the cost of insurance coverage under the plan. Mortality

    charges depend on number of factors such as age, amount of coverage, state of health etc.

    Fund Management Charges

    These are fees levied for management of the fund(s) and are deducted before arriving at the Net

    Asset Value (NAV) .

    Policy/ Administration Charges

    These are the fees for administration of the plan and levied by cancellation of units. This could

    be flat throughout the policy term or vary at a pre-determined rate

    Surrender Charges

    A surrender charge may be deducted for premature partial or full encashment of units wherever

    applicable, as mentioned in the policy conditions.

    Fund Switching Charge

    Generally a limited number of fund switches may be allowed each year without charge, with

    subsequent switches, subject to a charge. But now a days many insurers offer fund switching

    free of cost.

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    Service Tax Deductions

    Before allotment of the units the applicable service tax is deducted from the risk portion of the

    premium

    ULIPs StructureFund

    Management

    Mortality Charges

    Administration Charges

    Charges

    Premium

    AllocationCharges

    Invested

    Amount

    BREAK UP OF ULIP CHARGES

    4.2 EXAMPLE TO ELABORATE HOW ULIPS WORK

    Client pays annual premium of Rs.20,000

    Deduct 40% as Premium Allocation Charge - Rs.8,000

    Deduct Rs.200 per month as fixed monthly administration expense

    Deduct Rs.100 on the first month as mortality charge

    Balance Rs.11,700 is used to purchase units as per investment choice of the

    customer

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    Investment Fund (Rs.11,700) is used to buy units based upon NAV Values of the

    fund on that Day

    If NAV is Rs.10 on that day then Rs.11,700/10 = 1170 units are purchased

    For the first month the units are cancelled up- front and amount deducted to pay for

    the risk cover and expenses, this is 1/12 th of the annual amount so calculated

    Every month the required no. of units are cancelled to cover mortality charges and

    fixed monthly administration expenses

    Suppose in the second month the NAV is 12, 16.6666 units cancelled at Rs.12/-, to

    generate Rs.200/- so 963.3334 Units Remain

    This is repeated every month till end of the year

    Client pays renewal annual premium of Rs.20,000

    Deduct 20% as 2nd year Premium Allocation Charge - Rs.4,000

    Deduct Rs.200 per month as fixed monthly administration expenses

    Deduct Rs.80 on the first month of the second yr. as mortality charge

    Suppose in the second year beginning the NAV is Rs.14 Per Unit, so Rs.13,720/14

    = 980 Units are purchased

    So total units= units at end of first year + 980 units

    4.3 ADVANTAGES OF ULIPS

    ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The

    plan is a one stop solution for everything the customers want. Unit Linked Insurance Plans

    (ULIPs) are different from traditional plans purely because, they are much more transparent,

    various charges are shared with the customer before the sale of the product, so as to enable the

    customer to make an informed decision.

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    Customers have the flexibility to choose their life cover. Also the customers have the choice of

    multiple fund options based on their risk appetite, thereby enabling an investor to make the

    desired returns from the investment.

    The following are some of the advantages of Unit linked plans:

    a. Life protection

    b. Investment and Savings

    Market linked fund based on risk profile

    Switch option

    Premium redirection

    Automatic Transfer Plan(ATP)

    c. Tax Planning

    d. Flexibility of cover continuance

    e. Transparency

    f. Extra protection with riders

    Death due to accident

    Disability

    Critical illness

    g. Liquidity

    Partial withdrawals during the term

    At maturity

    h. Variable investment options

    i. Premium holiday

    j. Allow Top-ups

    5. COMPARATIVE SECONDARY DATA ANALYSIS OF UNITLINKED INSURANCE PLANS (ULIPs)

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    5.1 IDBI FORTIS LIFE INSURANCE COMPANYThere are many financial plans that can meet different needs of yours, but very few can offer

    comprehensive investments and protection benefits on a single platform. This is the very reason

    for choosing Wealthsurance the flagship product of IDBI Fortis, an Unit linked insurance plan

    (ULIP), which we have taken up for our comparative study and analysis with the other

    prominent ULIP plans of the selected players. Also since the Wealthsurance Plan was

    introduced in 2008, for a fair comparative evaluation , we have selected ULIP plans of the

    selected players which were introduced in the market at the same time.

    As discussed earlier we would be comparing the Unit Linked Insurance Plans (ULIPs) of the

    companies selected with those of IDBI FORTIS and then make a detailed analysis. This analysis

    would be well supported by the primary data analysis and then the final results would be

    analysed.

    FEATURE WEALTHSURANCEMin/Max Entry Age 1 Month/65 YearsMin/Max Maturity Age 75 YearsMin Premium Rs. 20,000 yearly/Rs. 10,000 for

    half yearly /Rs. 5,000 for

    quarterly/ Rs. 2,000 for

    monthly mode

    Term Term can be chosen in multiplesof 5 years starting from a minterm of 10 years.

    Fund Options 10 Fund Options Monthly Guaranteed

    Interest Fund Guaranteed Retun Funds Dynamic Guaranteed

    Funds Market Fund Options

    Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund

    Asset Allocator Funds

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    Fund Management Charges 1.25% p.a. + investment

    guarantee

    charge of 0.15% p.a. for MGIF. 1.25% p.a. + 0.25% p.a.

    for GRF 1.35% p.a. + 0.90% p.a.

    for DGF 1.35% p.a. for Market

    Funds. No FMC for Asset Allocator

    Fund.

