PART-I

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INFORMATION ABOUT

ORGANIZATION

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INFORMATION ABOUT ORGANIZATION

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

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

company is marketing life insurance products and unit linked investment plans. From my

research at HDFC SLIC, I found that the company has a lot of competition from other

private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition

from LIC. To compete effectively HDFC SLIC could launch cheaper and more

reasonable products with small premiums and short policy terms (the number of year’s

premium is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000 and

an ideal policy term would be 10 – 20 years.

HDFC must advertise regularly and create brand value for its products and services. Most

of its competitors like Aviva, ICICI, Max, Reliance and LIC use television

advertisements to promote their products. The Indian consumer has a false perception

about insurance – they feel that it would not benefit them if they do not live through the

policy term. Nowadays however, most policies are unit linked plans where a customer is

benefited even if their death does not occur during the policy term. This message should

be conveyed to potential customers so that they readily invest in insurance.

Family responsibilities and high returns are the two main reasons people invest in

insurance. Optimum returns of 16 – 20 % must be provided to consumers to keep them

interested in purchasing insurance.

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On the whole HDFC standard life insurance is a good place to work at. Every new recruit

is provided with extensive training on unit linked funds, financial instruments and the

products of HDFC. This training enables an advisor/sales manager to market the policies

better. HDFC was ranked 13 in the Best Places to Work survey. The company should try

to create awareness about itself in India. In the global market it is already very popular.

With an improvement in the sales techniques used, a fair bit of advertising and

modifications to the existing product portfolio, HDFC would be all set to capture the

insurance market in India as it has around the globe.

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BRIEF HISTORY OF

ORGANIZATION

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BRIEF HISTORY OF ORGANIZATION

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since

emerged as the largest residential mortgage finance institution in the country. The

corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross

premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new

business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000

lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate

head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE

with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing

company in India for the last 27 years.

Royal HDFC is a joint venture between HDFC bank Ltd. and Royal & Sun Alliance Plc.

The Company was one of the first new companies to be granted a license by the IRDA

(Insurance Regulatory and Development Authority) to transact business in the non-life

insurance sector. The Company was incorporated in April 2000, received its certificate to

commence business on October 25, 2000 and formally launched in March 2001.

The Values with which Royal Sundaram works are

- Truth

- Trust

- Teamwork

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- People commitment

- Customer commitment

- Professionalism

Royal Sundaram inherits the undisputed reputation for trust, built by Sundaram Finance

and Royal & Sun Alliance, who have stood for reliability and integrity for years.

At Royal Sundaram the customer is at the center of everything we do. The reason behind

insuring with Royal Sundaram is that we are a professionally managed customer focused

company, toll-free lines for easy access by the customer, appointing of assessors within

24 hours of the accident and claim settlement within 5 working days.

Products / Services Offered

Private Motor

Health & Hospital Cash

Travel

Personal Accident

Home & Household - including personal property

The Company was incorporated in 1954, with the object of financing the purchase of

commercial vehicles and passenger cars.

The company was started with a paid-up capital of Rs.2.00 Lakhs and later went public in

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1972.

The Company's shares were listed in the Madras Stock Exchange in 1972 and in the

National Stock Exchange in January 1998.

Subsequently, the equity shares of the Company have been delisted from Madras Stock

Exchange Limited (MSE) with effect from January 27, 2004, in accordance with SEBI

(Delisting of Securities) Guidelines, 2003, for voluntary delisting

Sundaram Finance Ltd incorporated in 1954 has grown today into one of the most trusted

financial services groups in India.

Today, the activities of the group span savings products like Deposits and Mutual Funds,

Car and Commercial Vehicle Finance, Insurance, Home Loans, Software Solutions,

Business Process Outsourcing, Tire Finance, Fleet Cards and In freight.

Royal Sundaram aims to offer customized non-life insurance products for the individual

and high standards of service in the areas of:

Private Motor

Health & Hospital Cash

Travel

Personal Accident

Home & Household - including personal property

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SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail

investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial

conglomerate with holdings In:

HDFC Standard Life insurance Company- HDFC holds 78.07 %.

HDFC Asset Management Company – HDFC holds 50.1%

HDFC Bank- HDFC holds 22.25%.

Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.

HDFC Chubb General Insurance Company – HDFC holds 74%.

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SNAPSHOT-II

Loan Approvals Rs. 805 billion.

(up to Dec 2007) (US $ 18.30 bn.)

Loan Disbursements Rs.669 billion

(up to Dec. 2007) (US $ 15.20 bn)

Housing Units Financed 2.5 million.

Distribution

Offices 181

Outreach Programs 90

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman

of Housing Development Finance Corporation Limited (HDFC Limited). He joined

HDFC Limited in a senior management position in 1978. He was inducted as a whole-

time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in

1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the

Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since

1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian

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Institute of Technology, Bombay and a Masters Degree in Business Administration from

The American University, Washington DC.

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

STANDARD LIFE

Standard Life is Europe’s largest mutual life assurance company. Standard Life, which

has been in the life insurance business for the past 175 years is a modern company

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surviving quite a few changes since selling its first policy in 1825. The company

expanded in the 19th century from kits original Edinburgh premises, opening offices in

other towns and acquitting other similar businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its management and

has the distinction of being accorded “AAA” rating consequently for the six years by

Standard and Poor.

SNAPSHOT

Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europe’s largest mutual life insurer.

JOINT VENTURE

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

granted license by the IRDA to operate in life insurance sector. Reach of the JV player is

highly rated and been conferred with many awards. HDFC is rated ‘AAA ’ by both

CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and

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Standard and Poor’s. These reflect the efficiency with which HDFC and Standard Life

manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

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

HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of

as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life

Insurance Companies, which offers a range of individual and group insurance solutions.

It is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.) India’s leading housing finance institution and the Standard Life Assurance

Company, a leading provider of financial services from the United Kingdom. Both the

promoters are will known for their ethical dealings and financial strength and are thus

committed to being a long-term player in the life insurance industry- all important factors

to consider when choosing your insurer.

BUSINESS GROWTH

Track Record so far

The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs.

