Investment Opportunities in Insurance Sector: 1. Introduction of Life Insurance

Investment Opportunities In Insurance Sector 1.
INTRODUCTION OF LIFE INSURANCE

HISTORY OF LIFE INSURANCE IN INDIA: The life insurance industry in India dates back to 1818, when the Oriental life insurance company set up office in Kolkata in 1823, the Bombay Life Assurance Company stated operations in Mumbai, India. The Indian Life Assurance Companies Act was passed in 1912 the Indian Assurance Companies Act 1928 followed this. These acts allowed the government to collect data regarding life and non life businesses conducted by both Indian and foreign insurance companies later the 1928 act was amended and a new act the Insurance Act was passed in 1938. By the mid 1950s, 154 Indian insurers, 16 foreign insurers and 75 provident societies were operating in the country. The life insurance business was concentrated in urban areas and was confined to the higher strata of society. In 1956, the management of these companies was taken over the government of India LIC was formed in September 1956 through the LIC Act 1956 with a capital of Rs 50 million. One of the main objectives of forming LIC was to make insurance cover available to a larger number of people particularly to the lower segments of society. In 1972, the government took over management control of 106 private general insurance companies and formed the General Insurance Corporation (GIC) over the years; LIC expanded its network all over the country and become one of the largest corporations in India. LIC had seven zonal offices 100 divisional offices, 2048 branch offices and army of agents totaling 6, 28,031. Growth in Indian insurance industry was minimal in the 1960s and 1970s because of low savings and the low level of literacy. In addition the insurance industry lacked sufficient funding and infrastructure. However changes in the economy in the 1980s such as growth in the rate of industrialization improvement in infrastructure the capital markets increase in the savings rate and substantial capital formation resulted in tremendous growth in the life insurance industry over the years LIC launched several group insurance and social security schemes to enhance its reach in the rural areas.
The Oxford College Of Business Management
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Investment Opportunities In Insurance Sector