    Partial Withdrawal Allowed provided fund value afterthe partial withdrawal is not less

    than two times the annual regularpremium or 50% of initial single

    premium subject to a minimum of

    Rs 20,000 in case of a single

    premium policy.

    Increase of sum assured on top -ups Whenever top-up premiums are

    paid, sum insured will

    automatically increase by 125%

    of the top-up premium paid.

    Premium allocation charges NilAdditional allocation on premium Rs 50,000- Rs 99,999 :

    0.5% Rs 100000- Rs 4,99,999 :

    1.5% Rs 5,00,000 + :

    2.5%*

    Policy Administration charges Monthly charge expressed as

    a percentage of sum insured

    Varies by premium paymentterm and policy year*

    Surrender charges Based on policy year and

    number of annual premiums

    paid.

    No surrender charge after 5thyear. *

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    Riders Life & Terminal illness benefit,Accidental death benefit,Accidental death & disablementbenefit, Major diseases benefit,Hospital cash benefit, Waiver of

    premium benefit.Mortality Charges Mortality and Terminal Illness

    Charges are calculated on theSum at Risk which is SumInsured - Fund Value. These arededucted at the beginning ofeach month by cancellation ofunits in your InvestmentAccount*

    Maturity benefits Maturity Benefit is equal to the

    Fund Value in your Investment

    account on the date of maturity.

    Tax benefits Contributions by way of premiumsare eligible for deduction under

    Sec 80C. Insurance charges for

    health benefits are eligible for

    deduction under Sec 80D. Benefits

    are tax-free under

    Sec 10(10D), allowing you to earntax-free income and benefits.

    Other benefits Free switching b/w Funds, Planflexibility.

    Additional allocation Premium (IDBI Fortis)

    Policy Administration Charges (IDBI Fortis)

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    Mortality Charges (IDBI Fortis)

    Surrender Charges (IDBI Fortis)

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    5.2 TATA AIG vsIDBI FORTIS

    FEATURE TATA AIG LIFE LAKSHYAPLUS

    WEALTHSURANCE

    Min/Max Entry

    Age

    30 Days/60 Years 1 Month/65 Years

    Max Maturity Age 75 Years 75 YearsMin Premium Rs. 18,000 p.a. Rs. 20,000 yearly/Rs.

    10,000 for half

    yearly /Rs. 5,000 for

    quarterly/ Rs. 2,000

    for monthly mode

    Term 15/20/25/30 Years -

    Min PremiumPayment Term Same as Policy Term Term can be chosen inmultiples of 5 yearsstarting from a minterm of 10 years.

    Fund Options 8 Fund Options Top 50 Fund

    Top 200 Fund

    Aggressive Flexi

    Fund

    Stable Flexi Fund

    Bond Fund

    Large Cap Equity

    Fund

    Infrastructure

    Fund

    Super Select

    Equity Fund

    10 Fund Options Monthly

    GuaranteedInterest Fund

    GuaranteedRetun Funds

    Dynamic

    GuaranteedFunds Market Fund

    Options Equity Growth

    Fund Nifty Index

    Fund Midcap Fund

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    Bond Fund Income Fund Liquid Fund

    Asset AllocatorFunds

    FundManagementCharges

    A FMC of 1.20 % p.a.of the fund value is

    charged for each of the

    8 funds.

    1.25% p.a. +investment

    guarantee charge

    of 0.15% p.a. will

    be appropriated

    while computing

    the Net Asset

    Value of the

    MGIF.

    1.25% p.a. +0.25% p.a. forGRF

    1.35% p.a. +0.90% p.a. forDGF

    1.35% p.a. forMarket Funds.

    No FMC AssetAllocator

    Partial

    Withdrawal

    Withdrawals from

    Regular Premium

    Account are allowed

    from the 6th policy

    year and only after the

    insured has attained

    18 years of age. Min

    partial withdrawal is

    Rs.5,000 and the Total

    Fund Value after any

    withdrawal should besuch that the

    Surrender value does

    not fall below an

    amount equal to One

    Annualised Regular

    Premium.There are no

    partial withdrawal

    Allowed provided fund

    value after the partial

    withdrawal is not less

    than two times the

    annual regular

    premium or 50% of

    initial single premium

    subject to a minimum

    of Rs 20,000 in case of

    a single premium

    policy.

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    charges under this

    product.

    Increase of sumassured on top

    -ups

    You have the flexibility

    to pay additional

    premium as "Top-Up

    Premium" at any time

    during the policy term

    without taking

    additional Sum

    Assured.

    Whenever top-uppremiums are paid,

    sum insured willautomatically increaseby 125% of the top-uppremium paid.

    Premiumallocation

    charges

    This will be deducted

    from the premium

    amount at the time of

    premium payment &

    units will be allocated

    thereafter.

    1st Yr- 30% of

    Annualised Premium,

    0% from 2nd Yr o/w.

    Top-up premium

    allocation charge: 1.5%

    of the Top-Up

    Premium.

    No premium allocationcharge for all policies.

    Additionalallocation onpremium

    The Additional

    allocation is additional

    premium credited to

    the respective funds

    every year till end of

    policy term, begins

    from the third policy

    anniversary of your

    policy.*

    Additional Allocation is

    not available on Top-

    Up Premium.