2,856 crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8,77,000 lives year ending March 31, 2007. Company

also declared our 5th consecutive bonus in as many years for our ‘with profit’

policyholders.

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KEY STRENGTH

Financial Expertise

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

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

Range of Solutions

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

customized to specific needs. These group solutions have been designed to offer

complete flexibility combined with a low charging structure.

Strong Ethical Values:

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

with the customers is not allowed.

Most respected Private Insurance Company

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

Magazine Business World for Integrity, Innovation and Customer Care.

With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per

cent annually and presently is of the order of Rs 1560.41 billion (for the financial year

2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross

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Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds

available with LIC for investments are 8% of the GDP.

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

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

part of our population is also subject to weak social security and pension systems with

hardly any old age income security. This in itself is an indicator that growth potential for

the insurance sector in India is immense.

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

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

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

investments of the order of one trillion US dollars. The Insurance sector, to some extent,

can enable investments in infrastructure development to sustain the economic growth of

the country. (Source: www.indiacore.com)

Life insurance, sometimes referred to as life assurance, provides for a payment of a sum

of money upon the death of the insured. In addition, life insurance can be used as a means

of investment or saving.

An agreement that guarantees the payment of a stated amount of monetary benefits upon

the death of the insured

Insurance in which the risk insured against is the death of a particular person, the insured,

upon whose death while the policy is in force, the insurance company agrees to pay a

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stated sum or income to the beneficiary.

Insurance paid to named beneficiaries when the insured person dies; "in England they call

life insurance life assurance”

Insurance policy that pays a death benefit to beneficiaries if the insured dies. In return

for this protection, the insured pays a premium, usually on an annual basis. Term

insurance pays off upon the insured's death but provides no buildup of cash value in the

policy. Term premiums are cheaper than premiums for cash value policies such as whole

life, variable life, and universal life, which pay death benefits and also provide for the

buildup of cash values in the policy. The cash builds up tax-deferred in the policy and is

invested in stocks, bonds, real estate, and other investments. Policyholders can take out

loans against their policies, which reduce the death benefit if they are not repaid. Some

life insurance provides benefits to policyholders while they are still living, including

income payments. See also Single Premium Life Insurance.

HISTORICAL PERSPECTIVE

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

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

charged for Indian lives than the non - Indian lives, as Indian lives were considered more

risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It

was the first company to charge the same premium for both Indian and non-Indian lives.

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

business in India, on the other hand, can trace its roots to Triton Insurance Company

Limited, the first general insurance company established in the year 1850 in Calcutta by

the British. Till the end of the nineteenth century insurance business was almost entirely

in the hands of overseas companies.

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

Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the

1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance

companies.

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

provided strict State Control over the insurance business. The insurance business grew at

a faster pace after independence. Indian companies strengthened their hold on this

business but despite the growth that was witnessed, insurance remained an urban

phenomenon.

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

provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it would

create the much needed funds for rapid industrialization. This was in conformity with the

Government's chosen path of State led planning and development.

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

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

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insurance industry was nationalized in 1972. With this, nearly 107 insurers were

amalgamated and grouped into four companies- National Insurance Company, New India

Assurance Company, Oriental Insurance Company and United India Insurance Company.

These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

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

the life insurance business.

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

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

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

objective of protecting the interests of the insuring public.

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

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

Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

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INDUSTRY REFORMS

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

Parliament in December 1999. The IRDA since its incorporation as a statutory body in

April 2000 has fastidiously stuck to its schedule of framing regulations and registering

the private sector insurance companies. Since being set up as an independent statutory

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

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

insurance sector and in particular the life insurance companies was the launch of the

IRDA online service for issue and renewal of licenses to agents. The approval of

institutions for imparting training to agents has also ensured that the insurance companies

would have a trained workforce of insurance agents in place to sell their products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium

income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume

of LIC's business increased in the last fiscal year (2006-2007) compared to the previous

one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a

year's time. The figures for the first two months of the fiscal year 2007-08 also speak of

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the growing share of the private insurers. The share of LIC for this period has further

come down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have entered

the market. The restriction on these companies is that they are not allowed to have more

than a 26% stake in a company’s ownership.

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

billion have poured into the Indian market and 19 private life insurance companies have

been granted licenses.

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

private insurance companies to sign up Indian customers faster than anyone expected.

Indians, who had always seen life insurance as a tax saving device, are now suddenly

turning to the private sector and snapping up the new innovative products on offer. Some

of these products include investment plans with insurance and good returns (unit linked

plans), multi – purpose insurance plans, pension plans, child plans and money back plans.

(www.wikipedia.com)

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PRODUCTS AND POLICIES

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PRODUCTS AND POLICIES

TYPES OF LIFE INSURANCE POLICIES

TERM INSURANCE

Term life insurance is the simplest and least expensive type, as it pays benefits only upon

the policy holder's death. With annual renewable term insurance, the policy holder pays a

low premium at first, which increases annually as he or she gets older. With level term

insurance, the premium amount is set for a certain number of years, then increases at the

end of each time period. Experts recommend that people who select term insurance make

sure that their policies are convertible, so they can switch to a cash-value plan later if

needed. They also should purchase a guaranteed renewable policy, so that their coverage

cannot be terminated if they have health problems. Term insurance typically works best

for younger people with children and limited funds who are not covered through an

employer. This type of policy enables such a person's heirs to cover mortgage and college

costs, estate taxes, and funeral expenses upon his or her death.

WHOLE LIFE INSURANCE

With whole life insurance, the policy holder pays a level premium on an annual basis.

The policy usually covers until the end of the person's life—age 90 or 100. In most cases,

the policy holder is overcharged for the premium, and the extra amount goes into an

interest-bearing dividend account known as a cash value account. The individual can use

the money in this account to pay future premiums, or can withdraw it or borrow against it

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to cover living expenses. With a variable whole life policy, the individual controls the

investments made with his or her cash value account. Selecting certain types of

investments, such as mutual funds, may allow the policy holder to increase the balance in

the account significantly. Regardless of the performance of the investments, however, the

amount of the insurance benefit can never drop below its original value. When choosing a

whole life policy, experts note, it is important to analyze the fund's past performance and

inquire about commissions and hidden costs. Although whole life insurance can provide

added security upon retirement, it should not be considered a replacement for retirement

savings. In fact, Janecek revealed that, on the average, whole life policy holders only

yielded between 2 and 4.5 percent on their investments over a twenty-year period.