Life Insurance: Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. Essentially, a life insurance policy is a contract between the named insured and the insurance company wherein the insurance company agrees to pay an agreed upon sum of money to the insureds named beneficiary as long as the insureds premiums are current.
People take out life insurance policies for a number of reasons. Such insurances provides security to family members upon the loss of a loved for instance if the primary wage earner dies in his or her prime the death benefit received from a life insurance policy will assist the surviving family members in overcoming the burden of the tragic loss. Life insurance can be purchased by individuals but is also offered as a perk by many employers. Often times large employers and government employers offer group life insurance at no cost to the employee. Should the employee wish to obtain additional lie insurance from the employers insurance company they can usually do so at reduced rates.
The cost of life insurance varies depending on such factors as the age health and occupation. For example the premium for a 25 year old male non-smoker in excellent health will be far less expensive than a similar policy for a 65-year old male smoker. Similarly a sky dive instructor would have to pay much higher premiums for life insurance then would a librarian.
Life insurance is available in a number of different forms to fit the tastes of the proposed insured. Some of the typical forms of insurance policies include whole life, variable life and term life. Term life insurance policies begin with low premiums during the initial stages of the policy and these premiums increases steadily as the insured grows older. There is no cash built-up in a term policy and accordingly the death benefit will not increase.
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With whole life and variable life insurance a portion of premium pays for the insurance and the remainder servers as a tax-free investment. A whole life policy sets a premium at the beginning of the policy and that premium does not change over the life of the policy. This form of insurance allows for a cash of the policy or it will simply serve to increase the death benefits in the end. In a variable life product, the premium remains the same over the life of the policy, and there should be a cash build-up as long as the various mutual funds selected by the insured perform well.
Insurance Premium: An insurance premium is the actual amount of money charged by insurance companies for active coverage. An insurance premium for the same service can vary widely among insurance providers which are why experts strongly recommend getting several quotes before committing to an insurance policy. Insurance agents or brokers will take your basic information and calculate an insurance premium estimate based on your answers and other factors. The lowest quoted price on an insurance premium may be the better bargain but the level of coverage may also be lower.
The cost of an insurance premium is largely based on statistics not necessarily on individual habits or history. 22-year old male seeking car insurance for a sports car can often anticipate a higher insurance premium than a 45-year old woman driving a mid-size sedan. Both may have excellent driving records but the insurance company considers a younger driver in a faster car to be more at risk for accidents. Therefore the insurance premium quotes will be noticeably different. In general a more expensive or faster car will cost more to insure simply because owners of those vehicles TEND to drive faster.
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The same philosophy holds true for medical insurance premium costs. Non-smokers statistically live healthier lives than smokers, for example construction worker may have more serious on the job accidents than accountants. A 55-year-old lumberjack who smokes may be charged a higher health insurance premium than 30-yaer-old non-smokers working in an office conversely an insurance premium may be reduced if the policyholder changes his or her habits and life style.
An insurance premium is generally collected in monthly or semi-yearly payments. If the policyholder fails to make a scheduled payment the insurance company can choose to cancel the policy entirely. This is often referred to as a lapsed policy. Either the customer will pay the balance of the insurance premium and become reinstated or the policy will become null and void. Because the billing cycle can be lengthy it is not unusual for policy holders to forget to make payments before the policy lapses.
An insurance premium is always in a state of flux rates can go up or remain stable between billing cycles. An accidents claim can dramatically changes the insurance premium rate of the claimant especially if the accidents report show the policy holder was at fault. Because most states now have a mandatory minimal insurance coverage law for drivers there may be no other choice but to pay the increased insurance premium or find another company willing to a higher risk driver. Insurance agencies are for profit businesses, so they will make every effort to recoup their losses after a pay-out. Paying an insurance premium may seem like a waste of money, but knowing your expenses will be met after an accident can bring peace of mind.
Legislative and regulatory matters: The Oxford College Of Business Management
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Insurance Act 1938: In 1912, the Indian life insurance companies Act and Provident Fund insurance societies Act 1912 were passed. This was the first comprehensive legislation in India to regulate the business of insurance. It had been observed that the provisions of Indian companies Act did not meet the purpose.
A further legislation was passed in 1938. The insurance Act 1938, aimed to consolidated and amid the law relating to business of insurance came into force with effect from 1 st July 1939 important changes were effected in 1950, whereby provisions made for the abolition of the chief agents, special agents and principal agents, the expenses were sought to be limited, investments were controlled much more, the insurance association, the insurance councils and also tariff advisory committees were formed as a matter of self regulation. After nationalization of the insurance business, the application of the insurance Act to the nationalized LIC and the GIC and the subsidiary was limited. Further amendments have been made in the insurance Act 1938, through the IRDA Act 1999, in view of the new circumstances arising out of the opening of the insurance industry in 2000.
Section 2 (5A) defines chief agent as a person who, not being salaried employed of an insurance, in consideration of commission (I) performs any administrative and organizing function for the insure and (II) procure life insurance business for the insure by employing causing to employed insurance agents on behalf of THE INSUER. Section 2 (177) defines special agent for life insurance business in similar terms. He only procures business through agents but does not perform administrative functions like a chief agent.
Section 42A of the insurance Act, being one of the amendments made to the Act in 1950, provides for the registration of chief agents and special agents. Certificates are valid for 12
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months and may be renewed. No chief agents or special were registered till the end of 1999. This position may change under the new circumstances. Chief agents and special agents may be registered.
Insurance Regulatory and Development Authority Act 1999: This Act was passed by parliament in December 1999 and in received presidential assent in January 2000. This Act provides for the establishment of the Authority to protect the interest of the holders of insurance policies, to regulate, promote and ensure orderly growth of there to. It also sought to matters connected there with or incidental Insurance Corporation Act 1956 and the general Insurance Business Act 1972. Under this Act, an authority called IRDA has been established. This is a corporate body established for the purpose and objects as set out in the explanation to the title. The Authority replaces Controller under Insurance Act 1938. The first schedule amends Insurance Act 1938. It states if Authority is superseded by the Central Government, the Controller of Insurance may be appointed till such time as Authority is reconstituted. Section 2(f) defines an intermediary or insurance intermediary to include insurance brokers, re-insurance brokers, insurance consultants, surveyors and loss assessors. The authority has the power and function to specify qualification, code of contract and practical training for intermediaries and agents.
PURPOSE AND NEED OF INSURANCE
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Assets are likely to be destroyed or made non functional due to accidental occurrences called perils. Assets can, therefore be insured. A few examples of perils are: floods, breakdowns, lightning, and earthquake. Perils are the events. Risks are the consequential losses or damages. Possibility of damage to asset caused by any peril is the risk that asset is exposed to. Risk means uncertainty or unpredictability about future loss or damage, which may or may no happen. This refers to the losses, which may happen suddenly and unexpectedly. This is because of uncertainty about the risk that insurance plays the role. Insurance becomes relevant only if there are uncertainties of occurrence of event leading to losses. Insurance is done against the contingency of the happening of such events. No Uncertainty No Insurance.
Rules laid by IRDA for life insurance companies:
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According to the IRDA Act, the Indian promoter may invest either wholly or enter into a joint venture with a foreign insurance company. It would be pertinent to note that foreign direct investment has been capped at 26%.
It is pertinent to mention that insurance business can be carried out only a public company incorporated in India under the companies Act 1956.
The IRDA Act has made it mandatory for private insurance companies to sell 5% of the policies in the rural sector, while for the general insurance segment, at least 2%.
Life insurance companies will have to increase their rural business from 5% in the first year to 15% in the fifth year and in the general insurance segment it has to increase from 2% to 5% in the third year.
The IRDA Act has also prescribed social sector obligation to be under by insurance companies. The companies will have to insure 5000 lives in the social sector in the year. This has to gradually increase every year to 20000 lives in the fifth year.
2. RESEARCH DESIGN:
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2.1 TITLE OF THE STUDY: INVESTMENT OPPORTUNITIES IN INSURANCE SEGEMENT WITH SPECIAL REFRENCE TO LIFE INSURANCE
2.2 Review of literature