    Rs 50,000- Rs99,999 : 0.5%

    Rs 100000- Rs4,99,999 : 1.5%

    Rs 5,00,000 +: 2.5%*

    Policy A monthly PMC of Monthly charge

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    Administrationcharges

    Re.1.1 per Rs.1000

    Basic Sum Assured will

    be deducted by

    cancelling Units at Unit

    Price from the Fund

    Value of the Policy +

    there will be Sum

    Assured related charge

    of Rs. 4 p/m per

    Rs.1000 of Basic Sum

    Assured for the first 2

    policy years.

    expressed as a

    percentage of sum

    insured

    Varies by premium

    payment term andpolicy year*

    Switching Charge There are 12 free

    switches per policy

    year. Thereafter a

    charge of Rs.100/- per

    switch will be

    applicable.

    No Switching charges.Any Number ofswitches can be madein a month .

    Surrendercharges

    Policy can be

    surrendered any time

    during the term.

    However

    when the request isreceived in first three

    policy years, the

    surrender value will be

    frozen as on date of

    surrender and shall be

    payable at the end of

    three policy years.

    These will be subject

    to the surrendercharges applicable at

    that time of

    surrender.*

    Based on policy year

    and number of annual

    premiums paid.

    No surrender charge

    after 5th year. *

    Riders Death benefit- In case

    of unfortunate death

    of the insured while

    Life & Terminal illnessbenefit, Accidentaldeath benefit,

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    the policy is in

    force & before the

    maturity date, the

    nominee will get

    Higher of (I) the SumAssured net of all

    Deductible Partial

    Withdrawals, if any,

    from the Regular

    Premium Account , or

    (ii) the Regular

    Premium Fund Value at

    applicable unit price.

    Accidental death &disablement benefit,Major diseases benefit,Hospital cash benefit,Waiver of premium

    benefit.

    Mortality Charges Mortality charge is theamount of insurance

    cover for the month

    multiplied by the

    applicable Mortality

    Charges for the month,

    based on the age of

    the Life Assured. It is

    deducted on a monthly

    basis on the life cover.Indicative charges per

    thousand Sum Assured

    for a sample age are as

    shown below.*

    Mortality and TerminalIllness Charges are

    calculated on the Sum

    at Risk which is

    defined as Sum

    Insured minus Fund

    Value. Mortality and

    Terminal Illness

    Charges are deducted

    at the beginning ofeach month by

    cancellation of units in

    your Investment

    Account*

    Maturity benefits On survival to the end

    of the policy term, you

    will not only receive

    the Total Fund Value

    which is equal to thevalue of the Regular

    Premium Account plus

    the value of the Top-

    Up Premium Account(if

    applicable) valued at

    applicable unit price

    but also the

    Maturity Benefit isequal to the FundValue in yourInvestment account onthe date of maturity.

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    Guaranteed Maturity

    Addition of 8% of your

    Regular Premium Fund

    Value.

    Tax benefits Premiums paid underthis plan are eligible

    for tax benefits under

    5 section 80C of the

    Income Tax Act, 1961+

    life insurance proceeds

    enjoy tax benefits as

    per section 10(10D) of

    the said Act.

    Contributions by way ofpremiums are eligible for

    deduction under Sec

    80C. Insurance charges

    for health benefits are

    eligible for deduction

    under Sec 80D. Benefits

    are tax-free under

    Sec 10(10D), allowing

    you to earn tax-free

    income and benefits.

    Other Remark Optimize market

    returns by investing

    through Systematic

    Money Allocation &

    Regular Transfer

    Investment (SMART).

    Flexibility to Inc/ Dec

    the Top-up Sum

    Assured. Flexibility of

    Premium Mode.

    Flexibility To Get

    additional Cover under

    Tata AIG Life

    Accidental Death

    Benefit Limited

    Underwriting Rider

    Free switching b/wFunds, Plan Flexibility.

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    5.3 HDFC STANDARD vs IDBI FORTIS

    FEATURE HDFC SIMPLILIFE WEALTHSURANCEMin/Max EntryAge

    18 /45 Years 1 Month/65 Years

    Max Maturity Age 60 Years 75 YearsMin Premium Rs. 15,000 (Annual)

    Rs. 8,000 (Half- Yearly)

    Rs. 20,000 yearly/Rs.

    10,000 for half

    yearly /Rs. 5,000 for

    quarterly/ Rs. 2,000for monthly mode

    Min PremiumPayment Term

    -

    Min/Max Term 15/20 Years Term can be chosen inmultiples of 5 yearsstarting from a minterm of 10 years.

    Fund Options 7 Fund Options Liquid Fund

    Options II

    Stable Managed

    Fund II

    Secure Managed

    Fund II

    Defensive

    Managed Fund II

    10 Fund Options Monthly

    GuaranteedInterest Fund

    GuaranteedRetun Funds

    DynamicGuaranteedFunds

    Market Fund

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    Balanced

    Managed Fund II

    Equity Managed

    Fund II

    Growth Fund II

    Options Equity Growth

    Fund Nifty Index

    Fund

    Midcap Fund Bond Fund Income Fund Liquid Fund

    Asset AllocatorFunds

    FundManagementCharges

    A fund management

    charge of 1.35% per

    annum will be

    applicable. There will

    be an additionalcharge for the cost of

    investment guarantee

    of 0.10% per annum.

    These will be made by

    adjustment to the NAV.

    1.25% p.a. +

    investment

    guarantee charge

    of 0.15% p.a. will

    be appropriatedwhile computing

    the Net Asset

    Value of the

    MGIF.