UNIVERSAL LIFE INSURANCE

Universal life insurance was introduced in the 1980s as a higher-interest alternative to

whole life insurance. Universal life premiums are based not only on the cost of the

insurance, but also on the interest rate offered on investments. Still, they are usually less

expensive than whole life policies. Universal life policies provide individuals with a

wider array of investment choices and higher projected interest rates. They are essentially

similar to a term policy with a fixed rate of interest guaranteed for a year at a time.

CURRENT ASSUMPTION LIFE INSURANCE.

Current assumption life insurance features a fixed annual premium for the duration of the

plan. This type of policy pays a set interest rate on premiums received, less the actual cost

of the insurance. They can be useful as a tax-deferred investment vehicle, since they

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usually pay 2 to 4 percent more than banks. Policy holders may elect to overpay their

premiums early in the plan period to accumulate cash value. They can withdraw or

borrow from the funds later for any purpose, including retirement income, or can use the

cash value to pay the premiums for the remainder of the plan period.

RIDERS AND OPTIONS

Most types of life insurance policies give individuals the opportunity to add optional

coverage, or riders. One popular option is accelerated benefits (also called living

benefits),

which pays up to 25 percent of the policy value to the holder prior to their death if they

are struck by a serious illness. Another option, known as a waiver of premium, allows an

individual to continue coverage without paying premiums if he or she becomes disabled.

Many policies also provide an accidental death and dismemberment option, which pays

twice the amount of the policy if the insured dies or loses the use of limbs as a result of

an accident.

HISTORY OF LIFE INSURANCE

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil

started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company

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started its business.

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

the life insurance business.

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

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

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

objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the

central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,

1956, with a capital contribution of Rs. 5 crores from the Government of India.

THE KEY FEATURES OF LIFE INSURANCE

INDUSTRY

Nomination:- When one makes a nomination, as the policyholder you continue to be the

owner of the policy and the nominee does not have any right under the policy so long as

you are alive. The nominee has only the right to receive the policy monies in case of your

death within the term of the policy.

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Assignment :- If your intention is that your policy monies should go only to a particular

person, you need to assign the policy in favor of that person

Death Benefit :- The primary feature of a life insurance policy is the death benefit it

provides. Permanent policies provide a death benefit that is guaranteed for the life of the

insured, provided the premiums have been paid and the policy has not been surrendered.

Cash Value :- The cash value of a permanent life insurance policy is accumulated

throughout the life of the policy. It equals the amount a policy owner would receive, after

any applicable surrender charges, if the policy were surrendered before the insured's

death.

Dividends :- Many life insurance companies issue life insurance policies that entitle the

policy owner to share in the company's divisible surplus.

Paid-Up Additions :- Dividends paid to a policy owner of a participating policy can be

used in numerous ways, one of which is toward the purchase of additional coverage,

called paid-up additions.

Policy Loans :- Some life insurance policies allow a policy owner to apply for a loan

against the value of their policy. Either a fixed or variable rate of interest is charged. This

feature allows the policy owner an easily accessible loan in times of need or opportunity.

Conversion from Term to Permanent :- When in need of temporary protection,

individuals often purchase term life insurance. If one owns a term policy, sometimes a

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provision is available that will allow her to convert her policy to a permanent one without

providing additional proof of insurability.

Disability Waiver of Premium

Waiver of Premium is an option or benefit that can be attached to a life insurance policy

at an additional cost. It guarantees that coverage will stay in force and continue to grow.

THE BENEFITS OF LIFE INSURANCE

Risk cover :- Life Insurance contracts allow an individual to have a risk cover against

any unfortunate event of the future.

Tax Deduction :- Under section 80C of the Income Tax Act of 1961 one can get tax

deduction on premiums up to one lakh rupees. Life Insurance policies thus decrease the

total taxable income of an individual.

Loans :- An individual can easily access loans from different financial institutions by

pledging his insurance policies.

Retirement Planning :- What had provided protection against the financial

consequences of premature death may now be used to help them enjoy their retirement

years. Moreover the cash value can be used as an additional income in the old age.

Educational Needs :- Similar to retirement planning the cash values that flow from ones

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life insurance schemes can be utilized for educational needs of the insurer or his children.

ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY

The Life Insurance Industry has an enviable track record among public sector units. It has

a Consistent profit and dividend paying record accompanied by a steady growth in its

financial resources. Through investments in the Government sector and socially- oriented

sectors the Industry has contributed immensely to the nation's development. The industry

is recognized as one of the largest financial Institutions in the country. The ventures

initiated by the industry in the areas of Mutual Fund, Housing Finance has done

exceedingly well in recent years. To protect the country's foreign exchange reserves, the

reinsurance arrangement are so organized that maximum retention is made possible

within the country while at the same time protecting interests of the policy holders.

INDIA AGAINST THE GLOBAL MARKETS

India is an under-insured market India’s insurance market is still at an early stage of

development. This is reflected in low penetration rates and low premiums per capita.

Insurable population – only 10% of India’s population have life insurance According to

ING only 10% of the population is insured, which represents around 30% of the insurable

population. This suggests more than 300m people, with the potential to buy insurance,

remain uninsured

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Global perspective – India ranks 19th on the global stage

India represents only around 0.66% market share (ranked 19th) of global insurance

premiums. As of 2004 the largest markets in size are the US (50x bigger than India),

Japan and the UK. Out of the Asian countries (ex Japan), South Korea is the largest

insurance market, Comprising 2.12% of global premiums, followed by China with

1.61%.

While insurance continues to reach out to the masses, India’s insurance penetration

(premiums as a percentage of GDP) still remains very low at 3.2%. This can be split

between life penetration of 2.6% and non-life of 0.6%. On the world stage, penetration

rates are significantly below developed markets such as the US (9.4%), UK (12.6%) and

Australia (8%). Compared with Asian markets, India still falls well short of its nearest

peers with countries such as Japan, South Korea and Taiwan having some of the highest

penetration rates in the world (between 9% and 14%). Nevertheless, despite current low

spend on insurance, the trends in India remain positive. Since the opening up of the

market to foreign players in 2000, penetration has more than doubled from 1.5%. With

foreigners gaining momentum and building the insurance, coupled with India’s favorable

macro overlay, we expect penetration rates to continue to expand.