Carrow Kenneth A. Citicorp-Travelers Group merger: Challenging barriers between banking and insurance. Journal of Banking and Finance 25 (2001): 1553-1571 This paper is conceptually similar to the one cited above, in that the author investigate whether the announcement of a merger between Citicorp and Travelers abnormally impacted stock prices of financial and insurance companies. Analysis of abnormal returns surrounding the merger show that life insurance companies and large banks experienced significant stock price increases, while the returns of stocks of smaller banks, health insurers and property/casualty insurers remain relatively unchanged. Estrella, Arturo. Mixing and matching: Prospective financial sector mergers and market valuation, Journal of Banking and Finance 25 (2001): 2367-2392; This paper analyses, which types of mergers are likely to be most productive for banks and other financial firms in the U.S. The author acknowledges that the extent to which different business activities are fundamentally distinct induces a tradeoff between diversification gains and loss of efficiency. The research considers life insurance, property/casualty insurance, securities and commercial firms as potential matches for firms and concludes that potential diversification gains arise from almost all combinations involving banking and insurance. The paper stands out because it shows, unlike other earlier research, that property and casualty insurance companies offer larger diversification gains to banks than life insurance companies.
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Johnston, Jarrod and Madura J. valuing the potential transformation of banks into financial service conglomerates: Evidence from the Citigroup merger The Financial review 35 (2000): 17-36; The authors first summarize previous literature that examined motives for combining bank and other financial services. Diversification benefits and product complementarities (i.e. mortgage and mortgage insurance, auto financing and auto insurance) seem to be the prime motives. However, some earlier research also suggests that there are few linkages between bank services and underwriting services in terms of customers, outlets or other characteristics that generate efficiencies. Given the sources of potential gains, it appears that life insurance companies with their limited underwriting risk and wide variety of other products offered to individual customers would be more attractive targets for banks than other types of insurance companies. Based on these observations, the authors propose to test whether commercial banks, insurance companies and brokerage firms were favorably affected by the Citigroup/Travelers merger for impending consolidation of financial services firms. They measure the valuation effects resulting from the merger announcement among those commercial banks and financial services firms most likely to be affected and conclude that commercial banks, insurance companies and brokerage firms have all experienced positive and significant valuation effects upon the announcement of the Citigroup merger. However, the authors find that the valuation effects are more favorable for brokerage firms than for commercial banks and than for insurance companies. Finally, the authors perform a cross-sectional analysis which concludes that the largest banks and the largest brokerage firms experience more favorable valuation than the smaller banks or smaller brokerage firms. Size does not seem to be significant for insurance companies
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2.3 STATEMENT OF THE PROBLEM: The research undertaken is to understand and analyze awareness level of people towards life insurance. The study also aims at creating to the people about the various plans of life insurance. 2.4 OBJECTIVES OF THE STUDY: To know the awareness level of the people towards life insurance. To highlight the picture of insurance sector and challenges faced by the insurance sector. To create awareness among the people in rural areas. To create awareness to the people about the various plans of life insurance.
2.5 SCOPE OF THE STUDY: The research is taken up as the insurance sector is doing very well. Many people in India are not aware of the insurance benefits so there are many investment opportunities in the insurance segment. It is taken up with the view of knowing the opportunities in the insurance sector. SAMPLE SIZE: The sample size consists of 50 people. SOURCES OF DATA: Primary data: The data are collected through questionnaires and personal interviews. Secondary data: From books, business journals and magazines.
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Investment Opportunities In Insurance Sector 2.6 LIMITATIONS OF THE STUDY:

Due to time constraint the sample size is restricted to 50 members. Insurance is limited to the finance value.
2.7 AN OVER VIEW OF THE REPORT:

CHAPTER 1: INTRODUCTION It provides insight into the industry. It consists of the history and the current scenario of the industry. It also consists of theoretical information related to the study. CHAPTER 2: RESEARCH DESIGN It consists of the detailed coverage of the manner in which the report is prepared. Research methodology helps to understand the practical steps adopted to reach the data and methods of analysis and interpreting the response. CHAPTER 3: PROFILE OF THE INDUSTRY/COMPANY It is concerned with industry profile and 5 company profiles, which gives detailed information about the origin, growth and development, present status, and future plans and funds. CHAPTER 4: ANALYSIS AND INTERPRETATION OF THE DATA It consists of analysis and interpretation of data collected through primary and secondary data. CHAPTER 5: SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSIONS It is the last and final chapter, which contains all findings, suggestions and conclusions.
3. INDUSTRY PROFILE:
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Insurance The business of insurance is related to the protection of the economic value of assets. Every asset has a value. The asset would have been created through the efforts of owner, in the expectation that either through the income generated there from or some other output, some of his needs would be met. In the case of a factory or a cow, the production is sold and income generated. In the case of a motorcar, it provides comfort and convenience in transportation. There is no direct income. There is a normally expected life time for the asset during which time is expected to perform. The owner, aware of this, can so manage his affairs that by the end of the life time. A substitute is made available to ensure that the value or income is not lost. However, if the asset gets earlier, being destroyed or made nonfunctional, through an accident or other unfortunate event, the owner and those deriving benefits there from suffer. Insurance is a mechanism that helps to reduce such adverse consequences.
Purpose and need of insurance Assets are insured, because they likely to be destroyed of made non-functional through an accidental occurrence. Such possible occurrences are called perils. Firefloods, breakdowns lighting earthquakes, etc. are perils. The damage that these perils may cause the asset is the asset is exposed to the risk only means that there is possibility of loss or damage. It may or may not happen. There is an uncertainty that it may happen. Insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot be insured against. Conceptually, the mechanism of insurance is very simple. People who are exposed to the same risks come together and agree that, if any one of the members suffers a loss, the others will share the loss and make good to the person who lost. All people who send goods by ship are
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exposed to the same risk related to water damage, ship sinking, piracy, etc. those owing factories are not exposed to these risks like fire, hailstorms, lighting, burglary, etc. like this, different kinds of risks can be identified and separated groups made, including those exposed to such risks. By this method the risk spared among the community and the likely bib impact on one is reduce to smaller manageable impacts on all. The manner in which the loss is to be shared can be determined beforehand. It may be proportional to the likely loss that each person is likely to suffer, which is indicative of the benefit he would receive if the Peril befell him. The share could be collected in advance at the time of admission to the group. Insurance companies collect in advance and create a found which the losses are paid. A human life is also an income generating asset, this asset also can be lost through unexpectedly early or made non-functional through sickness and disabilities caused by accidents. Accidents may or may not happen. Death will happen but timing is uncertain. If it happens around the time of ones Retirement when it could be expected that the income will normally ceased, the person concerned could have made some arrangements to meet the continuing needs. But if happens much earlier when the alternate arrangement are not in place, insurance is necessary to help those dependent on the income. In the case of a human being he may have made arrangements for his needs after his retirements. Those would have been on the basis of some expectations like he may live for another 15 years, or that his children will look after him. If any of these expectations do not become true, the original arrangement would become inadequate and there could be difficulties. Living to be long as much as problems as dying too young.
Insurance does not protect the asset. It does not prevent its loss due to the peril. The peril cannot be avoided through insurance. The peril can sometimes be avoided, through better safety
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and damage control management. Insurance only ties to reduce the impact of the risk on the owner of the asset and those who depend on the asset. It compensates, may not be fully, the losses. Only economic or financial losses can be compensated.
The concept of insurance has been extended beyond the coverage of tangible assets. Exporters run the risk of the importers in the other country defaulting as well as loss due to sudden change in currency exchange rate, economic policies or political disturbances. These risks are now insured. Doctors run the risk of being charged with negligence and subsequent liability for damages.
The amounts in question can be fairly large, beyond the capacity of individual to bear. These are the insured. Thus insurances tended to intangible. In some countries the voice of singer or the leg of dancer may be insured, even though the advantage of spared may not be available in these cases.
There are certain basic principles. Which make it possible for the insurance to remain popular, and the fair arrangement? The first if the facts that people are exposed to the risk and consequences of such risks are difficult for any one individual to bear. It becomes bearable when the community shares the burden. The second is that no one person should be in a position to his asset taking unfair advantage of the arrangement put in to place to protect people from the risks they are exposed to. The Occurrence has to be random, and not the deliberate creation of the insured person.
This industry profile helps to gain an insight into the evolution of the industry and competitive dynamics prevalent in the market. It discusses the significant developments in the
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industry and analyzes the key trends and issues. The profile provides inputs in strategic business planning of industry professionals. This profile is of immense help to management consultants, analysts, market research organizations and corporate advisors.
Challenges facing Insurance Industry
Threat of New Entrants: The insurance industry has been budding with new entrants every other day. Therefore the companies should carve out niche areas such that the threat of new entrants might not be a hindrance. There is also a chance that the big players might squeeze the small new entrants. Power of Suppliers: Those who are supplying the capital are not that big a threat. For instance, if someone as a very talented insurance underwriter is presently working for a small insurance company, there exists a chance that any big player willing to enter the insurance industry might entice that person off. Power of Buyers: No individual is a big threat to the insurance industry and big corporate houses have a lot more negotiating capability with the insurance companies. Big corporate clients like airlines and pharmaceutical companies pay millions of dollars every year in premiums. Availability of Substitutes: There exist a lot of substitutes in the insurance industry. Majorly, the large insurance companies provide similar kinds of services be it auto, home, commercial, health or life insurance.
LIFE INSURANCE CORPORATION OF INDIA