    1.25% p.a. +0.25% p.a. forGRF

    1.35% p.a. +0.90% p.a. for

    DGF 1.35% p.a. for

    Market Funds. No FMC Asset

    AllocatorPartialWithdrawal

    From 6th policy year

    onwards, 1 partial

    withdrawal allowed

    every year, subject to

    a max 20% of the Fund

    Value as on the date ofpartial withdrawal. The

    minimum amount is

    Rs.2000 .These partial

    withdrawals will be

    free ofcharge. Also

    this will have an

    Allowed provided fund

    value after the partial

    withdrawal is not less

    than two times the

    annual regular

    premium or 50% ofinitial single premium

    subject to a minimum

    of Rs 20,000 in case of

    a single premium

    policy.

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    impact on the Sum

    Assured.

    Increase of sumassured on top

    -ups

    Top Up premium is not

    allowed under this

    product.

    Whenever top-uppremiums are paid,

    sum insured willautomatically increaseby 125% of the top-uppremium paid.

    Premiumallocationcharges

    This will be deducted

    from the premium

    amount at the time of

    premium payment &

    units will be allocated

    thereafter.*

    No premium allocationcharge for all policies.

    Additionalallocation onpremium

    On maturity, there will

    be an Additional

    Allocation to the

    policy. This will be

    calculated as 3% of the

    Fund Value on the date

    of maturity.

    Rs 50,000- Rs99,999 : 0.5%

    Rs 100000- Rs4,99,999 : 1.5%

    Rs 5,00,000 +: 2.5%*

    PolicyAdministration

    charges

    0.3% of the original

    annualised premium

    per month.

    Monthly charge

    expressed as a

    percentage of sum

    insured

    Varies by premiumpayment term andpolicy year*

    Switching Charge 24 switches will begiven free in a policyyear & any additionalswitch will be charged

    Rs 100 per switch.

    No Switching charges.Any Number ofswitches can be madein a month .

    Surrendercharges

    The Surrender Value

    where 3 full years'

    premiums have not

    been paid will be 30%

    of the Fund Value.

    The Surrender Values

    Based on policy year

    and number of annual

    premiums paid.

    No surrender charge

    after 5th year. *

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    where 3 full years'premiums have beenpaid- see table below*

    Riders Death benefit Life & Terminal illnessbenefit, Accidental

    death benefit,Accidental death &disablement benefit,Major diseases benefit,Hospital cash benefit,Waiver of premiumbenefit.

    Mortality Charges Mortality charges will

    be deducted on a

    monthly basis on the

    life cover. Life cover is

    the difference between

    the Sum Assured and

    the Fund Value at the

    time of deduction of

    charges. Indicative

    charges per thousand

    Sum Assured

    for a healthy male andfemale life are asshown below.*

    Mortality and Terminal

    Illness Charges are

    calculated on the Sum

    at Risk which is

    defined as Sum

    Insured minus Fund

    Value. Mortality and

    Terminal Illness

    Charges are deducted

    at the beginning of

    each month by

    cancellation of units in

    your Investment

    Account*

    Maturity benefits At maturity, the higher

    of the Fund Value and

    Guaranteed Value as

    on the maturity date,

    along with the

    Additional Allocation

    shall be payable.*

    Maturity Benefit isequal to the FundValue in yourInvestment account onthe date of maturity.

    Tax benefits Premium and anybenefit amount

    received under this

    policy will be eligible

    for the tax

    benefit as per the

    prevailing Income Tax

    Contributions by way ofpremiums are eligible for

    deduction under Sec

    80C. Insurance charges

    for health benefits are

    eligible for deduction

    under Sec 80D. Benefits

    are tax-free under

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    laws. Sec 10(10D), allowingyou to earn tax-free

    income and benefits.

    Other Remark No Plan flexibility, Get

    the benefit of thehighest NAV recorded

    on a daily basis, in the

    first 7 years of the

    fund, at maturity. If

    there are any policy

    alterations during the

    policy term, they will

    be subject to a

    miscellaneous charge

    of Rs. 250 per

    alteration.

    Free switching b/w

    Funds, Plan Flexibility.

    5.4 LIC vs IDBI FORTIS

    FEATURE LIC Market Plus -1 WEALTHSURANCE

    Min/Max Entry

    Age

    18 Years/65 Years 1 Month/65 Years

    Min/Max

    Maturity Age

    40 Years/75 Years 75 Years

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    Min Premium

    Rs. 5000 p.a. for

    deferment term of 20

    years & +

    Rs 10000 p.a. for

    term of 15-19 years

    Rs 15000 p.a. for

    term of 10-14 years

    Rs. 20,000 yearly/Rs.

    10,000 for half yearly

    /Rs. 5,000 for quarterly/

    Rs. 2,000 for monthly

    mode

    Min Premium

    Payment Term

    Term

    -

    10 years Regular

    Premium/ 5 Years

    -Single

    Term can be chosen in

    multiples of 5 years

    starting from a min term

    of 10 years.

    Fund Options 4 Fund Options 10 Fund Options

    Bond Fund

    Secured Fund

    Balanced Fund

    Growth Fund

    Monthly Guaranteed

    Interest Fund

    Guaranteed Return

    Funds

    Dynamic Guaranteed

    Funds

    Market Fund Options

    - Equity Growth Fund

    - Nifty Index Fund

    - Midcap Fund

    - Bond Fund

    - Income Fund

    - Liquid Fund

    Asset Allocator Funds

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    Fund

    Management

    Charges

    0.50% p.a. of Unit

    Fund for Bond Fund

    1.25% p.a. +

    investment guarantee

    0.60% p.a. of Unit

    Fund for SecuredFun

    0.70% p.a. of Unit

    Fund for Balanced

    Fund

    0.80% p.a. of Unit

    Fund for Growth

    Fund

    charge of 0.15% p.a. will

    be appropriated whilecomputing the Net Asset

    Value of the MGIF.