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FUTURE OF LIFE INAURANCE SCHEMES

The Indian Life insurance sector will register a high growth rate in the future years to

come says the report prepared by Fitch Ratings. This will be due to the innovative

products, better distribution network, better services coupled with other never-before

changes that have taken place in the insurance sector. The report laid stress on branding,

customer service and tailor made products that will assume importance besides

information technology that will become vital to bring down costs in the future. Also data

warehousing, ensuring effective cross selling will grown in importance to exploit the

largely unexploited market.

In Nov 2005 the Indian Life insurance industry saw a growth of 46 %. This rally is

expected to continue as people realize the importance of risk management. The private

sector players are expected to grow with their innovative and profitable life insurance

schemes

THE MAJOR DISTRIBUTION CHANNELS

Retail Banks

While a lot of bank relationships with insurance companies have been established, life

insurance sales have been slower than one would expect he primary bank insurance

activities have been the distribution of annuities, credit life, and direct marketing

insurance. Banks are failing to incorporate successful sales tactics used to sell other

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financial services like investments.

Full-Service Brokers

Brokerage firms have gained much of the institutional and personal trust business lost by

the banks. These firms have steadily captured assets, primarily at the expense of the

banks. The number of non-bank trust companies has increased in recent years as

independent trust companies have emerged and more broker/dealers are integrated

services. Insurance companies view full-service brokers as a potentially new distribution

channel as well.

Discount Brokers and Online Financial Services

Direct sales of life insurance are growing rapidly, but many of the traditional full-serve

players seem to be letting it go. Across all financial services, consumers are expressing a

willingness to deal with a variety of providers on the web. Web sites are starting to pop

up offering consumer insurance products especially designed for distribution over the

web.

Independent Advisors

To gain a better understanding of the demand amongst independent advisors for trust

services and to gain a better feel for how independent advisors handle trust services, a

research was performed with independent advisors across several broker/dealers and

custodians. The interviews revealed that demand is greatest for living trusts among

independent advisors, followed by demand for corporate trustee services.

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Life Insurance Agents, CPAs, & Lawyers

Independent insurance agents represent a number of companies and can research these

companies’ products to find the right combination for their clients. Independent agents &

insurance producer groups are growing in prevalence. Although producer groups are in

their infancy, their emergence may potentially be realignment in the distribution of

financial services. Independent shops realized that by pooling production and funding a

central support office, they had increased buying power.

PRESENT SITUATION

A robust 36 percent increase in business by country's largest insurer LIC and strong

performance by most of the private players pushed the overall life insurance growth to 46

per cent in April-November 2005. With competition intensifying, the 14 life-insurers

collected Rs 16,604 crores in new premium in the first eight months of 2005-06

compared to Rs 11,337 crores in the year ago period, according to data compiled by

regulator IRDA. State-owned Life Insurance Corporation gave a tough fight to private

players, who were fast increasing their market share, to collect Rs 12,271 crores in new

premium by selling over 1.3 crores policies.

LIC also improved its market share to 73.91 per cent from 73.82 per cent a month ago as

two private players - Birla Sunlife and SBI Life - continue to see fall in business. As

market continues to grow and more new players enter the space, LIC has rolled out

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innovative products and doing aggressive marketing to attract more business.

The 13 private players led by ICICI Prudential and Bajaj Allianz are leaving no stones

unturned to expand business by netting more policyholders to increase their market share.

Among private players, ICICI Prudential ranked at the top by collecting about Rs 1,180

crores after logging 73 per cent growth, followed by Bajaj Allianz, which increased

business by 264 per cent to collect Rs 1,016 crores in premium. ICICI Prudential had a

market share of 7.11 per cent while Bajaj Allianz increased its market pie to 6.12 per

cent.

HDFC Standard Life had a market share of 2.96 per cent, followed by Birla Sunlife (1.84

per cent), Tata AIG (1.78 per cent), SBI Life (1.52 per cent), Max New York Life (1.32

per cent) and Aviva (1.12 per cent). Other players -- Kotak Mahindra Old Mutual, ING

Vysya, AMP Sanmar, Met Life and Sahara Life -- each had less than one per cent of the

market.

HDFC Standard collected Rs 491 crores in premium income till November, followed

Birla Sunlife (Rs 305 crores), Tata AIG (Rs 296 crores), SBI Life (Rs 252 crores), Max

New York Life (Rs 219 crores) and Aviva (Rs 186 crores).

In group insurance, LIC continued to dominate with a market share of about 81.32 per

cent by covering 8.638 million lives till November this fiscal. Among the private

insurers, SBI Life was at the top with a market share of 5.27 per cent, followed by Tata

AIG (4.16 per cent), ICICI Prudential (2.34 per cent), Met Life (1.9 per cent), Aviva

33

(1.16 per cent) and Bajaj Allianz (1.14 per cent).

TOP TEN INSURERS (LIFE)

Insurer

Market Share (%)

LIC

74.87

ICICI Prudential

7.53

Bajaj Allianz

4.18

HDFC Standard

3.20

Tata AIG

1.93

Birla Sun life

1.84

34

SBI Life

1.69

Max New York life

1.44

Aviva

1.14

Kotak Mahindra old mutual

0.77

35

STRUCTURE, PERFORMANCE PRODUCTS/SERVICES AND PROBLEM

FACED

The right investment strategies won't just help plan for a more comfortable tomorrow --

they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are

created keeping in mind the changing needs of family. Its life insurance plans are

designed to provide you with flexible options that meet both protection and savings

needs. It offers a full range of transparent, flexible and value for money products. HDFC

SLIC products are modern and contemporary unitized products that offer unique

customer benefits like flexibility to choose cover levels, indexation and partial

withdrawals. (Source: www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

TERM PLAN-

Term Plan is a pure risk product that aims to cover your life at a nominal cost. You may

want to take this plan to cover your outstanding debts like a mortgage, a home loan etc.

