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EXECUTIVE SUMMARY
The new millennium saw the dawn of many developments and changes in insurance industry. In the backdrop of this challenging market scenario it was thought to be benefiting to undertake a project study on investment opportunities available in life insurance sector. In the wonderful world of finance there are wide Varity of choices available one needs to understand the different investment alternatives such as stocks, bonds, government securities, bank fixed deposits, private company deposits & insurance. The goal is to help reduce risk and enhance returns. Life Insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier. . Among the competitive and complex market scenario in India, it is difficult to analyze the changing attitudes, likes, dislikes and satisfactory levels of customers. The field is such that only the enduring and most outstanding will survive without being choked. The attempt here is made to assess the awareness and preference of people in different investment schemes available in insurance sector. On the outset itself the problem was identified and defined with the help of convince sampling. The research carried out this survey keeping in mind the need and importance of the proposed study. This has enabled the researcher to easily determine the scope and objectives of this study. A descriptive approach was considered ideal for the study as it entailed the ever-changing opinion of the investors and people.
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The findings were taken up for drawing logical conclusions. Based on the findings suitable suggestions and recommendations were brought for the tangible benefits of both the company and the investor. The entire project is presented in the form of a comprehensive study report using a chapter scheme developed logically and sequentially in a systematic and orderly manner from the beginning to the end. The respondents were presented with a well-structured questionnaire as a part of the survey method, which was easy to fill up. The main sources of data were the questionnaire and other relevant business magazines, books and broachers of the companies providing insurance schemes. The specific objectives of the present study are to study the structure of insurance company and insurance market, to study the existing business of insurance industry, to study the investors behavior regarding insurance, and investment options available in insurance sector. To study the investors preferences and attitude towards insurance companies with regards to investment policies, their schemes and services. To evaluate the insurance market under investment opportunities.
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INTRODUCTION
PART-A: ABOUT INDUSTRY
History of Insurance
Im sure weve all heard of the word, and have an idea of how it works. Is it a concept? Idea? Is it something concrete or abstract? It depends on the context of the situation. A quick, simple definition of insurance could be as follows: Reimbursement in a situation of loss. Usually, someone decides that insurance is needed. In order for the concept of insurance to arise, a pre-payment of some type is required. In the case of typical, everyday general auto, health and life insurance, for example, the pre-payment is in the form of a premium. Prior to the eve of the year 2000, thousands of people flocked to the stores, stocking up on numerous supplies. They feared that something catastrophic was going to take place once the clock struck midnight, and if so, they wanted to be prepared. Isnt this a form of insurance? Surein its basic definition. The supplies they purchased would act as reimbursement in the case of loss. Insurance is not necessarily an investment from which one expects to get one's money back. Nor is it gambling. A gambler takes risks, while insurance offers protection against risks that already exist. Insurance is a way to share risk with others. Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. About 3,500 years ago, Moses instructed the nation of Israel to contribute a portion of their produce periodically for "the alien resident and the fatherless boy and the widow."-Deuteronomy
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INSURANCE IN INDIA A HISTORICAL PROSPECTIVE: Insurance business is not new to India. It finds mention in the writings of Manu, Rishi Yagnavalkya and others, indicating that it has existed in India of ancient times. It has evolved over time and has drawn heavily from the experience of other countries specially England, where insurance companies have a more than 500 years of history. Bombay Life Assurance Company was established in Bombay (now Mumbai) on 1st May 1823. Oriental Life Assurance Company started was in Calcutta by Europeans. The recorded history of Insurance business in India, however, began in 1914 when the Government of India started publishing returns of Insurance Companies in India. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize the insurance business. An Ordinance issued on 19th January 1956 nationalized the Life Insurance sector and 'LIFE INSURANCE CORPORATION OF INDIA' (L.I.C.) came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies. Since then LIC has been the only player. Similarly, before November 1972, a number of Indian and many foreign companies did general insurance business in India and this business was linked with their branches abroad. In addition, LIC, some mutual companies and cooperative societies also offered this product. In fact, on the eve of nationalization, 68 Indian (including LIC) and 45 non-Indian entities carried out insurance business in India. Nationalization saw the business of all these organizations absorbed by the GENERAL INSURANCE CORPORATION (GIC) with its four subsidiaries.
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Thus Life Insurance Corporation of India in the field of life insurance and General Insurance Corporation of India in the field of general insurance have enjoyed absolute monopoly. However, the reforms in financial sector in the early 90s have since touched Insurance also. The Govt. of India set up a committee with Shri. R.N. Malhotra as the Chairman to recommend suitable reforms in this sector. As a consequence of the recommendation of the Malhotra Committee, the Government of India set up an Insurance Regulatory Authority. On the 2nd December 1999, Indian Parliament has passed, Insurance Regulatory and Development Act, throwing open the Insurance sector to Banks and other private parties. Since then, RBI has come out with draft guidelines for entry to this sector. This is seen as a major step in financial sector reforms, which introduce, for the first time since nationalization of the insurance business, an element of competition in this sector. This should bring competitively priced insurance for the customer and improve the service available to him.
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Some of the important milestones in the life insurance business in India are: 1912: 1928: The Indian Life Assurance Companies Act enacted as the first statute The Indian Insurance Companies Act enacted to enable the to regulate the life insurance business. 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 the Provident Societies 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 crore from the Government of India. The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population. The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed. The 12 private insurers in the life insurance market have already grabbed nearly 9 percent of the market in terms of premium income. The new business premiums of the 12 private players have tripled to Rs 1000 crore in 2002- 03 over last year. Meanwhile, state owned LIC's new premium business has fallen. Innovative products, smart marketing and aggressive distribution. That's the triple whammy companies to sign up Indian customers faster than anyone ever expected. Indians, who have always seen life insurance as a tax saving device, are now
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suddenly turning to the private sector and snapping up the new innovative products on offer.
The growing popularity of the private insurers shows in other ways. They are coining money in new niches that they have introduced. The state owned companies still dominate segments like endowments and money back policies. But in the annuity or pension products business, the private insurers have already wrested over 33 percent of the market. And in the popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers. The private insurers also seem to be scoring big in other ways- they are persuading people to take out bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs 50,000. That has risen to about Rs 80,000. But the private insurers are ahead in this game and the average size of their policies is around Rs 1.1 lacks to Rs 1.2 lacks- way bigger than the industry average.
KINDS OF INSURANCES
Permanent Life Insurance This is the one that provides for a lifetime of benefits as long as the premiums are paid as and when they are due. They are beneficial as one can take a loan on the benefits that can be availed on this type of insurance. Term Life Insurance This provides protection for a preset / limited period of time, and would pay the death benefit only on death happening within the preset time. It is considered to be insurers require the insured to provide proof of their insurability.
Annuity
An Annuity is a contract that provides an income for a specified period of time, such as a number of years. And Annuity Consideration is the payment, or one of the regular periodic payments; an annuitant makes for an annuity.