COMPANY PROFILE: The Oxford College Of Business Management
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The Life Insurance Corporation (LIC) was established about 44 years ago with a view to provide an insurance cover against various risks in life. A monolith then, the corporation, enjoyed a monopoly status and became synonymous with life insurance. Its main asset is its staff strength of 1.24 lakhs employees and 2,048 branches and over six lakhs agency force. LIC has hundred divisional offices and has established extensive training facilities at all levels. At the apex, is the Management Development Institute, seven Zonal Training Centers and 35 Sales Training Centers. At the industry level, along with the Government and the GIC, it has helped establish the National Insurance Academy. It presently transacts individual life insurance businesses, group insurance businesses, social security schemes and pensions, grants housing loans through its subsidiary; and markets savings and investment products through its mutual fund. It pays off about Rs 6,000 crores annually to 5.6 million policyholders. The largest life insurance company in India, Life Insurance Corporation is fully owned by the government. Its subsidiaries include Life Insurance Corporation of India International, LIC Nepal, LIC Lanka, LIC Housing Finance and LICHFL Care Homes. It has over 12 million policy holders and over 9 lakhs agents. It has underwritten more than 120 million policies. LIC saw computers in 1964. Today the company is on the Internet and is utilizing Information Technology in servicing its clients. It has bagged various award including Loyalty Awards 2008 in Insurance Sector, NDTV Profit Business Leadership Award 2007, CNBC Awaaz Consumer Awards 2007 and Outlook Money NDTV Profit Awards 2007. LIC provides a rewarding career as sales agents. It offers world class training, freedom to work and unmatched financial strength.
RELIANCE LIFE INSURANCE COMPANY LIMITED
COMPANY PROFILE: Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd, of the Reliance Anil Dhirubhai Ambani Group. Reliance Capital is one of Indias leading private The Oxford College Of Business Management
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sector financial services companies, and ranks among the top 3 private sector financial services and banking companies in terms of net worth.
Reliance Capital has interests in asset management and mutual funds stock broking, life and general insurance, proprietary investment, private equity and other activities in financial services.
Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45-1A of the Reserve Bank of India Act 1934. Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services. Reliance Life insurance is another step forward for Reliance Capital Limited to offer need based Life insurance solutions to individuals and Corporate.
Reliance life insurance is committed to help public to realize those many moments, which make their life smart, safety and secured. Be it living the same life style in the post retirement days or providing a secured future for their loved ones in case something happen to them.
BIRLA SUN LIFE INSURANCE COMPANY LTD
COMPANY PROFILE: VISION: To create long term value along with market leadership Birla Sun Life Insurance Company Ltd is one of the Indias leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture The Oxford College Of Business Management
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between Aditya Birla groups local insight and Sun Life financials global expertise. The Aditya Birla group is a dominant player in all the sectors in which it operates. These sectors includes viscose staple fiber, non-ferrous metals, cement, and viscose flament yarn, branded apparel, carbon black, chemicals, fertilizers, sponge, iron, insulators and financial services. Sun Life Financial Services Inc. is a leading provider of financial services from the Canada. Both the promoters are well known for their ethical dealings and financial strength and are thus committed to being long term players in the life insurance industry- all important factors are consider when choosing your insurer. Some of key companies are Hindalco, Grasim and Aditya Birla Nuvo. Sun Life Financial Inc. and its partners, have operations in key markets worldwide. These include Canada, The United Kingdom, Hong Kong,The Phillipines, Japan, Indonesia, India, China and Bermuda. It is a leading performer in the life insurance market in Canada. Birla Sun Life Insurance (BSLI) has been operating for 6 years. It has contributed significantly to the growth and development of the life insurance industry in India. It pioneered the launch of Unit Linked Insurance Plans amongst the private players in India. It was the first player in the industry to sell its policies through the Banc assurance route and through the internet. It was the first private sector player to introduce a Pure Term plan in the Indian market. BSLI has covered more than a million lives since it commenced operations. And its customer base is spread across more than 1000 towns and cities in India.
BIRLA SUN LIFE COMPANYS CORE VALUES
Integrity Commitment Passion
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Seamlessness speed
HDFC STANDARD LIFE INSURANCE LTD
COMPANY PROFILE: VISION:
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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. Organization profile: HDFC (Housing Development Finance Corporation Ltd.) Founded in 1977, HDFC is today the market leader in housing finance in India and extended financial assistance for more than 19 lakhs homes. HDFC has 120 offices in India presently. It also has one international office in Dubai and service associate in Bahrain, Kuwait, Qatar, Saudi Arabia and Sultanate of Oman. HDFC asset based amount of over Rs. 23650 crore. Its financial strength is reflected in highest safety rating of FAAA and MAAA awarded by CRISIL ICRA two of Indias leading credit rating agencies respectively for the last 9 years consequently. It has a depositor based of over 15 lakhs depositors and deposits agent face of over 50000.of the total deposit of 82% are sourced from individual and trust depositors, which demonstrate the tremendous that retail investors, have in the company. HDFC promoted companies have emerged to meet the investor and customer needs. HDFC standard life insurance for life insurance, pension plan and product, and HDFC Chubb for general insurance product. Being an institution that is strongly committed to the highest standard of quality and excellence, HDFC has own several accolades in the past few years one such award is Ramakrishna Bajaj National Quality Award for the year 1999. This award was instituted to award reorganization to Indian companies for business excellence and quality achievements. HDFC is the only company so for to receive this award in the service category. HDFC Standard Life Insurance Company Ltd is one of Indias leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a The Oxford College Of Business Management
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joint venture between HDFC Ltd, Indias leading housing finance institution and The Standard Life Assurance Company, a leading provider of financial services from U.K. Both the promoters are well 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 considers when choosing your insurer. HDFC and standard life first came together for a possible joint venture, to enter the life insurance market, in January 1995. 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 3 years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA Act passed the parliament. Despite this both the companies remained firmly committed to the venture. In October 1998, the joint venture was renewed and additional resource made available. Around this time standard life purchased 2% of Infrastructural Development Finance Company Ltd (IDFC). Standard life also started to use the services of the HDFC treasury department to advice 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 U.K joined a hand picked team from HDFC to form the core project team based in Mumbai, India.
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 launched on 20 th July, 2000.
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Their ambitions from as for 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 insurance company to be granted a certificate of registration. The company was incorporated on 14 th august, under the name of HDFC Standard Life Insurance Company Ltd.
HDFC STANDARD LIFE INSURANCE COMPANYS CORE VALUES Integrity Innovation Customer centric People care Team work Joy & simplicity
ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD
COMPANY PROFILE: Indias number second private life insure, ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank- one of Indias fo0remost financial services companies and Prudential is a leading international financial services group headquartered in the United Kingdom. In total capital, ICICI Bank holding a stake of 74% and Prudential holding 26%.
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We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises nearly 1,40,000 insurance advisors, 18 banc assurance partners and 200 corporate agent tie-ups. ICICI Prudential was the first life insurer in India to receive a National Insurer Financial Strength rating of AAA from Fitch ratings. On the basis of which life stage and the corresponding insurance needs, ICICI press plans can be categorized into following four types:
Educational insurance plans Wealth creation plans Premium guarantee plans Protection plans
ICICI Prudential Life Insurance offers a range of innovative, customer centric products that meet the needs of customers at every life stage. Its 14 products can be enhanced with up to 4 riders to create a customized solution for each policy holder.
VISION & VALUES: To make ICICI Prudential the dominant Life and Pensions player built on trust by worldclass people and service. This we hope to achieve by: 1. Understanding the needs of customers and offering them superior products and services. 2. Leveraging technology to service customers and quickly, efficiently and conveniently.
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3. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policy holders. 4. And above all, building transparency in all our dealings.
VALUES ICICI Prudential is the only life insurance company to implement a Six Sigma quality program of the companys 2000 plus employees, less than 5% have prior experience in the life insurance industry. The average age of its employees is 29 years. The success of the company will be founded in its unflinching commitment to 5 core values-integrity, customer First, Boundary less, Ownership and Passion. Each of the values describes what the company stands for, the qualities of our people and the way we work. ICICI Prudential believes that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector. Given the quality of our parentage and commitment of our team, there are no limits to our growth. MISSION OF ICICI:
ICICI bank as an organization has been built on the principles of professionalism, ethics and financial expertise. The bank believes that its existence and development are closely interlinked with its ability to serve both the corporate philosophy of growth, innovation and stability. The bank aims to provide the benefits of universal banking to its corporate and retail clients and its investors. The goal is to ensure that dealing with ICICI bank is sage, simple and efficient.
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ICICI bank attempts to pursue growth and innovation without compromising in its stability.
THE DIFFERENT PRODUCTS OF LIFE INSURANCE SECTOR ARE:

ENDOWMENT PLAN Life insurances Endowment plan is the key to all financial needs. It is an inexpensive and easy way to protect a person, family their business. In a nutshell this plan will keep one financially prepared for all the special occasions in life daughters wedding, childs university education or even a new office for business by eliminating the burden that a shortage of money creates. In the event of untimely death, endowment plan will also assist loved ones through this difficult time by the financial support that it provides. Endowment Plan also gives the additional benefit of participating in the companys profits, which will receive at the end of the policy period. As soon as one pay single premium, or as long as continue to pay regular premium, policy will participate in the profits of the company. This means that each year, we will declare a The Oxford College Of Business Management
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bonus, the amount of which may vary from one year to the next. The cash value of the bonuses, which accumulate over the policy term, will be paid along with the basic sum assured when it falls due. The modes of payment of premiums permitted are yearly, half-yearly quarterly and monthly. The policy can also be availed under salary deduction scheme. When the mode of payment of premium is half-yearly, quarterly and monthly, the premiums will be rated up.
SPECIAL ENDOWMENT PLANS: This insurance policy is designed for people who wish to combine savings with extended security. The special benefit under this policy is that it ensures securing a found for the future when it is most needed and gives much needed financial security for the family. The unique feature of this policy is that the risk cover continues for the full sum assured for an extended period of 5 years even, after payment of the full sum assured at the end of the premium paying term. This policy also participates in the profits. Bonus is compounded yearly. CASH FLOW PLAN: This insurance policy is designed for those who have a recurring need for reinvestment in business or look for short-term investment channels. The advantage of the policy is that they need not part with a sizable amount of money at any one time, but create, through regular premium payments, a periodic return of lump sums .which become available for reinvestment at higher returns, while providing simultaneously, substantial life cover. Alternatively, it can be used to meet any immediate financial crisis in the family like your sons college admission, your daughters engagement, and renovation of your home or perhaps, a holiday abroad. The money is payable in installments. The first installment is paid at the end of the 4 th year and thereafter at the end of every 3rdyear. It averts the necessity to look elsewhere for loan facilities. A unique feature of this policy is that the risk cover continues for the full sum assured even though the periodical payments are being made. This policy also participates in the profits and is eligible for bonus.
Page 27.
CHILD PLAN: This insurance policy is designed for people who wish to save money for a future time when will be a recurring need for substantial amounts of money. This is especially true when it comes to paying large sums of money for higher education as and when your son or daughter is studying to become an Engineer, a Doctor or specialize in some other filed, or is perhaps planning to go abroad. This money is payable in equal installments over the last 4 years of the policy term. A unique feature of this policy is that the risk cover continues for the full sum assured even though the periodical payments are being made. This policy also participates in the profits for the full term of the policy.
TERM PLAN: This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save themselves. It can also be useful to business firms that wish to provide financial security to their business against the sudden loss or partners of valuable manpower. Since there is no saving element or bonus provision, the premium is very low. Hence, this is a high risk plan with a low premium. The special benefit under this policy is that it ensures protection for you and your family and your business as well at a very low premium. WHOLE LIFE PLAN: This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost. This policy ensures security for your family in the unfortunate event of your passing away suddenly and unexpectedly. It provides a high-risk cover
Page 28.