Since this is a pure risk cover product, there is no maturity benefits payable on survival.

This is a non-participating plan.

Term life insurance is normally the most inexpensive form of life insurance. Term life

insurance provides protection for a specified period of time, or the term of the policy. A

benefit is paid only if the insured dies during the term of the policy. If the insured is still

living at the end of the term, the policy expires without value.

36

ENDOWMENT PLAN-

Form of Life Insurance where the face value is paid out to the insured or a beneficiary

after a specified contract period. For example, an endowment policy that provides

benefits for 20 years until the insured is 65, pays its face value after 20 years whether the

insured lives or dies.

Endowment Plan is a protection plan that covers your life and at the same time ensures

that your money does not lie idle. It invests a portion of your premium in financial

instruments and ensures a considerable growth in savings.

ULIP PLAN-

ULIP is life insurance solution that provides for the benefits of protection and 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).

PROTECTION PLAN

Protection Plans help you shield your family from uncertainties in life due to financial

losses in terms of loss of income that may dawn upon them incase of your untimely

demise or critical illness. Securing the future of one’s family is one of the most important

goals of life. Protection Plans go a long way in ensuring your family’s financial

independence in the event of your unfortunate demise or critical illness. They are all the

more important if you are the chief wage earner in your family. No matter how much you

37

have saved or invested over the years, sudden eventualities, such as death or critical

illness, always tend to affect your family financially apart from the huge emotional loss.

For instance, consider the example of Amit who is a healthy 25 year old guy with a

income of Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10%

per annum, while the inflation rate is around 4%; this is how his income chart will look

like, until he retires at the age of 60 years. At 50 years of age, Amit’s real income would

have been around Rs. 10,00,000/- per annum. However, in case of Amit’s unfortunate

demise at an early age of 42 years, the loss of income to his family would be nearly Rs.

5,00,000/- per annum.

RETIREMENT PLANS

Retirement Plans provide you with financial security so that when your professional

income starts to ebb, you can still live with pride without compromising on your living

standards. By providing you a tool to accumulate and invest your savings, these plans

give you a lump sum on retirement, which is then used to get regular income through an

annuity plan. Given the high cost of living and rising inflation, employer pensions alone

are not sufficient. Pension planning has therefore become critical today.

India’s average life expectancy is slated to increase to over 75 years by 2050 from the

present level of close to 65 years. Life spans have been increasing due to better health

and sanitation conditions in the country. However, the average number of years of

employment has not been rising commensurately. The result is an increase in the number

38

of post-retirement years. Accordingly, it has become necessary to ensure regular income

for life after retirement, so that you can live with pride and enjoy your twilight years

HDFC Pension Supreme

Today, you are busy climbing the ladder of success and realizing your dreams. Today,

time is with you. Just take a moment and think. Will your income be the same forever?

Will you be able to live life on your own terms even after you retire? The HDFC Pension

Supreme is Unit Linked plan, designed to provide a post-retirement income for life with

the freedom to choose your retirement date. This plan gives you with an outstanding

investment opportunity to maximise your savings by providing you a choice of

thoroughly researched and selected investments. This plan also gives Bumper Addition to

the fund value at vesting

Why do I need Savings & Investment Plans?

You have always given your family the very best. And there is no reason why they

shouldn’t get the very best in the future too. As a judicious family man, your priority is to

secure the well-being of those who depend on you. Not just for today, but also in the long

term. More importantly, you have to ensure that your family’s future expenses are taken

care, even if something unfortunate were to happen to you.

A big factor that you need to consider while building your wealth is inflation. It has a

dual impact on your hard-earned savings. Inflation not only erodes your current

purchasing power but also magnifies your monetary requirements for the future. Sample

39

this: An 35 Year individual needs to invest Rs. 36,000/- per year with 8% returns to build

a corpus of Rs. 10,00,000/- by the age of 50 Years.Types of Savings & Investment Plans.

HDFC Endowment Super Suvidha

As a judicious family man, your priority is to secure the well-being of those who depend

on you. Not just for today, but also for the long term. With our HDFC Endowment Super

Suvidha, you can start building your savings today and ensure that your family remains

financially independent, even when you are not around. It is a convenient plan, which

saves you from the need of going for Medicals. This Unit Linked Plan gives you with an

outstanding investment opportunity to maximise your savings by providing you a choice

of thoroughly researched

Advantages.

1. No need to go for medicals. Just filling a Short Medical Questionnaire will do .

2. This plan gives you Bumper Addition to the fund value at Maturity.

3. Your fund value will be augmented by addition of Bumper Addition, which is a

percentage of your original annualised premium In the long term, the key to

building great maturity values is a low Fund Management Charge (FMC). We

have a low FMC of only 1.25% per annum (of the fund’s value) You can choose

to pay your premium as either Half Yearly or Annually.

4. You also have a range of convenient auto premium payment options

5. You can change your investment fund choices in two ways:

a. Switching: You can move your accumulated funds from one fund to

40

another anytime Premium Redirection:

b. You can pay your future premiums into a different selection of funds, as

per your need and selected investments. This plan also gives Bumper

Addition to the fund

HDFC Wealth Builder.

HDFC Wealth Builder is an exclusive plan crafted for elite achievers like you. An

investment cum insurance plan that will actively help in building your wealth and give

you twin advantage of exclusive funds (actively managed for you) along with choice of

limited premium payment term. This plan provides the financial protection to your loved

ones and builds up your wealth effortlessly. This plan also gives Bumper Addition to the

fund value at Maturity

Advantages

1. This plan gives you Bumper Addition to the fund value at Maturity.

2. Your fund value will be augmented by addition of Bumper Addition, which is a

percentage of your average annualized premium.

3. This plan offers an excellent investment opportunity through choice of exclusive

funds In the long term, the key to building great maturity values is a low Fund

Management Charge (FMC).