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The business of Insurance essentially means defraying risks attached to any activity over time (including life) and sharing the risks between various entities, both persons and organizations. Life Insurance is universally acknowledged to be an institution that eliminates 'risk' and provides the timely aid to the family in the unfortunate event of death of the breadwinner. Life insurance is a written contract between the insured and the insurer that provides for the payment of the insured sum on the date of the maturity of the contract or on the unfortunate death of the insured, whichever occurs earlier. The contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier.
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the same seriousness as the payment of interest on a mortgage, thus insurance in effect brings about compulsory savings. Easy settlement and protection against creditor: Life Insurance can assure name of a person to whom the policy moneys would be payable in the event of his death. The proceeds of a life insurance policy, a married womans property act policy constitutes a trust in favor of the wife and /or children and no separate assignment is necessary. The beneficiaries ate fully oriented from radiators except to the extent if any interest in the policy by the assured.
The possibility of damage to assets caused by any peril is the risk that the asset is exposed to Risk means the possibility of loss or damage that may or may not happen. It is because of the uncertainty about the risk that insurance becomes important. No person should be in a position to make the risk happen or occur and take unfair advantages. It covers the risk of dying too early and living too long. Individual he also needs financial security for the old age or on his becoming permanently disabled when his income will stop. It covers tangible assets but the concept can be extended to intangibles also. Human life is an income generating assets that can be lost in case of early death or disability caused by an accident.
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training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.
Section 14 of IRDA ACT, 1999 lays down the duties, powers and function of IRDA. Subject to the provision of this act and any other law for the time being in force, the authority shall have the duty to regulate, promote and ensure orderly of the insurance business and reinsurance business. Without prejudice to the generality of the provision contained in sub section (1), the powers and function of the authority shall include Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, solving insurance claim, surrender value of policy and terms and conditions of contract of insurance. Specifying requisite qualifications, code of conduct and practical training for inter mediators or insurance intermediately and agents. Specifying requisite qualifications, code for surveyors and loss assessors. Levying fees and other charges for carrying out the purposes of this act. Promoting efficiency in the conduct of insurance and reinsurance business. Promoting and regulating professional organizations connected with the insurance and reinsurance business. Calling for information from, undertaking inspection of, conduction enquires and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 12
Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory committee u/s section 64U of the Insurance Act, 1938 (4 of 1938). Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. Regulating investment of funds by insurance companies. Regulating maintenance of merging of solvency.
Adjudication of disputes between insurers and intermediaries or insurance intermediaries. Supervising the functioning of the tariff advisory committee. Specifying the % of premium income of the insurer to finance schemes for promoting and regulation professional organizations referred to in clause (f). Specifying the % of life insurance business and general insurance business and general insurance business to be undertaken by the insurer in the rural or social sector. Exercising such other powers as may be prescribed. IRDA also try to generate the awareness and regulate the life insurance sector. For this job government also use the print media viz. newspapers and magazines etc. to for public interest. Some of the advertisement cuttings are attached in annexure at end of the project.
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LIFE ICICI Prudential Life Insurance Kotak Mahindra Life Insurance Max New York Life Insurance HDFC Standard Life Insurance Bajaj Allianz Life Insurance Birla Sun Life Insurance Aviva Life Insurance ING Vysya Life Insurance Amp Sanmar Life Insurance Tata AIG Life Insurance MetLife Insurance SBI Life Insurance LIC
GENERAL ICICI-Lombard Insurance Reliance General Insurance IFFCO-Tokyo General Insurance HDFC Chubb General Insurance Bajaj Allianz General Insurance Royal Sundaram General Insurance Cholamandalam General Insurance National Insurance Company New India Assurance Company Tata AIG General Insurance Oriental Insurance United India Insurance
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Investment alternatives
As an investor you have a wide array of investment avenues available to you. Sacrificing some rigor, bewildering range of investment alternatives is available. They fall into two broad categories, viz. financial assets and real assets are paper (or electronic) claims on some issues such as the government or a corporate body. The important financial assets are equity shares, corporate debentures, government securities, and deposit with banks, mutual fund shares, insurance policies, and derivative instruments. Real assets are represented by tangible assets like a residential house, a commercial property, an agriculture farm, gold, precious stones, and art LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 15
objects. As the economy advances, the relative importance of financial assets tends to increase. Of course, by and large the two forms of investment of financial assets tend to increase. Of course, by and large the two forms of investments are complementary and not competitive. For sensible investing, you should be familiar with the characteristics and features of various investment alternatives before you. These may be classified as shown below chart.
Investment alternatives
Investment alternatives
Commodities
Bonds
Precious objects
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i. EQUITY SHARES An equity share refers to the ownership of the capital. Equity shares holder will purchase the shares of the company and control the company. The equity shareholders enjoy the companys profit or losses. While fixed income Investment Avenue may be more important to most of the investor, equity shares seen to capture their interest the most potential rewards and penalties associated. CALCULATION OF EQUITY SHARE: Amount of per equity share= net amount available to the equity share Number of equity shares ii. NON-MARKETABLE FINANCIAL ASSETS A good portion of the financial assets of individual is held in the form of nonmarketable financial assets like bank deposits, post office deposits, company deposits and provident fund deposits. BANK DEPOSITS: Perhaps the simplest of investment avenues, opening a bank account and depositing money in it can make a bank deposit. There are various kinds of bank account. Current A/c, saving A/c and fixed A/c. while a deposit in a current A/c does not earn any Interest, deposits in other kind of bank A/c earn interest. POST OFFICE TIME DEPOSITS: Similar to fixed deposits of commercial banks, post office time deposits have the following features: LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 17
Deposits can be made in multiple of Rs 50 without any limits. The interest rates on post office time deposits are in general, slightly higher than those on bank deposits. The interest is calculated half yearly and paid annually. No withdrawal is permitted up to six months. Post office time deposits can be pledged.
COMPANY DEPOSITS: A company fixed deposit is similar to a fixed deposit in a bank. The difference is that it is with a non-banking finance company popularly called a non-banking financial corporation (NBFC) entity. It operates like a bank FD, where in you invest your money for a specified period of time and a specific rate of interest. The factors that come in to play for a company deposit are the period of the FD the principle amount and other organizational policies which vary from company to company the tenures generally vary from 1 year to 5 years. iii. MONEY MARKET INSTRUMENTS: Debt instruments, which have a maturity of less than one year at the time of issue, are called money market instruments. These instruments are highly liquid and have negligible risk. The major money market instruments are Treasury bills Certificate of deposit Commercial papers Repos A treasury bill is a short-term money market instruments issued by the central government. Typically, it has a maturity period of six months or one year it is issued at a discount and is repayable at par. Due to a large denomination and low rate of return; it has virtually no appeal for individual investors. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 18
TREASURY BILLS:
COMMERCIAL PAPER: Commercial paper represents short term unsecured promissory note issued by firm that are generally considered to be financially strong. A commercial paper usually has a maturity period of 90 to 182 days. It is sold at a discount and redeemed at par. Hence the implicit rate is a function of size of discount and the period of maturity.