    1.25% p.a. + 0.25%

    p.a. for GRF

    1.35% p.a. + 0.90%

    p.a. for DGF

    1.35% p.a. for Market

    Funds.

    No FMC for Asset

    Allocator Fund.

    Partial

    Withdrawal

    No Partial Withdrawal

    will be allowed

    Allowed provided fund

    value after the partial

    withdrawal is not less than

    two times the annual

    regular premium or 50% of

    initial single premiumsubject to a minimum of Rs

    20,000 in case of a single

    premium policy.

    Increase of

    sum assured

    on top -ups

    No Such Increase Whenever top-up

    premiums are paid, sum

    insured will

    automatically increase

    by 125% of the top-up

    premium paid.

    Premium

    allocation

    charges

    Single Premium Policy

    : 3.3%

    No premium allocation

    charge for all policies.

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    Riders Death benefit, Life

    cover option,

    Accidental benefit

    option, Critical

    benefit option rider

    Life & Terminal illness

    benefit, Accidental death

    benefit, Accidental death

    & disablement benefit,

    Major diseases benefit,

    Hospital cash benefit,

    Waiver of premium

    benefit.

    Maturity

    benefits

    Maturity Benefit is

    equal to the Fund

    Value in your

    Investment account

    on the date of

    maturity.

    Maturity Benefit is equal

    to the Fund Value in

    your Investment account

    on the date of maturity.

    Tax benefits

    Contributions by way of

    premiums are eligible

    for deduction under Sec

    80C. Benefits are tax-

    free under Sec 10(10D),

    allowing you to earn

    tax-free income and

    benefits.

    Contributions by way of

    premiums are eligible for

    deduction under Sec 80C.

    Insurance charges for

    health benefits are eligible

    for deduction under Sec

    80D. Benefits are tax-free

    under

    Sec 10(10D), allowing you

    to earn tax-free income

    and benefits.

    Other Remark No Free switching

    b/w Funds, No Plan

    FLexibilty, An

    alteration such as

    reduction in policy

    term , change in

    premium mode

    subject to a charge of

    Rs. 50/-. A service tax

    levied on all of the

    above policy charges.

    Allocation charge for

    top up-1.25%

    Free switching b/w

    Funds, Plan FLexibilty

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    5.5 ICICI PRUDENTIAL vs IDBI FORTIS

    FEATURE ICICI PRU PINNACLE WEALTHSURANCEMin/Max EntryAge

    8 /65 Years 1 Month/65 Years

    Max Maturity Age 75 Years 75 YearsMin Premium Rs. 50,000 p.a. Rs. 20,000 yearly/Rs.

    10,000 for halfyearly /Rs. 5,000 for

    quarterly/ Rs. 2,000

    for monthly mode

    Min PremiumPayment Term

    3 Years -

    Term 10 years Term can be chosen inmultiples of 5 yearsstarting from a minterm of 10 years.

    Fund Options 1 Fund OptionPinnacle Fund*-The investment

    objective of the fund is

    to generate optimal

    returns through an

    actively managed

    equity portfolio while

    using debt instruments

    to manage the

    guarantee.

    10 Fund Options Monthly

    GuaranteedInterest Fund

    GuaranteedRetun Funds

    DynamicGuaranteedFunds

    Market FundOptions

    Equity GrowthFund

    Nifty IndexFund

    Midcap Fund Bond Fund Income Fund Liquid Fund

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    Asset AllocatorFunds

    FundManagementCharges

    A fund management

    charge of 1.35% per

    annum will be

    applicable. There will

    be an additional

    charge for the cost of

    investment guarantee

    of 0.10% per annum.

    These will be made by

    adjustment to the NAV.

    1.25% p.a. +

    investment

    guarantee charge

    of 0.15% p.a. will

    be appropriated

    while computing

    the Net Asset

    Value of the

    MGIF.

    1.25% p.a. +0.25% p.a. forGRF

    1.35% p.a. +0.90% p.a. forDGF

    1.35% p.a. forMarket Funds.

    No FMC AssetAllocator

    PartialWithdrawal

    From 6th policy year

    onwards, 1 partial

    withdrawal allowed

    every year, subject toa max 20% of the Fund

    Value as on the date of

    partial withdrawal. The

    minimum amount is

    Rs.2000 .These partial

    withdrawals will be

    free ofcharge. Also

    this will have an

    impact on the Sum

    Assured.

    Allowed provided fund

    value after the partial

    withdrawal is not less

    than two times theannual regular

    premium or 50% of

    initial single premium

    subject to a minimum

    of Rs 20,000 in case of

    a single premium

    policy.

    Increase of sumassured on top-ups

    Top Up premium is not

    allowed under this

    product.

    Whenever top-uppremiums are paid,sum insured willautomatically increaseby 125% of the top-uppremium paid.

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    Premiumallocationcharges

    This will be deducted

    from the premium

    amount at the time of

    premium payment &

    units will be allocated

    thereafter.*

    No premium allocationcharge for all policies.

    Additionalallocation onpremium

    On maturity, there will

    be an Additional

    Allocation to the

    policy. This will be

    calculated as 3% of the

    Fund Value on the date

    of maturity.