4. We have a low FMC of only 1.35% per annum (of the fund’s value).

5. You can choose to pay your premium as either Half Yearly or Annually.

41

6. You also have a range of convenient auto premium payment options

LIMITED PREMIUM PAYMENT

HDFC Wealth Builder HDFC Endowment Super

You have always given your family the very best. And there is no reason why they

should not get the best in future too. With rising costs, ensuring the best got your family

will need some financial planning. With our HDFC Endowment Super, you can start

building your savings today and ensure that your family remains financially independent,

even when you are not around. This Unit Linked Plan also gives you with an outstanding

investment opportunity to maximise your savings by providing you a choice of

thoroughly researched and selected investments.HDFC SimpliLife

You have always believed in living life on your own terms. So why let the changing

realities of everyday life overwhelm you and make your aspirations take a back seat?

With our HDFC SimpliLife Plan, you can plan now to maximize your savings and secure

your and your family’s future. It is a convenient plan, which saves you from the need of

going for Medicals. This Unit Linked Plan gives you with an outstanding investment

opportunity to maximize your savings by providing you a choice of thoroughly

researched and selected investments

42

CHILDREN’S PLANS

Children’s Plans helps you save so that you can fulfill your child’s dreams and

aspirations. These plans go a long way in securing your child’s future by financing the

key milestones in their lives even if you are no longer around to oversee them. As a

parent, you wish to provide your child with the very best that life offers, the best possible

education, marriage and life style.

Most of these goals have a price tag attached and unless you plan your finances carefully,

you may not be able to provide the required economic support to your child when you

need it the most. For example, with the high and rising costs of education, if you are not

financially prepared, your child may miss an opportunity of a lifetime.

Today, a 2-year MBA course at a premiere management institute would cost you nearly

Rs. 3,00,000/- At a assumed 6% rate of inflation per annum, 20 years later, you would

need almost Rs. 9,07,680/- to finance your child's MBA degree.

43

Individual Products

Investment Plans

 HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term

investment needs. This provides attractive long term returns through regular bonuses.

Pension Plans

 

Pension Plans help to secure financial independence even after retirement. Pension

range includes Personal Pension Plan, Unit Linked Pension , Unit Linked Pension

Plus.

Savings Plans

  Savings Plans offer a flexible option to build savings for future needs such as buying

a dream home or fulfilling your children’s immediate and future needs.

Savings range includes Endowment Assurance Plan, Unit Linked Endowment,

Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back,

Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young

44

Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

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

employers who wish to provide the best and most innovative employee benefit

solutions to their employees. It offers different products for different needs of

employers ranging from term insurance plans for pure protection to voluntary plans

such as superannuation and leave encashment.

HDFC SLIC offers the following group products to esteemed corporate clients:

Group Term Insurance

Group Variable Term Insurance

Group Unit-Linked Plan

 

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave

Encashment schemes of your company

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

45

and wealth management schemes

Social Product

Development Insurance Plan

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

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

group insured during the year of cover, a lump sum is paid to those member

beneficiaries to help meet some of the immediate financial needs following their loss.

46

Tax Benefits

INCOME TAX

SECTION

GROSS ANNUAL

SALARY

HOW MUCH

TAX CAN YOU

SAVE?

HDFC STANDARD

LIFE PLANS

Sec. 80C Across All income

Slabs

Upto Rs. 33,990

saved on

investment of

Rs. 1,00,000.

All the life insurance

plans.

Sec. 80 CCC Across all income

slabs.

Upto Rs. 33,990

saved on

Investment of

Rs.1,00,000.

All the pension plans.

Sec. 80 D Across all income

slabs

Upto Rs. 3,399

saved on

Investment of

Rs. 10,000.

All the health insurance

riders available with the

conventional plans.

TOTAL SAVINGS

POSSIBLE

Rs37,389

47

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under

Sec. 80 D, calculated for a male with gross annual income

exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-free,

subject to the conditions laid down therein.

48

PART-II

49

INTRODUCTION TO THE TOPIC

50

INTRODUCTION TO TOPIC

With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per

cent annually and presently is of the order of Rs 1560.41 billion (for the financial year

2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross

Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds

available with LIC for investments are 8% of the GDP.

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

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

part of our population is also subject to weak social security and pension systems with

hardly any old age income security. This in itself is an indicator that growth potential for

the insurance sector in India is immense.

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

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

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

investments of the order of one trillion US dollars. The Insurance sector, to some extent,

can enable investments in infrastructure development to sustain the economic growth of

the country. (Source: www.indiacore.com)

Life insurance, sometimes referred to as life assurance, provides for a payment of a sum

of money upon the death of the insured. In addition, life insurance can be used as a means

51

of investment or saving.

An agreement that guarantees the payment of a stated amount of monetary benefits upon

the death of the insured

Insurance in which the risk insured against is the death of a particular person, the insured,

upon whose death while the policy is in force, the insurance company agrees to pay a

stated sum or income to the beneficiary.

Insurance paid to named beneficiaries when the insured person dies; "in England they call

life insurance life assurance”

Insurance policy that pays a death benefit to beneficiaries if the insured dies. In return

for this protection, the insured pays a premium, usually on an annual basis. Term

insurance pays off upon the insured's death but provides no buildup of cash value in the

policy. Term premiums are cheaper than premiums for cash value policies such as whole

life, variable life, and universal life, which pay death benefits and also provide for the

buildup of cash values in the policy. The cash builds up tax-deferred in the policy and is

invested in stocks, bonds, real estate, and other investments. Policyholders can take out

loans against their policies, which reduce the death benefit if they are not repaid. Some

life insurance provides benefits to policyholders while they are still living, including

income payments. See also Single Premium Life Insurance.

52

RESEARCH METHODOLOGY

53

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is

defined as data that is collected from original sources for a specific purpose. Secondary

data is data collected from indirect sources. (Source: Research Methodology, By C. R.

Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the

personal interview methods of data collection.

SECONDARY SOURCES

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

website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view to

draw conclusions about that universe. A sample is a representative of the universe

selected for study.

SAMPLE SIZE

The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

54

10,00,000 which is approx population of Jodhpur excluding people below age of 18

years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also neatly presented

with the help of statistical tools such as graphs and pie charts. Percentages and averages

have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in Jodhpur City. The areas covered were Shastri

Nagar, Sardarpura, Masuriya, Subhash Nagar, City Area and Kamla Nehru Nagar.