CERTIFICATE OF DEPOSITS: A certificate of deposit represents a title to a negotiable time deposit with a commercial bank. It carries a reasonable attractive interest rate. Since the denomination of certificates of deposits is very high, it is of interest mainly to institutions investors and companies. iv. FINANCIAL DERIVATIVES A financial derivative is an instrument whose value depends on the value of some underlying asset. Hence, it may be viewed as a side bet on that asset. From the point of view of investors and portfolio manager, FUTURES, OPTIONS and SWAPS are the three most important financial derivatives. They are used for hedging and speculation. Exchanges for trading these derivatives are expected to be set up soon in India. FUTURES: A future contract is an agreement between two parties exchanges an asset for cash at pre-determined future date for a price that is specified today. The party, which agrees to purchase the asset, is said to have a long position and the party, which agrees to sell the assets said to have a short position. OPTIONS: A potion gives its owner the right to buy or sell an underlying asset (our focus here will be on equity shares) on or before a given date at a pre-determines price. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 19
Note that options represent a special kind of financial contract under which the option holder enjoy the right (for which he pays a price), but has no obligation, to do something. There are two types of options. Call option Put option
V. BONDS OR FIXED INCOME SECURITIES Bonds or debentures represent long-term debt instruments. The issuer of a bond promises to pays a stipulated stream of cash flows. This generally comprises periodic interest payments over the life of the instrumented principal payment at the time of redemption. The following fixed income instruments, government securities, RBI relief bonds, private sector debentures, PSU bonds and preference shares. PREFFERANCE SHARES: Preference share represent a hybrid security that par takes some characteristics of equity shares and some attributes of debentures. Some of the features are below: Preference shares carry a fixed rate of dividend. Preference dividend in payable only out of distributes profits. Dividend on preference share is generally cumulative. Currently preference dividend is tax-exempt up to a certain limit.
GOVERNMENT SECURITIES: Debt securities issued by the central government, state government and quasi government agencies are referred to as government securities. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 20
Government securities have maturity ranging from 3-20 years and carry interest rates that usually vary between 8 and 10 percent. Even though these securities carry some tax advantages, they have traditional not appealed to individual investors because of the low rates of interest and long maturities. They typically held by bank, financial institution, insurance companies and provident fund mainly because of certain statutory compulsions. PRIVATE SECTOR DEBENTURES: Akin to promissory notes, debentures are instruments meant for raising longterm debt. The obligation of a company towards its debentures holders is similar to that of a barrower who a promises to pay interest and principal at specified times.
vi. MUTUAL FUNDS The securities exchange board of India (mutual fund) regulations 1993 defines mutual funds as a fund established in the form of a trust by a sponsor, to raise money by the trustees through the sale of units to the public under one or more schemes for investing in securities in accordance with these regulations. TYPES OF FUNDS On the basis of execution and operation CLOSED- ENDED FUNDS Under this scheme, the corpus of the funds and its duration are pre-fixed. The corpus of the fund and the numbers of units are determined in advance. OPEN ENDED FUNDS It is just the opposite of close-ended funds, under this scheme the size of the fund and or the period of the fund are not pre-determined. The investors are free to buy and sell any number of units at any point of time. SCHEMES GALORE: A variety of schemes offered by mutual funds. Based on the investment policy the more commonly offered schemes might be broadly classified as follows. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 21
EQUITY SCHEMES: 1. GROWTH SCHEMES 2. INDEX SCHEMES 3. SECTOR SCHEMES GROWTH SCHEMES: The corpus of a growth scheme is invested substantially (80-90%) in equity related investments. The balance may be an in debt instrument. The principal objective of such a scheme is to achieve long-term capital growth for the unit holders. INDEX SCHEMES: An index scheme is equity schemes that invest its corpus in a basket of equity stocks that comprise a given stock market. Such as BSE&PCNX, nifty index with each stock being assigned a weight age equal to what it has in the index thus on index fund appreciates or depreciates (subject to tracking error) the same way as the index. The principal objective of an index scheme is to give a return in time with the index movement. SECTORAL SCHEMES: A sectoral scheme invests its corpus in the equity stocks of a given sector such as pharmaceuticals, information technology, telecommunications, and so on sectoral scheme appeal to investors interested in taking a bet on those sectors. BALANCED SCHEME: A balanced as the name suggests the, invests its corpus across two broad asset classes via, equity and debt in a more or less balanced manner. A commonly followed allocation is as follows. ALLOCATION OF FUNDS Equity Debt 60% 60% 40% 40%
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Debt
60%
40%
Equity
60%
40%
ALLOCATION OF FUNDS 0
0.2
0.4
0.6
0.8
1.2
DEBT SCHEME: 1. INCOME SCHEME 2. GILT SCHEME 3. MONEY MARKET SCHEME INCOME SCHEMES: The corpus of an income scheme is invested primarily in fixed income securities such as government of India securities, debt obligations of state and local government corporate debentures and money market instruments. A small portion of the corpus, say 10 to 20% may be invested in equity instruments the primary objectives of an income scheme is to provide a steady income without impairing the capital. GOVERNMENT SECURITIES SCHEME: LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 23
The corpus of a government securities scheme (also referred as gilt scheme) is invested in sovereign securities issued by the central and the state government and securities that are unconditionally guaranteed by the central and or state government for payment of interest and principle. The scheme may also invest in money market instrument for liquidity purposes. The objective of such a scheme is to earn a modest return without any credit risk. MONEY MARKET SCHEME: The corpus of a money market scheme (also referred to as a liquid scheme) is invested primarily in money market instruments. Such as Treasury bill, commercial paper, Certificate of debt and call and notice money. Money market instruments have negligible interest risk exposure (thanks to their short maturity) as well as credit risk exposure. The principal value of a unit in a unit in al liquidity scheme remains stable though the periodic income may vary depending on the conditions in the money market.
vii. REAL ESTATE: For the bulk of the investors the most important asset in the portfolio is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following type of real estate. Agricultural land Semi-urban land Time share in a holiday resort
viii. REAL ASSETS & PRECIOUS OBJECTS: Precious objects are generally small is size but highly valuable in monetary terms. The important precious objects are Gold and silver Precious stones Page 24
Art objects
ix. LIFE INSURANCE The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. INVESTMENTS IN LIFE INSURANCE AS AN INDIVIDUAL Agreed, insurance may not be the best place to invest your hard earned money. But there are sufficient reasons for one to believe that it can be a highly lucrative avenue to facilitate savings. People often talk about yield on investment and tend to compare their values with those available on various insurance schemes. This is particularly typical within the Indian sub-continent where one conveniently forgets the element of risk covered by life insurance. It is extremely unfair to compare the performance of insurance against other investments without considering the core features of insurance. The very essence of insurance is to protect your family from the uncertainty of your life. Hence it proves very logical to evaluate the costs involved towards this feature. Ask yourself this question. When you pay insurance premium for your car, do you get anything if fortunately no mishap happens? This means that you spent the amount to secure a valuable property. Hence you must accept that out of the total amount paid by you for your life insurance, a certain amount is used for providing the risk cover and only the balance can be utilized as savings. In other words, the total premium you pay minus the amount evaluated, as the cost of insurance must be considered as the amount invested to get the maturity amount. If you calculate the Yield from returns, you will be in for a surprise.