at a very low cost. The duration for which the premiums are to be paid s decided at the beginning. The longer the lower is the premium. The unique feature is that risk cover continues throughout your life beyond your premium paying term. These products participate in the profits throughout your lifetime provided premiums have been paid up to date. CREDIT GUARDIAN PLAN: Credit Guardian Plan ensures that housing loans. Personal loans or even outstanding credit card bills are paid in the event or untimely demise. Thus keeping the person and the family protected from the burden and the worry of debt in such a situation. It is a unique insurance plan to protect ones family from the burden of repayment of loans. Different types of loans are covered under this plan-housing loan, personal loans, outstanding on credit card etc. there is discount on premium rates in case of a woman. There is decreasing term insurance in line with outstanding liability. The premiums can be paid single and regular premium payment options.
MARKET RETURN PLAN: A unit-linked insurance plan helps to invest money in various investment funds and enjoy investment benefits and insurance benefits at the same time. Market return fund is the unit-linked product that helps to invest in the financial markets in a combination of investment instruments of choice. One can enjoy the returns from the markets without the trouble of monitoring and managing own investment portfolio and keeping track of the market movements. At the same time investment premiums provide with insurance cover. Market return fund unit-linked insurance plan provides a basket of fund options that balances return and risk exposure while providing life cover at the same time. Market return fund is a unit-linked investment plan that invests premiums in a verity of investment instruments. Premiums, regulars or one-time, are invested in the different types of
Page 29.