55

OBJECTIVES

56

OBJECTIVES

To analysis the product details of HDFC Standard life Insurance Company

limited and Tata AIG life Insurance Company Limited.

To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life

Insurance Company Limited and Tata AIG Life Insurance Company Limited.

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

give suggestions for further improvement.

57

DATA ANALYSIS

&

INTERPRETATION

58

DATA ANALYSIS & INTERPRETATION

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

Age group of surveyed respondents

TABLE 1:

Age group No. of Respondents

18 - 25 years 127

26 - 35 years 67

36 - 49 years 46

50 - 60 years 24

More than 60 years 6

CHART 1:

59

Analysis:

From the chart above we find that 47% of the respondents fall in the age group of 18 – 25

years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49

years.

Therefore most of the respondents are relatively young (below 26 years of age). These

individuals could be induced to purchase insurance plans on the basis of its tax saving

nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with

this and this fact has to be conveyed to the consumer. As of now many consumers have a

false perception that insurance is only meant for people above the age of 50. Contrary to

popular belief the younger you are the more insurance you need as your loss will mean a

great financial loss to your family, spouse and children (in case the individual is married)

who are financially dependent on you.

60

Gender classification of surveyed respondents

TABLE 2:

Particulars No. of Respondents

Male 193

Female 77

CHART 2:

61

Customer profile of surveyed respondents

TABLE 3:

Customer profile No. of respondents

Student 62

Housewife 5

Working Professional 116

Business 49

Self Employed 24

Government service employee 14

CHART 3:

Analysis:

From the chart above it can clearly be seen that 43% of the respondents are working

professionals, 23% are students and 18% are into business. Therefore the target market

would be working individuals in the age group of 18 – 25 years having surplus income,

interested in good returns on their investment and saving income tax.

62

No. Of respondents who have life insurance policy in their name

TABLE 4:

Person who have life insurance policy

Yes 103

No 167

CHART 4:

ANALYSIS :

This graph shows that out of total 270 respondents only 103 or 38% respondents have life

insurance policy in their name. Rest all don’t have a single policy in their name. So there

is a very big scope for life insurance companies to cover these people. So in future

business of life insurace will gro further.

63

Market share of life insurance companies

TABLE 5:

Life insurer Number of policies

Hdfc standard life 4

Birla sun life 3

Aviva life insurance 6

Bajaj allianz 7

Lic 55

Tata aig 6

Icici prudential 12

Ing vysya 6

Bharti axa 2

Others 2

64

CHART 5:

Analysis:

In India, the largest life insurance company is Life Insurance Corporation of India. It has

been in existence in India since 1956 and is completely owned by the Government of

India. Today the organization has grown to 2048 offices serving 18 crore policies and has

a corpus of over 340000 crore INR.

65

Annual premium paid by individuals for life insurance

TABLE 6:

Premium paid (p.a.) No. of respondents

Rs. 5000 - Rs. 10000 40

Rs. 10001 - Rs. 15000 26

Rs. 15001 - Rs. 24900 18

Rs. 25000 - Rs. 50000 10

Rs. 50001 - Rs. 60000 4

Rs.60001 - Rs. 80000 2

Rs. 80001 - Rs. 100000 3

CHART 6:

Annual premium paid by individuals for life insurance

Analysis:

From the chart above we find that, 39% of the respondents surveyed pay an annual

premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an

annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs.

66

25000. Hence we can safely say that HDFC SLIC would be able to capture the market

better if it introduced products/plans where the minimum premium starts at Rs. 5000 per

annum.

Only 19% of the respondents pay more than Rs. 25000 as premium and most products

sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They

should introduce more products like Easy Life Plus and Safe Guard where the minimum

premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase

their market share as more individuals would be able to afford the policies/plans offered.

67

Popular life insurance plans

TABLE 7:

Type of Plan No. of Respondents

Term Insurance Plans 105

Endowment Plans 122

Pension Plans 16

Child Plans 8

Tax Saving Plans 19

CHART 7:

Popular life insurance plans

Analysis:

From the chart given above we can clearly see that 45% of the respondents hold

endowment plans and 39% of the respondents hold term insurance plans. Endowment

plans are very popular and serve two purposes – life cover and savings.

68

If the policy holder dies during the policy term the nominee gets the death benefit that is,

sum assured and accumulated bonus. On survival the policy holder receives the survival

benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a

higher sum assured. Term insurance is the cheapest form of insurance and helps the

policy holder insure himself for a relatively low premium. For the returns sensitive

investor term plans do not find favor as they do not offer a return in case the individual

does not die during the policy term.

69

Awareness of unit linked insurance plans

TABLE 8:

Awareness of Unit Linked Plans No. of Respondents

Yes 154

No 116

CHART 8:

Awareness of unit linked insurance plans

Analysis:

From the chart given above we find that 57% of the respondents are aware of unit linked

life insurance plans and 43% are not aware of such plans. These plans should be

promoted through advertising. The company can advertise through television, radio,

70

newspapers, bill boards and pamphlets. This would increase awareness and arouse

curiosity in the minds of the consumer which would enable the company to market its

products more effectively.

Unit – linked plans are those where the benefits are expressed in terms of number of units

and unit price. They can be viewed as a combination of insurance and mutual funds. The

number of units a customer would get would depend on the unit price when they pay the

premium.

When the policy matures the individual gets his fund value. The value of his fund is

calculated by multiplying the net asset value and number of units held by them on that

day.

71

Consumer willingness to spend on life insurance premium

TABLE 9:

Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

Consumer willingness to spend on life insurance premium

Less than Rs. 6,000

Rs. 6,001 - Rs. 10,000

Rs. 10,001 - Rs. 25,000

Rs. 25,001 - Rs. 50,000

Rs. 50,001 - Rs. 1,00,000

0%5%

10%15%20%25%30%35%40%45%

15%

27%

41%

15%

2%

Insurance Premium

Perc

enta

ge

Analysis:

From the graph above, we can clearly see that 41% of the respondents would be willing

to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to

72

spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend

more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs.

25000 p.a. This is further reduced as most customers have already invested with LIC,

ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance

companies in India inclusive of LIC. Hence to capture a larger part of the market the

company could introduce more reasonable plans with lesser premium payable per annum.