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Secondly, we tend to think very unrealistically about our life. We often compare the results after say 10 years from an investment scheme, for instance PPF is providing a better yield than an insurance policy. For instance if you invest Rs. 10,000/ - in PPF after 1 year your money will grow to Rs. 11,100/ - accruing a return of 11 percent. But what if your death occurs in the first year itself? The Rs. 10,000/ - can give you an insurance cover up to an approximate sum of Rs. 12 lakes (depending upon the plan, age, etc) and this amount shall become available to the nominee of the policyholder as against the mere paltry Rs. 11,100/ - which PPF shall pay. We shall look after the following schemes of Life insurance, because of their importance and /or distinctive features: Endowment assurance policy Money back policy Whole life policy Term assurance policy Investment plan
THE ENDOWMENT ASSURANCE POLICY This is the most popular form of life assurance since it not only makes provision for the family of the Life Assured in the event of his early death, but also assures a lump sum at any desired age. The amount assured, if not paid by reason of his earlier death, becomes payable at the end of the endowment term when it may be invested to provide an annuity during the remainder of his life or in any other way he may think most suitable at the time. If payment of premiums ceases after at least THREE years' premiums have been paid, a free paid-up policy for a reduced sum assured will be automatically LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 26
secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable on the event as stipulated in the policy. Being an endowment assurance policy, this plan is opt for people of all ages and social groups who wish to protect their families from a financial setback that may occur owing to their demise. The amount assured if not paid by reason of his death earlier will payable at the end of the endowment term where it can be invested in an annuity provision for the rest of the policyholder's life or in any other way he may think most suitable at that time. THE ENDOWMENT ASSURANCE POLICY LIMITED PAYMENT Just as in the case of limited payment whole life polices, here, too, the payment of premium can be limited either to a single payment or to a term shorter than the policy. The endowment is, however, payable only at the end of the policy term, or on death of the policyholder if it takes place earlier. If payment of the premiums ceases after at least three years' premiums have been paid, a free paid-up Policy for an amount bearing the same proportion to the sum assured as the number of premiums actually paid bears to the number stipulated for in the policy, will be automatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs.250.Such reduced paid-up Policy will not be entitled to participate in the profits declared thereafter, but such Bonus as has already been declared on the Policy will remain attached here too. THE MONEY BACK POLICY Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, this scheme provides for periodic payments of partial survival benefits as follows during the term of the policy, of course so long as the policy holder is alive. In the case of a 20-year Money-Back Policy, 20% of the sum assured becomes payable each after 5, 10, 15 years, and the balance of 40% plus the accrued bonus become payable at the 20th year. For a Money-Back Policy of 25 years, 15% of the sum assured becomes payable
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each after 5, 10, 15 and 20 years, and the balance 40% plus the accrued bonus become payable at the 25th year. An important feature of this type of policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which have already been paid. Similarly, the bonus is also calculated on the full sum assured. THE WHOLE LIFE POLICY This plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby providing for payment of sum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whichever is later. The premiums under the policy are payable up to age 80 years of the policyholder or for a term 35 years whichever is later. If the payment of premium ceases after 3 years, a paid-up policy for such reduced sum assured will be automatically secured provided the reduced sum assured exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach, provided the policy is converted in to a paid-up policy after the premiums are paid for 5 years. THE WHOLE LIFE POLICY-LIMITED PAYMENT This is the best form of life assurance for family provision since it enables the Life Assured to pay all the premiums during the ordinarily vigorous and most productive years of life. He need not pay any premium in the later stages of life if and when his condition might be become adverse. With Profits Limited Payments Policies do not cease to participate in profits after completion of the premium-paying period but continue to share in the periodical LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 28
Bonus Distribution until the death of the Life Assured. The Without-Profit option is available Under this scheme. If the policyholder pays at least 3 years' premiums and then discontinues paying any more premiums, a reduced paid-up assurance policy comes into force. Such a reduced paid-up Policy will not be entitled to participate in the profits declared thereafter, but such Bonus as has already been declared on the Policy will remain attached thereto. The premium paying term under this plan is five years minimum and 55 years maximum. THE CONVERTIBLE TERM ASSURANCE POLICY This plan of assurance is designed to meet the needs of those who are initially unable to pay the larger premium required for a Whole Life or Endowment Assurance Policy, but hope to be able to pay for such a policy in the near future. This plan would be found useful also in cases where it is desired to leave the final decision as to the plan to a later date when, perhaps a better choice could be made. Policyholders get an option of converting a policy into endowment assurance or limited payment whole life assurance. INVESTMENT PLANS: (ULIPs) Investments in Life insurance something like investing youre saving to earn income and getting value to the life. In this investment plan we are going to study about the unit linked plans that is invest life is the HDFC SLIC unit linked plan.
INVEST LIFE: IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER This is a unit linked Endowment plan, which offers investment cum insurance during the term of the policy. You can choose the level of cover within the limits,
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which will depend on whether the policy is a Single premium or Regular premium contract, term chosen and on the level of premium you agree to pay. The allocated premiums will be applied to purchase units as per the Fund type chosen. Your Unit Account will be subject to deduction of charges as specified in the Policy Conditions. The value of the units in the Unit Fund may increase or decrease, depending on the investment return of the assets representing the chosen Fund Type. PAYMENT OF PREMIUMS You may pay premiums regularly at yearly, half-yearly or quarterly intervals over the term of the policy. The minimum annual premium will be Rs.5, 000/increasing thereafter in multiples of Rs.1, 000/-. Alternatively, a Single premium can be paid subject to a minimum of Rs.10, 000/- and thereafter in multiples of Rs.1, 000/-.
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A systematized study requires proper planning and implementation of the same. So, this research design includes an outline of the study, which was conducted at HDFC Standard Life Insurance Company Limited. Bangalore. The design of the study contains information stating the statement of the problem, objective of the study, need for the study, and scope of the study, significance of the study, research methodology, and sources of data, tools and techniques of data collection, plan of analysis, limitations of the study and operational definition of the concepts, sampling and sampling design.
There are lot of insurance companies are offering a number of insurance policies with different schemes and benefits. These policies have to frame considering interest and preferences of the different kinds of people. The insurance companies has to know which type of the policies can satisfy the needs and preferences of the different people in the society, so that the investor can invest his/ her savings in those policies which are most suitable & beneficial. Therefore this study was conducted to throw the light on some of the policies and to study the investors preferences regarding insurance products, and awareness of different products, services, likes and dis-likes of the investors and what are all the benefits expected from the life insurance products by the investors. The study of Investment opportunities helps the company in knowing the requirements, needs and preferences of general public in line with insurance products and helps companies providing such plans to customize their products according to LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 31
the preference of investors and also to create awareness among people about the investment options.