    Rs 50,000- Rs99,999 : 0.5%

    Rs 100000- Rs4,99,999 : 1.5%

    Rs 5,00,000 +: 2.5%*

    PolicyAdministrationcharges

    The PMC is apercentage of the

    annual premium and

    will be charged only in

    the first 3 policy years,

    regardless of the

    premium payment

    status. These charges

    will be deducted by

    cancellation of units.*

    Monthly chargeexpressed as a

    percentage of sum

    insured

    Varies by premiumpayment term andpolicy year*

    Switching Charge N.A No Switching charges.Any Number ofswitches can be madein a month .

    Surrendercharges

    The Surrender Value

    where 3 full years'

    premiums have not

    been paid will be 30%

    of the Fund Value.

    The Surrender Valueswhere 3 full years'premiums have beenpaid- see table below*

    Based on policy year

    and number of annual

    premiums paid.

    No surrender charge

    after 5th year. *

    Riders Death benefit Life & Terminal illnessbenefit, Accidentaldeath benefit,

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    Accidental death &disablement benefit,Major diseases benefit,Hospital cash benefit,Waiver of premium

    benefit.Mortality Charges Mortality charges will

    be deducted on a

    monthly basis on the

    life cover. Life cover is

    the difference between

    the Sum Assured and

    the Fund Value at the

    time of deduction of

    charges. Indicative

    charges per thousand

    Sum Assured

    for a healthy male andfemale life are asshown below.*

    Mortality and Terminal

    Illness Charges are

    calculated on the Sum

    at Risk which is

    defined as Sum

    Insured minus Fund

    Value. Mortality and

    Terminal Illness

    Charges are deducted

    at the beginning of

    each month by

    cancellation of units in

    your Investment

    Account*

    Maturity benefits At maturity, the higher

    of the Fund Value and

    Guaranteed Value as

    on the maturity date,

    along with the

    Additional Allocation

    shall be payable.*

    Maturity Benefit isequal to the FundValue in yourInvestment account on

    the date of maturity.

    Tax benefits Premium and any

    benefit amount

    received under this

    policy will be eligible

    for the tax

    benefit as per theprevailing Income Tax

    laws.

    Contributions by way of

    premiums are eligible for

    deduction under Sec

    80C. Insurance charges

    for health benefits are

    eligible for deduction

    under Sec 80D. Benefitsare tax-free under

    Sec 10(10D), allowing

    you to earn tax-free

    income and benefits.

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    Other Remark No Plan flexibility, Get

    the benefit of the

    highest NAV recorded

    on a daily basis, in the

    first 7 years of the

    fund, at maturity. If

    there are any policy

    alterations during the

    policy term, they will

    be subject to a

    miscellaneous charge

    of Rs. 250 per

    alteration.

    Free switching b/wFunds, Plan Flexibility.

    5.6 FUND OPTIONS AVAILABLE UNDER ULIPsMost insurers offer a wide range of funds to suit ones investment objectives, risk profile and

    time horizons. Different funds have different risk profiles. The potential for returns also varies

    from fund to fund. The following are some of the common types of funds available along with

    an indication of their risk characteristics.

    FUND Nature of investments Risk category

    Equity Funds Primarily invested in

    company

    stocks with the general

    aim of capital appreciation.

    High

    Income, Fixed Interest

    andBond Funds

    Invested in corporate

    bonds,government securities and

    other fixed income

    instruments.

    Medium

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    Cash Funds Sometimes known as

    Money Market Funds

    invested in cash, bank

    deposits and money market

    instruments

    Low

    Balanced Funds Combining equity

    investment

    with fixed interest

    instruments

    Medium

    5.7 COMPARISON OF EQUITY FUNDS(2009-10)

    5.7.1 EQUITY OUTLOOK

    Fiscal year 2009-10 was a stupendous year for the Indian equity markets. Booming growth in

    India's economy, robust quarterly results from companies and consistent investments from FIIs

    fuelled the rise over the past year. From the point of extreme pessimism in March 2009,

    investors' money almost doubled. Sensex gained 80.54% and Nifty rose 73.76%. Broader

    market indices outpaced the key benchmarks by a huge margin.

    BSE Midcap rose 130.23% while BSE Smallcap gained 161.73%. FIIs parked in a whopping Rs

    1.10 lakh crore in the Indian stock markets for the FY

    09-10.

    Spirits were lifted by the stability and continuity at the Centre with the Congress-led UPA

    government taking charge last year. The momentum continued, supported by the earnings

    upgrade on the back of better growth guidance from companies and the strong performance in

    the past few quarters. Signs of recovery in global markets also helped the return of the risk

    appetite.

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    Optimism continued to build up as the government tabled the framework for India's growth at

    the Union Budget. FM Pranab Mukherjee announced plans to bring down fiscal deficit from

    6.5% of GDP in FY10 to 4.8% in FY12 and 4.1% in the following year. Allocations to

    infrastructure development and direct tax concessions were cheered by the market. Meanwhile,

    the gradual withdrawal of stimulus packages was inevitable, given

    the need for fiscal consolidation. On the other hand, RBI raising LAF lending rates by 25 bps

    was on expected lines, though the timing surprised the

    market.

    Equity markets are expected to react positively to earning upgrades and robust liquidity

    flows.However, high inflation, interest rates tightening and high fiscal deficit numbers can act

    as dampener for the markets.