73

Chart showing ideal policy term

TABLE 10:

Ideal policy term No. of respondents

3 - 5 years 51

6 - 9 years 41

10 - 15 years 95

16 - 20 years 38

21 - 25 years 24

26 - 30 years 5

More than 30 years 3

Whole life Policy 13

CHART 10:

Chart showing ideal policy term

74

Analysis:

From the chart given above it can be seen that 35% of the respondents prefer a policy

term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9

years. This means that HDFC SLIC could introduce more plans wherein the premium

paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you pay

for your whole life (whole life policy) and do not receive any benefit (the nominee only

receives the benefit in case of your death) to an extremely useful investment opportunity

with the prospects of good returns on savings, tax saving opportunities as well as

providing for every milestone in your life like marriage, education, children and

retirement.

75

Factors that motivate respondents to purchase insurance

TABLE 11:

Parameter No. of Respondents

Advertisements 35

High returns 84

Advice from friends 46

Family responsibilities 89

Others 16

CHART 11:

Analysis:

76

From the chart above it can be seen that 33% of the respondents purchase life insurance

to secure their families, 33% take life insurance to get high returns, 17% purchase

insurance on the advice of their friends and 13% purchase insurance because of the

influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to

the family in case of the uncertain death of the policy holder. But now a days this trend is

changing. Along with protection (life cover), a savings element is being added to

insurance.

With the introduction of the new unit linked plans in the market, policy holders get the

option to choose where their money will be invested. They can invest their money in the

equity market, debt market, money market or a combination of these. The debt and

money markets usually have low risk attached whereas the equity market is a high risk

investment option.

77

Preferred company type of the respondents

TABLE 12:

Type of Company No. of Respondents Percentage

Government Owned

Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 12:

Preferred company type of the respondents

78

Analysis:

From the graph above we find that 60% of the respondents preferred to purchase

insurance from a government owned company, 29% of the respondents preferred to

purchase insurance from a public limited company and only 4% of the respondents

preferred a foreign based company. Heavy advertising through television, newspapers,

magazines and radio is required.

79

Minimum expected return on investment

TABLE 13:

Expected Returns No. of respondents

Less than 5% 5

5% - 10% 39

11% - 15% 46

16% - 20% 49

21% - 25% 46

26% - 30% 27

31% - 40% 22

41% - 50% 14

More than 50% 22

CHART 13:

Analysis:

80

From the chart above it can clearly been seen that 18% of the respondents would like 16

– 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of

11 – 15% on their investments. Therefore the average return on investment should be at

least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some

guaranteed returns. Therefore the bulk of investment should be made in the balanced fund

with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these

involve investment is government securities and the debt market. But the returns on these

instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%)

but correspondingly risk borne by the policy holder is also higher. Therefore a good

combination of the two instruments is often a wise choice.

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CONCLUSION

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CONCLUSION

HDFC standard life insurance is first life insurance Company in India. It has businesses

spread out across the globe. It was registered on 23rd December 2000. It currently ranks

number 4 amongst the insurers in India (Source: annual premium provided by the

company)

The company faces a large amount of competition. To sustain itself it must promote its

products through advertising and improve its selling techniques. Consumers must be

aware of the new plans available at HDFC SLIC. The medium of advertising used could

be television since most of its competitors use this tool to promote their products. The

company must be promoted as an Indian company since consumers seem to have more

trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life

insurance has to change in India before progress is made in this field. People should not

be afraid to invest money in insurance and must use it as an effective tool for tax

planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.

There are individuals who are willing to pay small amounts as premium but the plans do

not accept premiums below a certain amount. It was usually found that a large number of

males were insured compared to females. Individuals below the age of 30 (mostly male)

were interested in investment plans. This was a general conclusion drawn during

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prospecting clients.

LIMITATIONS

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LIMITATIONS

1. Few problems were faced in meeting customers.

2. Few of the customers did not help me in giving the correct information.

3. Restricted time acted as a barrier for me while moving different cutomers.

4. Some customers were reluctant to give adequate information.

5. Due to short duration of the study, primary data could only be collected from100

customers.

PROBLEM ENVIRONMENT

Sales Maximization

(Company was not getting the expected sale from the city due to lack of availability and

mismanagement of the workers working under distributors.)

Market Penetration

(Company wanted to grab largest market share and also wanted to tap not only their new

potential customers but it wanted to get its competitors share also.)

As the distribution channel of the National Companies is not up to the mark, they are

facing tough competition from other companies, which are providing prompt services.

Due to the aspects like less margins and service Problems Company faced problems in

Market Penetration and sales Maximization.

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The old and out dated technique of tele marketing is used to prospect customers. More

modern techniques must be adopted. The company must sponsor shows and give

presentations in corporate houses. The financial health check must be performed for

every prospect to assess his/her true financial position and needs. Some of the advisors

skip this vital step and the prospect ends up with a plan they do not appreciate and soon

surrender or discontinue.

Some of the main problems in marketing the policies are:

Large amount of competition (18 players in the market)

Other brands are well advertised and have higher recall value

LIC is considered a safer option

Face competition from banks and mutual funds

High premium policies are difficult to market

Incorrect perception about insurance

Interested prospects might have a lack of time and postpone investments

Customers get defensive if you cold call

Short term plans are available only at large premium

Customers do not have risk appetite to invest in shares

Some prospects have already invested and are not interested in further

investments

Consumers don’t want to undertake medical examinations

Large amount of documentation

Customers do not like their money locked up for many years

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RECOMENDATION

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RECOMENDATION

1. After conducting the survey I would like to give few suggestions as follows-

Services should be streamlined to increase the sales because due to improper

Services Company is not getting what it could get.

2. Although company has good market share in Noida city due to it’s brand name

But it could increase its share significantly through massive direct marketing

because company still has not touched some areas. ..

3. Recently significant numbers of life insurance sellers have increased which shows

a phenomenal change and development of insurance business. Company should

also increase its visibility in the city.

4. Lack of awareness about product offered by SBI should also be removed through

advertisement.

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BIBLIOGRAPHY & REFERENCES

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BIBLIOGRAPHY & REFERENCES

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

Magazine –

Insurance World

The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

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