The survey will be conducted only to working respondents Some of the major points of the life insurance policy were not let out. Some of the information was confidential. Which do company & its employees only use? So such informations are not reviled outside for the general public
Methodology of Research:
I. Type of Research
The research carried out in this study is both exploratory and descriptive in nature. II. Sample size Convenience sampling has been adopted for the study. The sample size taken up for the study was 100 respondents. The respondents include professionals, self-employed, employed, and businessmen. III. Tool for data collection The study was done based on the collection of Primary & Secondary data. Primary Data: Primary data was collected with the use of questionnaire and personal interaction with the company employees and general public. Secondary Data: Secondary data was collected by: Referring several books on insurance issues. Referring different books and previous project reports in a college library. Referring from fact sheets, brochures, journals, reference books, etc. Referring some of the articles, reports and magazines on insurance.
the investment plans. This was done through questionnaire and personal interaction with the employees of HDFC SLIC .
CHAPTER SCHEME
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CHAPTER 1 Introduction.
PART-A: About industry PART-B: About subject
CHAPTER 2 Research Design. CHAPTER 3 Company Profile. CHAPTER 4 Presentation and Analysis of Data & Interpretation. CHAPTER 5 Summary of Findings, Suggestions and Conclusions. BIBLIOGRAPHY ANNEXURES
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HDFC standard life insurance company was started on 14th august 2000 and received a license 23rd October 2000.HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3-year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000, an expert team from the UK joined a handpicked team
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from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank. In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000. Incorporation of HDFC Standard Life Insurance Company Limited: The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Our ambition from as far back as October 1995 was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life's existing investment in the HDFC Group, this is the maximum investment allowed under current regulations. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance companies in India are measured. HDFC has always been market-oriented and dynamic with respect to resource mobilization as well as its lending programme. This renders it more than capable to meet the new challenges that have emerged. Over the years, HDFC has developed a vast client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment. HDFC has developed a network of institutions through partnerships with some of the best institutions in the world, for providing specialized financial services. Each institution is being fine-tuned for a specific market, while offering the entire HDFC
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customer base the highest standards of quality in product design, facilities and service. HDFC is a professionally managed organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and urban policy & development. The board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to shareholders. Company Mission The company aim to be the top new life insurance company in the market. This does not just mean being the largest or the most productive company in the market; rather it is a combination of several things like, Customer service of the highest order. Value for money for customers. Professionalism in carrying out business. Innovative products to cater to different needs of different customers. Use of technology to improve service standards. Increasing market share.
Company Values
SECURITY: Providing long term financial security to our policy
holders will be our constant endeavor. We will be do this by offering life insurance and pension products.
TRUST: We appreciate the trust placed by our policy holders in us.
Hence, we will aim to manage their investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customers, we
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Their mission is to be the best new life insurance company in India and these are the values that will guide them in this. LOCATION HDFC standard life insurance company limited operates its business through its Branches The HDFC Standard Life Insurance company holding their main Regional office in Mumbai. CORPORATE OFFICE HDFC Standard Life Insurance Company Limited, IL&FS Financial Centre, Plot C22 - G Block, Bandra Karla Complex, Bandra (East), Mumbai - 400 051. Tel: 56932666 Website -hdfcinsurance.com
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OBJECTIVES
Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.
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VISION STATEMENT
The most successful and admired life insurance company, which mean that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, the most obvious choice for all
VALUES
Integrity Innovation Building a store house of treasures through experiences. Looking at every product and process through fresh eyes. Honest and truthful in every action. Transparency. Stick to principles irrespective of outcome. Be just and fair to everyone.
Customer centric Understanding Customer expectations by keeping him as the centre-point. Understanding customer needs and deliver solutions.
People care Genuinely understanding the people we work with. Create an environment of trust. Guiding their development through training and support. Know them on a personal front. Respect for the time of others.
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Team work Co-operate and support across departmental boundaries. Identify strengths and weaknesses accordingly allocate responsibilities to
achieve common objectives. Joy and Simplicity Environment that fosters fun in the form of celebration of individual and To encourage work as fun that contributed to personal and organizational Joy is also derived through simple processes and forms. Being approachable, radiate simplicity and spreads a sense of joy. Moreover team success. development.
leads to results.
ACHEIVEMENTS
Awards: 2008 Ms Renu Sud Karnad selected as the Best Woman Corporate Leader of the Year by Business & Economy Magazine HDFC selected as the top Indian company in FIs / NBFCs / Financial Services Sector for the DUN & BRADSTREET - American Express Corporate Awards 2007 Mr Deepak Parekh recognized by Finance Asia for his lifetime achievements, at their Achievement Awards ceremony held in Hong Kong on24thJan,2008.
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Awards: 2007 Mr Keki Mistry awarded the Best Performing CFO in the financial services sector for 2007 by CNBC-TV 18 Business Today selects Renu Sud Karnad as a Powerful Woman in Indian Business HDFC emerged as the best 'Investment Management Company in India at the Liquid Real Estate Awards 2007 organised by EUROMONEY HDFC ranked 3rd amongst the Asian Banking and Finance Sector for Highest Return on Equity by Asia money Ms Renu Sud Karnad, Executive Director, was one of the eminent women felicitated by the FICCI Ladies Organization at their Women AchieversAward-2007 Awards: 2006 Mr Deepak Parekh, Chairman HDFC Ltd. awarded the Best Non Executive Director 2006 by the Asian Centre for Corporate Governance Mr Keki Mistry, Managing Director HDFC Ltd. awarded the Best Performing CFO in the Financial Services Sector at the CNBC-TV18 CFO Awards 2006 HDFC won the award for 'Investment Management in India' at the EUROMONEY 2006 Real Estate Awards 'Best Home Loan Provider' title at the Zee Business Pinnacle Awards, 2006 Limca Book of Records, 2006: HDFC for the landmark achievement of Rs. One Lakh Crore Best Strategy, at the 4Ps Business, Marketing & Advertising Power Awards 2006 Dun & Bradstreet American Express Corporate Awards 2006 LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 43
Mr. Deepak Parekh, Chairman, HDFC Ltd. conferred with the prestigious PadmaBhushanaward
Awards : 2005 HDFC receives award for 'The Best Presented Accounts' of The Institute of Chartered Accountants of India for 2004-05 HDFC Ranked as Indias Third Best Managed Company by Finance Asia 2005 Mr Deepak Parekh awarded the 'Hall of Fame' award by Outlook Money magazine. HDFC receives the 'Dream Home' award for the best Housing Finance company for 2004 from Outlook Money magazine
Awards: 2004 Awards galore by HDFC at the 44th ABCI Awards!!! 5th Best Company to work for in India, ranked by Business Today in November 2004 Economic Times Corporate Citizen of the Year Award, November 2004 Rated by Deutsche Bank as one of the top 5 banks/Financial Institutions in Asia in October 2004 Ranked among the Top 20 companies to deliver healthiest returns to shareholders, Outlook Money Magazine - September 2004 1st Prize at the New York Festival's Gold Midas Awards for Environmental Communication Ad in August 2004 Features in the Forbes list of Top 20 Leading Indian Companies in May 2004. One of the Top 10 Investor Friendly Companies, ranked by Business Today in March 2004. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 44
Awards: 2003 Clean Sweep by HDFC at the 43rd ABCI Awards!!! National Award for Excellence In Corporate Governance by The Institute of Company Secretaries of India 2nd Best Company for Corporate Governance in India by The Asset magazine. The Economic Times Lifetime Achievement Award - 2003. (For Mr. Deepak Parekh - Chairman, HDFC Ltd.) One of the Top Ten - Most Admired Companies in India ' - 2003 by Business Barons One of the Top Ten - Most Admired CEOs in India ' - 2003 by Business Barons ( for Mr. Deepak Parekh ) India's Second Best Managed Company - 2003 by Finance Asia. India's Biggest Wealth Creator in the banking and financial services by the fourth Business Today - Stern Steward Survey. One of the Top Ten - Most Respected Companies in India' by Business world. Highest rating for ' Governance and Value Creation ' by CRISIL. One among the top ten ' Company Leaders in India' by the Far Eastern Economic Review Survey. Best Managed Financial Institution in India' by fox Pitt Survey.