    5.7.2 TERMS TO UNDERSTAND

    Normally people and agents just look into one aspect of the funds i.e the returns and make a

    decision.But considering the returns is not enough and while choosing a fund or a company

    various other aspects should be taken into consideration.They are as follows

    RETURNS

    ANNUALISED STANDARD DEVIATION

    SHARPE RATIO

    Fund: This is a collective pool of money created from individual investments such that

    each individual shares risks and rewards in the proportion of their contribution. Since a

    fund is managed as a single investment vehicle, all the investors will face the same risks

    and rewards. A professional fund manager invests the fund according to

    the objective of the fund defined in the offer document or policy document. In case of a

    policyholder who pays premium, a predetermined part of this is used to pay for life

    cover and other expenses. The remaining part of the premium is the investment which is

    put in the various funds (such as Maximiser and Balancer) as per the investors

    instructions. The investor is free to change the allocation of investments at any time

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    during the term of the policy.

    NAV:Net Asset Value of a fund on a given day is the total closing value of the securities

    held in the portfolio of the fund divided by the number of units outstanding. When a

    person invests a sum (say Rs. 10000) in a fund on a certain day when the NAV was Rs. 20

    per unit he is assigned 1000020=500 units. On any given day, the investor can find the

    value of his investment in the fund by multiplying the units he holds by the NAV of the

    day. So if the NAV of the fund has become Rs. 30 per unit, the investor can calculate the

    value of his holdings as 500x30=Rs. 15000. The NAV

    changes with changes in value of investments in the fund.

    Risk: Concept of risk of an investment essentially captures the possibility of loss in that

    investment. Risk, in terms of portfolio management, is defined as variability of the

    returns of a fund or more correctly expected variability. So if fund A and fund B both

    given 10% annualized returns, however fund A gives this same 10% consistently every

    year but fund B gives 3% in one year, 12% in another year and so on but still averages

    10% per annum in the long run, then fund B is said to be more risky than fund A. Risk is

    generally measured as standard deviation or variance of returns. For similar levels of

    returns a rational investor will always choose the least risky asset.

    Returns: Return is the reward one has got for taking risk and giving time. Absolute rate

    of return (or simply return) in a period is the ratio of increase (or decrease) in the NAV of

    the fund at the end of the period over the NAV at the start of the period. Generally when

    reporting for a period longer than 1 year, the return is annualized (generally using the

    CAGR method) for the purpose of comparison. For example

    if in the last 1 year, the NAV of a fund has increased from Rs. 20 to Rs. 25, then absolute

    return (and in this case the annualized return as well) is (25-20)20=25%. If over the last

    2 years, the NAV has grown from Rs. 15 to Rs. 30 then the absolute return in 2 years is

    (30-15)15=100%; however the annualized return, or compound annual growth rate is

    41.4% per annum.

    Benchmark: Every investment has to have a yardstick to evaluate whether it has met the

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    objective of investment. A benchmark is a standard against which the performance of a

    fund can be compared. The benchmark for each fund is predetermined based on the

    investment objective and target asset allocation of the fund. At a macro level, a

    benchmark captures the average returns of all funds which have the same objective and

    funds that perform better than the benchmark can be said to be better than the average.

    Benchmarks can be either those that are readily available in the market or synthetically

    created.The benchmark taken for comparison with Equity funds is the NIFTY 50.

    Debt: Debt or fixed income as an asset class refers to investment in securities that have

    well defined pay offs, and mostly pf a fixed nature or a fixed rate of return for a fixed

    period. Because of the fixed nature of returns debts as an asset class is less risky than

    equity. All securities where the borrower is the government are classified as government

    securities or gifts and have a negligible level of risk of default, i.e., Non-payment. Other

    borrowers have varying levels of risk of default, determined by a neutral third party such

    as CRISIL or Moody by looking at the financial strength of the borrower and being

    described in the rating of the security where AAA is the safest followed by AA+,AA and

    so on. Among debt securities there are various types of instruments viz., money market

    instruments, Certificate of Deposits, Fixed Deposits, Corporate bonds, Gifts, Loans, etc.,

    which have different maturity, risk and reward profiles.

    Equity: Equity investment means holding shares of companies, meaning that the investor

    is taking part ownership of a company rather that lending to the company. As a part owner

    of a business, the shareholder shares all the risks and rewards of the business. Several

    factors lead to appreciation in equity investments - all of which in some way relate to

    current and future prospects of the business of the company, also called fundamentals.

    Because of the variable nature of these factors, equity investments are more risky than

    debt investments, but have historically shown signifantly better returns in the long-run

    (investment horizon greater than 5 years).

    Sharpe Ratio: This is a popular measure of risk adjusted returns. This is an important

    measure because it is inaccurate to compare the returns of funds that have different risk

    profiles or objectives. For instance, fund A may perform better than fund B but this may

    be because it is investing in small cap companies that are more risky. Sharpe

    ratio helps to compare the returns of funds taking into account the riskiness of returns, and

    is defined as reward of investing in a risky asset per unit risk taken. More accurately, it is

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    measured as:

    Sharpe Ratio = Annualized Excess Return/Annualized Std Deviation of Excess Returns

    Excess Return is the difference between the fund return and the risk free rate of return.

    Standard Deviation is a common measure of risk. So a higher Sharpe Ratio means a fund

    has given superior returns (over an asset that has no risk such as

    a government security) for every unit of risk.