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Board of Directors
Mr. D M Sukthankar Mr. Deepak S Parekh - Chairman Mr. Keshub Mahindra - Vice Chairman Mr. Keki M Mistry - Vice Chairman & Managing Director Ms. Renu S. Karnad - Joint Managing Director Mr. Shirish B Patel Mr. B S Mehta Mr. D M Sukthankar Mr. D N Ghosh Dr. S A Dave Mr. D M Sukthankar Dr. Ram S Tarneja Mr. N M Munjee Dr. Jamshed J Irani Mr. D M Satwalekar
HDFC has a staff strength of 1388 (as on 31st March, 2007), which includes professionals from the fields of finance, law, accountancy, engineering and marketing 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. Keki M Mistry joined the Board of Directors of the Company in December, 2000. He is currently the Managing Director of HDFC Limited. He joined HDFC Limited in 1981 and became an Executive Director in 1993. He was appointed as its Managing Director in November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered Accountants of India and a member of the Michigan Association of Certified Public Accountants.
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Mr. Alexander M Crombie joined the Board of Directors of the Company in April, 2002. He has been with the Standard Life Group for 34 years holding various senior management positions. He was appointed as the Group Chief Executive of the Standard Life Group in March 2004. Mr. Crombie is a fellow of the Faculty of Actuaries in Scotland. Ms. Marcia D Campbell is currently the Group Operations Director in the Standard Life group and is responsible for Group Operations, Asia Pacific Development, Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell joined the Board of Directors in November 2005. Mr. Keith N Skeoch is currently the Chief Executive in Standard Life Investments Limited and is responsible for overseeing Investment Process & Chief Executive Officer Function. Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding the positions of UK Economist, Chief Economist, Executive Director, Director of Controls and Strategy HSBS Securities and Managing Director International Equities. He was also responsible for Economic and Investment Strategy research produced on a worldwide basis. Mr. Skeoch joined the Board of Directors in November 2005. Mr. Gautam R Divan is a practising Chartered Accountant and is a Fellow of the Institute of Chartered Accountants of India. Mr. Divan was the Former Chairman and Managing Committee Member of Midsnell Group International, an International Association of Independent Accounting Firms and has authored several papers of professional interest. Mr. Divan has wide experience in auditing accounts of large public limited companies and nationalised banks, financial and taxation planning of individuals and limited companies and also has substantial experience in structuring overseas investments to and from India. Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002 was a Partner & VicePresident at Bain & Company, Inc., Boston, where he led the worldwide Utility LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 47
Practice. He was also Director, Corporate Business Development at General Electric headquarters in Fairfield, USA. Mr. Pant has an MBA from The Wharton School and BE (Honours) from Birla Institute of Technology and Sciences.
Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities & Exchange Board of India (SEBI) and is also associated with various committees of SEBI and the Reserve Bank of India (RBI). 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 Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC. Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in law and holds a Master's degree in economics from Delhi University. She has been employed with HDFC Limited since 1978 and was appointed as the Executive Director in 2000. She is responsible for overseeing all aspects of lending operations.
THE STRATEGY
Too many options simply confuse the users where as too few will surely turn them away. HDFC SLIC has thankfully introduced products with basic premiums serving specific needs of all. Most products have some additional optional value adding benefits at marginal additional premiums. The proponent is free to choose any of the basic products along with none or some of the option as per his needs.
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help your family repay the outstanding loan in case of your unfortunate death on this product.
Children's Plan
The future of your child is most important to you. You need to plan today to ensure a bright future for your child, whether it is education, marriage or establishing a professional career. To help you save for your child, we at HDFC Standard Life present the plan is affordable, customized to your needs, and above all, enables you to realize your dreams for your child. This plan is well suited for the value-conscious customer, and above all, for every loving parent. Grandparents, other relatives or any adult for the benefit of a child can also choose the plan. HDFC Children's Plan The HDFC Children's Plan gives you: * Invaluable financial support to your child * Helps you customise an ideal plan for your child * Provides you multiple options for multiple benefits The HDFC Childrens Plan is designed to secure your childs future by giving your child (the beneficiary) a guaranteed lump sum, on maturity or in case of your unfortunate demise, early in the policy term. The premiums, paid by you, are invested by the company to give you good long-term returns.
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Bajaj Allianz Life Insurance Birla Sun Life Insurance Aviva Life Insurance ING Vysya Life Insurance Amp Sanmar Life Insurance Tata AIG Life Insurance MetLife Insurance SBI Life Insurance LIC
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Following are the Some branch offices in India Branch Offices: Agra Ahmadabad Allahabad Amravati Asansol Bhubaneswar Calicut Chennai Delhi Faridabad Hyderabad Jaipur Kanpur Kolhapur Lucknow Mangalore Mumbai Nagpur Patiala Pune Salem Surat Ajmer Ambala Amritsar Bangalore Bhopal Chandigarh Coimbatore Durgapur Ghaziabad Indore Jalandhar Kochi Kolkata Manjery Madurai Mysore Nashik Pondicherry Rajkot
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Trivandram Vijayawada
Analysis:
From the above table, it can be analyzed that out of 100 respondents 32% of the respondents are employed, 30% of the respondents are belonging to business, 26% of the respondents are self employed and 12% are belongs to professionals.
Inference:
From the above table we can inferred that, highest percentages of respondents are belongs to employees.
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Kinds of respondents
35 30 25 20
P g a t n c r e
Occupation
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Analysis:
From the above table, it can be analyzed that 33% of the respondents are belongs to 20-30 years age group, 39% of the respondents are belonging to 31-40 years, 21% of the respondents are the age group of 41-50 years and 07% of the respondents are belongs to 51 and above age group.