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    5.7.3 TATA AIG LIFE EQUITY FUND

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    FUND

    x NAV(1.4.09)

    17.35

    Y NAV(31.3.10) 30.55

    g Growth=((y-x)/x)*100 76.07

    %

    z Annualised Standard

    Deviation(Calculated in

    Excel) 26.12

    %

    r Risk free rate(G sec)

    5%

    s Sharpe Ratio=(g-r)/z

    2.72

    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

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    5.7.4 ICICI PRUDENTIAL EQUITY FUND

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    FUNDx NAV(1.4.09)

    6.4

    Y NAV(31.3.10) 10.62

    g Growth=((y-x)/x)*100 65.94

    %

    z Annualised Standard

    Deviation(Calculated in

    Excel)

    24.56

    %

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 2.48

    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

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    5.7.5 HDFC STANDARD - UNIT LINKED ENDOWMENT

    PLUS EQUITY MANAGED FUND

    5.7.6 RELIANCE GOLDEN

    YEARS PLAN - EQUITY

    FUND

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    FUND

    x NAV(1.4.09) 35.6

    Y NAV(31.3.10)

    63.41

    g Growth=((y-x)/x)*100 78.12

    %

    z Annualised Standard

    Deviation(Calculated in

    Excel)

    22.99

    %

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 3.18%

    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

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    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

    FUND

    x NAV(1.4.09)

    7.95

    Y NAV(31.3.10) 13.38

    g Growth=((y-x)/x)*100

    68.21

    %

    z Annualised Standard

    Deviation(Calculated in

    Excel)

    23.22

    %

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 2.72

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    5.7.7 IDBI FORTIS WEALTHSURANCE EQUITY GROWTH

    FUND

    5.7.8 SBI LIFE HORIZON

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    FUND

    x NAV(1.4.09) 7.01

    Y NAV(31.3.10) 12.87

    g Growth=((y-x)/x)*100 83.60

    %

    z Annualised Standard

    Deviation(Calculated in

    Excel) 26.66

    %

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 2.94

    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

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    5.7.9 Kotak Easy Growth Plans(5 Times)

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    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

    FUND

    x NAV(1.4.09) 21.12

    Y NAV(31.3.10) 35.98

    g Growth=((y-x)/x)*100 70.36

    %

    z Annualised StandardDeviation(Calculated in

    Excel)

    28.98%

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 2.43

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    5.8 ANALYSIS

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    BENCHMARK(NIFTY

    )

    Returns 73.76%

    Standard Dev. 31.11%

    Sharpe Ratio 1.93%

    FUND

    x NAV(1.4.09)

    19.05

    Y NAV(31.3.10) 32.95

    g Growth=((y-x)/x)*100 72.97

    %

    z Annualised Standard

    Deviation(Calculated inExcel)

    26.27

    %

    r Risk free rate(G sec) 5%

    s Sharpe Ratio=(g-r)/z 2.59

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    5.8.1 Returns:

    Fund returns: Fund returns here would be the percentage difference in the NAV

    values between the starting date(1.04.09)and the last day(31.3.10) of the financial

    year.

    Benchmark returns: Benchmark returns here would be the percentage difference in

    the benchmark values between the starting date(1.04.09)and the last day(31.3.10) of

    the financial year.The Benchmark for Equity Funds is NIFTY

    Company Returns(2009-10)NIFTY Returns(2009-

    10)

    IDBI FORTIS 83.60%

    73.76%

    TATA AIG 76.07%

    KOTAK 72.97%

    SBI LIFE 70.36%

    RELIANCE LIFE 68.21%

    HDFC STANDARD 78.12%

    ICICI PRUDENTIAL 65.94%RETURNS EQUITY FUNDS 2009-10

    Comparing the 7 plans above it is clear that IDBI FORTIS has given the highestrreturns this despite being the youngest player

    Therefore if we were to rank these in order of the returns given by the equity funds

    in the past financial year(2009-10) their ranking would be as follows

    1. IDBI Fortis Wealthsurance Equity Growth Fund

    2. HDFC Standard - Unit Linked Endowment Plus Equity Managed Fund

    3. TATA AIG Equity Fund

    4. Kotak Easy Growth Plans(5 Times)

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    5. Sbi Horizon

    6. Reliance Golden Years Plan - Equity Fund

    7. ICICI Prudential

    If we compare these to the benchmark i.e NIFTY we find that 3 out of the 7 funds have beenable to outperform it.These are

    IDBI Fortis Wealthsurance Equity Growth Fund

    HDFC Standard - Unit Linked Endowment Plus Equity Managed Fund

    TATA AIG Equity Fund

    5.8.2 Fund Standard Deviation

    Risk of investing in a fund is identified by the volatility of the funds periodic returns.Standard deviation measures the volatility of the funds returns for a given time period.

    In other words, Fund Standard Deviation for a particular time period gives us the

    deviation from the mean returns, that has occurred for that fund during that time period.

    For e.g. let us assume that the Balanced Fund has generated an average (mean) return of

    11.55% for the last 2 years and that the corresponding standard deviation was 4.44%.

    That means that during the last 2 year time period, the balanced fund return varied

    between 15.99% (i.e. 11.55+ 4.44) and 7.11% (i.e. 11.55-4.44) during 65% of the time.

    Higher the standard deviation, the greater the volatility, and therefore, the greater

    the risk of investing in that fund.

    Thus, an investor has more information available at his disposal to evaluate the quality

    of performance of the fund and how volatile its returns are.

    To carry it a step further, it is highly unlikely that a funds return in any one year will

    be exactly the average. Rather, it will always be either higher or lower than the average.

    Thus, st