Inference:
From the above table we can inferred that, highest percentages of respondents are belongs to age group of 31-40 years. LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 56
g a t n c r e P
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INCOME EARNED Below Rs10, 000 Rs 10,000-20,000 Rs 20,000-30,000 Rs 30,000 and above TOTAL
Analysis:
The above table indicates that, out of 100 respondents 35% of respondents are earning below Rs 10,000, 42% of respondents are earning between Rs 10,000 to Rs 20,000, 15% of respondents are earning between Rs 20,000 to Rs 30,000 and 8% of respondents are earning Rs 30,000 and above.
Inference:
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The above table shows the earnings of different respondents. The highest percentage of respondents belongs to the second category i.e. Rs 10,000-20,000 income.
Monthly income
45 40 35 30 25 20 15 10 5 0
g a t n c r e p
Income group
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SAVINGS PER MONTH Below Rs 2,000 Rs 2,000-4,000 Rs 4,000-6,000 Rs 6,000 and above TOTAL
Analysis:
The above table clears that, out of 100 respondents, 26% of them save money below Rs 2,000, 47% respondents are saving between Rs 2,000 to Rs 4,000, 18% respondents saves Rs 4,000 to Rs 6,000 and 9% respondents saves Rs 6,000 and above.
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Inference:
The above table indicates that the highest percentage of respondents save between Rs 2,000 to 4000 i.e. 47 percent. The savings of the individuals depends on their earnings.
g a t n c r e p
Savings
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TABLE-5 Table showing the different investment alternatives preferred by respondents for savings
INVESTMENT ALTERNATIVES BONDS DEPOSITS SHARES MUTUAL FUNDS LIFE INSURANCE OTHERS TOTAL NO. OF RESPONDENTS 13 29 21 16 19 2 100 % OF RESPONDENTS 13% 29% 21% 16% 19% 02% 100%
Analysis:
The above table shows that, 13% of respondents wants to invest their savings in bonds, and the maximum of respondents wants to invest in deposits i.e. 29%, 21% of the respondents preferred for shares to invest and 19% of the people interested LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 62
in life insurance and 2% of the respondents wants to invest their savings other alternatives like real estates, jewels, gold and other real investments.
Inference:
Even though there are different investment alternatives are available to invest but the investors are not ready to take more risk on their investments, for this reason the highest percentage of respondents are preferred to invest their savings in deposits i.e. 29%
GRAPH-5 Graph showing the different investment alternatives preferred by respondents for their savings.
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g a t n c r e p
Alternatives
TABLE-6 Table showing the respondents opinion about Life insurance for their investments
Analysis:
The above table indicates that, out of 100 respondents, 30% of respondents telling that insurance policies are average to invest, 49% respondents are showing the good opinion about life insurance to invest, 14% of them telling that insurance plans are very good to invest and 7% of respondents had excellent opinion to invest in insurance plans.
Inference:
The above table clears that the highest percentage of respondents are showing good opinion about life insurance to invest i.e. 49% of respondents, because the only insurance policies can give predictable rate of return with life cover.
GRAPH-6 Graph showing the respondents opinion about Life insurance for their investments
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g a t n c r e p
TABLE-7 Table showing companies preferred by the respondents to invest in life insurance. COMPANY
HFDC SLIC
NO. OF RESPONDENTS % OF RESPONDENTS
15
15
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Birla sun Life Met Life ICICI LIC Others Total Analysis:
5 9 14 17 33 7 100
5 9 14 17 33 7 100%
15% of the respondents preferred to invest in HDFC SLIC. Only 5% of the respondents preferred to invest in MAX NEW YORK LIFE. 9% of the respondents preferred to invest in Birla Sun Life and 14% of the respondents are proffered to invest in met life. 17% of respondents prefer to take up investment plans from ICICI The highest percentages of respondents are preferred to invest in LIC i.e.33%. 7% of the respondents are preferred to invest in other insurance companies.
Inference:
From the above table it is clear that LIC is still the market leader in insurance sector, so the highest percentage of people most preferred to invest in that company only. But people are starting to believe that the private companies are providing equal benefits, and Insurance industry is growing tremendously that is why new companies are getting customers.
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GRAPH-7 Graph showing companies preferred by the respondents to invest in life insurance.
Investments in different companies
35 30 25 20
g a t n c r e p
15 10 5 0 HDFC SLIC Max New York Life Birla sun Life Met Life ICICI LIC Others
Companies
4 56
4% 56%
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14 26 100
56% of the respondents have given the highest importance to security as reason to opt the companies 26% of the respondents have given the importance to service as reason to opt the companies 14% of the respondents have given the importance to product as reason to opt the companies 4% of the respondents have given the importance to ambience as reason to opt the companies
Inference:
Security is one on the minds of the people, which means that the amount left to be saved or invested. Thats why Indian families even today want security for their hard earned money.
GRAPH - 8 Graph showing the respondents preference criteria for HDFC life insurance.
LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 69
Preferred companies
60 50 40 30
g a t n c r e p
TABLE-9 Table showing the respondents most preferred investment in life Insurance plans
NO. OF RESPONDENTS % OF RESPONDENTS
INVESTMENT PLANS
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MONEY BACK PLANS ENDOWMENT PLANS TERM ASSURANCE PLANS WHOLE LIFE PLANS INVESTMENT PLANS (ULIPS) TOTAL
30 26 10 24 10 100
Analysis:
From the above table we can analyze that 30% of the respondents well aware of money back plans and they need maximum return to their money and 26% of the respondents wants to invest in endowment policies, 10% of the people they dont want to pay continues premiums, and 24% of the respondants wants to invest in whole life policies to cover the future risk and finally 10% of the people are interested in unit linked plans. They think that they want to earn income as well as risk cover.
Inference:
In the insurance sector at present scenario there are lot of schemes available to invest, but the investor give much preference to, which schemes gives maximum returns on their investments with less risk. For this reason the highest percentage of respondents gives more preference to money back plans.
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GRAPH-9 Graph showing the respondents most preferred for investments in Life insurance plans
Pe g a t n e c r
Plans
TABLE-10 Table showing the benefits availed for the respondents in their Investments
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BENIFITS TAX BENEFIT MATURITY BENEFIT DEATH BENEFIT LOAN BENEFIT TOTAL
Analysis:
The above table shows that, 40% of respondents like to invest the plans that are giving maximum tax benefits, 21% of them like to invest to get maturity benefits, 19% of respondents are like death benefits and highest percentage of respondents are like to get loan benefits from their investments i.e. 20%.
Inference:
The highest percentage of respondents like tax benefits in insurance policies, rather than other above benefits, i.e. 40%. The people want to satisfy their financial needs by going tax benefit schemes.
GRAPH-10
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Graph showing the benefits availed for the respondents in their investments
g a t n c r e P
TABLE-11
LORVEN COLLEGE OF SCIENCE AND MANAGEMENT Page 74
Analysis:
The table indicates the expectation from the insurance company, 40% respondents expects predictable rate of return, 20% of respondents for low premium, 28% of respondents expects risk coverage and 12% of respondents are expect other returns.
Inference:
From the table, we can find that highest percentage of respondents expects predictable rate of return from the insurance companies with risk cover compare to above other expectations.
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GRAPH-11 Graph showing the respondents expectation from the insurance company
Expectations of respondents
45 40 35 30 25
P g a t n c r e
Expectations
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TABLE-12 Table showing the mode of payment most preferred by the respondents.
NO. OF RESPONDENTS % OF RESPONDENTS
MODE OF PAYMENT
10 24 40 26 100
Analysis:
10% of the respondents prefer to pay monthly 24% of the respondents prefer to pay quarterly 40% of the respondents prefer to pay half yearly 26% of the respondents prefer to pay annually
Inference:
Monthly savings is still a difficult factor in India hence majority of the respondents are opted for half yearly payments, as they are not ready to pay
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the premium every month. They are ready to pay a lump sum amount on halfyear basis.
GRAPH-12 Graph showing the mode of payment most preferred by the respondents.
Pe g a t n e c r
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Analysis:
The table indicating the respondents plans for future. Among the 100 respondents, 28% of them planned for retirement, 22% of them planned for childrens education, 30% of respondents planned for family welfare, 18% of respondents planned for tax liability and 2% of respondents have not planned for future.
Inference:
The analyzed data shows the maximum number of respondents had planned for family welfare, because the Indians are give more respect and preference to their familys welfare rather than other above future plans.
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Pe g a t n e c r
N M I T E R
C S N E R D L I H N O I T A C U D E
Y L I M A F W R A F L E
Y B I L X A T
Plans
G I A L P O N Page 80
TABLE-14 Table showing the awareness of respondents about HDFC Standard Life Insurance Company
NO. OF RESPONDENTS AWARENESS YES NO TOTAL 70 30 100 70% 30% 100% % OF RESPONDENTS
Analysis:
From the table we can analyze that the 70% of the respondents are well aware of HDFC Standard Life Insurance Company. And 30% of the respondents are not aware of HDFC Standard Life Insurance Company
Inference:
From the table we can inferred that maximum numbers of respondents are well aware of HDFC Standard Life Insurance Company, because now days the existing company creating awareness in the minds of the people.
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GRAPH-14 Graph showing the awareness of respondents about HDFC Standard Life Insurance Company
Awareness of HDFC SLIC
80 70 60 50 40 30 20 10 0 YES AWARENESS NO
e P n c r t g a
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TABLE-15 Table showing opinion about investments in HFDC Standard Life Insurance Company Limited
OPINION OF HDFC SLIC VERY MUCH PREFERRED PREFERRED NOT PREFERRED TOTAL NO. OF RESPONDENTS 30 66 4 100 % OF RESPONDENTS 30% 66% 4% 100%
Analysis:
The table shows the opinion of respondents towards investment in HDFC SLIC. Among 100 respondents, 30% of respondents responded for the choice of very much preferred, 66% chosen the option for preferred and 4% of them not preferred.
Inference:
The maximum of responds had good opinion about investment in HDFC SLIC. And the HDFC SLIC is one of the top five life insurance companies in India, the people are now getting interested to invest in HDFC SLIC, and 30% of the respondents are very much preferred about invest in HDFC SLIC.
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GRAPH-15 Graph showing the opinion of respondents about investment in HDFC Standard Life Insurance Company Limited
Opinion about HDFC SLIC
70 60 50 40 30 20 10 0 VERY MUCH PREFERRED PREFERRED Opinion NOT PREFERRED
g a t n c r e P
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TABLE-16 Table showing whether the respondents are policy holders of HDFC Standard Life Insurance Company or Not
NO. OF RESPONDENTS POLICY HOLDERS OF HDFC SLIC YES NO TOTAL 19 81 100 % OF RESPONDENTS 19% 81% 100%
Analysis:
The table indicates that only 19% of the respondents are the policyholders of HDFC SLIC, remaining 81% of respondents are non-policyholders of HDFC SLIC.
Inference:
By analyzing the table the policyholders of the HDFC SLIC are only 19%, because the company has not improved their network to approach the people to buy their policies and not create awareness of their products and services.
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GRAPH-16 Graph showing whether the respondents are policy holders of HDFC Standard Life Insurance Company or Not
Pe g a t n e c r
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TABLE-17 Table showing the satisfaction level of policyholders with HDFC Standard Life Insurance Company products and services
SATISFACTION OF POLICY HOLDERS YES NO TOTAL NO. OF RESPONDENTS 19 0 19 % OF SATISFACTION 100% 0% 100%
Analysis:
The above table indicates that 100% of the respondents are satisfied with the products and services of existing company.
Inference:
By analyzing the above table we can inferred that the all policyholders of the HDFC SLIC are satisfied with the products and services of the company.
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Pe g a t n e c r
10 5 0 YES Satisfaction NO
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SUMMARY OF FINDINGS
The majority of the respondents belong to employees. The highest % of respondents belongs to the age group between 31-40 years. Majority of respondents earnings per month is Rs.10, 000 to 20,000. 47% of the people save out of their earnings to the extent of Rs. 2,000-4,000. The highest % of the respondents preferred to invest their savings in deposit schemes. The maximum % of people are ready to invest in life insurance. LIC is having highest market share compare to other private life insurance players and still LIC is the market leader in life insurance sector in India. The maximum numbers of people give more preference to security in their investments, because of this reason the people most preferred to invest in life insurance policies. According to this analysis we can find that the maximum number of people ready to invest in money back plans and unit linked investment plans (ULIP) compare to other plans. The highest % of people giving more preference to tax benefits. Most of the people want to invest in those investment alternatives, which furnish predictable rate of return with risk coverage. Majority of the investors preferred half yearly payments of premium. The investors give more preference to family welfare plans. The majority of people well aware of HDFC Standard Life Insurance Company Limited. 30% of the respondents are very much preferred to invest in HDFC Standard Life Insurance Company Limited. Out of 100 only 15% of the respondents are the policyholders of HDFC Standard Life Insurance Company Limited. All the policyholders of HDFC Standard Life Insurance Company Limited have very much satisfied with the products and services of the company.
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TO THE INVESTORS:
Investors should be aware of insurance policies and its future benefits. The regularity of investment is most important. The systematic investment is one of the best ways of savings because it makes investment a habit. Investor should analyze his needs and wants accordingly he should choose the policy. There are lots of agents and advisors to give awareness regarding insurance, so before going to invest in insurance gather information and take investment decision. Investors should be aware of IRDA, it is a body to regulate all insurance companies in India. For IRDA MNC/Pvt ltd and Govt company is same. So in HDFC Pvt Ltd insurance company also has the same merits.
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CONCLUSION
Since the incorporation of HDFC Standard life in the year 2000 Bangalore branch has become an integral part of the joint venture between HDFC and Europe based life insurance Company, which has a history of more than 200 years in the insurance industry. HDFC Standard Life is the top most insurance company in the service industry HDFC Standard life doing lot of work to sustain in the national insurance market, because of the keen competition. With all these analysis we can conclude that company is trying to develop and grow itself in the insurance industry because whoever stays in this market he is the winner. So applying latest possible service manuals and methods in their customer satisfaction and company main aim to become NO: 1 Life Insurance Company within 2008.
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