funds after deducting charges. The amount you invest is expressed in units. Based on the performance of Return fund unit-linked insurance plan offers four tailored investment funds. the funds, the value of units will vary. Market return fund provides wit the option to combine returns from fixed income. Investments and participate in the equity markets so that the returns can be maximize from investments. One can choose from the different fund option that the company offers in the way best desire. At the same time, in line with the premiums that one can specify a sum for insurance and enjoy the benefit of life insurance cover. Market Return Fund is a two in-one insurance and investment plan that provides returns and life cover, market
CAPTIAL SECURE FUND: This fund offers steady returns for very little risk. Funds are invested 100% in bank deposits, government bonds and debt instruments that offer financial security. BALANCED FUND: In this fund a major portion of funds are invested in fixed securities while a small percentage is invested in the equity market which is exposed to market movements. GROWTH FUND: This fund offers a greater portion of investment in the equity market. The greater exposure to the equity market means that returns will be higher, but with the attendant higher level of risk. EQUITY FUND:
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This fund offers a totally equity based investment option. Returns depend entirely upon the performance of the equity market. The higher risk of this portfolio means expected returns will also be higher. GOLDEN YEAR PLAN: Golden years plan is a flexible package that provides freedom of choice in choosing the type of investment .Life cover, vesting options such as commuting and annuity options. Contributions provide income tax savings as well. The plan is quite simple contributions are made to the Golden years plan pension plan. The contributions may be a lump sum or on a regular basis like monthly, quarterly, half yearly and annual. The funds contributed are invested in any of the investment options offered after deduction of nominal charges. At the time of vesting (i.e., the time when one decide to opt for receiving the annuity) a choice of annuity plans are available. Additionally one can opt for life insurance cover under the reliance golden years plan, at a nominal cost. This life insurance cover offer is available only for regular contribution of founds for investment. The additional features of the reliance golden years plan are the commuting options available upon vesting. Furthermore, the scheme also provides 5 choices of annuity payments.
RIDERS:
ACCIDENTEL DEATH AND TOTAL AND PERMANANENT DISABLEMENT BENFIT RIDER If the life assured becomes totally and permanently disabled due to an accident then this
rider will give you additional protection. By selecting this rider you will safeguard yourself against any unexpected expenditure that an accident could cause. In case of death due to an accident, your family will receive an additional benefit equal to the accidental Death and Total and Permanent Disablement sum assured that you selected.
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CRITICAL CONDITIONS RIDER: The sudden onset of a major illness may cause worries and unexpected expenditures. The optional Critical Conditions Rider provides financial relief in such cases. Life Insurances critical conditions rider covers ten major critical conditions, cancer, coronary artery bypass surgery, heart attack, aorta surgery, heart valve replacement, kidney failure stroke, major organ transplant coma, paralysis.
4. DATA ANALYSIS AND INTERPRETATION
Data after collection has to be processed and analyze in accordance with the research design and plan. Processing of data involved the following steps.
EDITING Data collected through questionnaire will be crude form and edited for analysis Editing was done to ensure that data was accurate.
Page 32.

CODING Coding was done to make the analysis of data collected.
TABULATION This process involved classification of data and combining and totaling of the collection data.
1. Table showing the number of male and female respondents:

GENDER MALE FEMALE Total NO OF RESPONDENTS 42 8 50 Percentage 84% 16% 100%
Page 33.
Chart showing the number of male and female respondents:
Interpretation: 84% of the respondents are male and 16% are female. Inference: From the above it is clear the majority of the respondents are male.
Page 34.
Investment Opportunities In Insurance Sector 2. Showing the occupation of respondents

Occupation No of respondents percentage
Salaried
15
30%
Business people
16%
Students
27
54%
Total
50
100%
Graph showing occupation of the respondents:

Page 35.
Interpretation: 30% respondents are salaried, 16% are business people and 54% are students.
Inference: From the above it is clear that majority of the respondents are students.
3. Showing the age of respondents.

Page 36.
AGE <20 20- 30 31- 40 41- 50 >50 Total
NO OF RESPONDENTS 02 30 08 06 04 100
Percentage 4% 60% 16% 12% 8% 100%
Graph; Showing the age respondents:
Page 37.
Interpretation: No of respondents below 20 years are 4%, 60% of respondents are between 20 30 Years, 16% are between 31 40 years, 12 % are between 41 50 Years and above 50 years comprises of 8% people.
Inference: Majority of the respondents are of the age group between 20 30 years.
4. Showing the Marital status of the respondents.
Page 38.
MARITAL STATUS
NO OF RESPONDENTS
percentage
Single
29
58%
Married
21
42%
Total
100
100%
Graph; The marital status of the respondents:
Page 39.
Interpretation: 24% of the respondents are single and 76% are married.
Inference: From the above it is very clear that majority of the respondents are married.
5. Table showing the annual income of the respondents:
Page 40.
ANNUAL INCOME (RS) <80,000 80,000 1,50,000 1,50,000 - 2,00,000 2,00,000 3,00,000 >3,00,000 Total
NO OF RESPONDENTS 4 26 10 4 6 100
Percentage 8% 52% 20% 8% 12% 100%
Chart showing the annual income of the respondents:
Page 41.
Interpretation: The annual income of 8% of the respondent is below 80,000 Rs, 52% of the respondents are between 80,000 1, 50,000Rs, 20% of the respondents are between 1.50000 2,00,000 Rs, and between 2,00,000 3,00,000 Rs are 8% of respondents and 12% of the respondents annual income is above 3,00,000.
Inference: More no of respondents are in the income group between 80,000-1,50,000.
6. Table showing yearly investment of respondents:
Page 42.
Annual Investment
NO OF RESPONDENTS
PERCENTAGE
< 20,000
10
20%
20,000-40,000
30
60%
40,000-60,000
16%
>60,000
4%
Chart showing yearly investment of respondents:
Page 43.
Interpretation:
the annual investment of respondents below 20,000 are 20%, 60% of the respondents investment is between 20,000-40,000, 16% of the respondents investment is between 40,000-60,000 and 4% of respondents are investing more than 60,000.
Inference:
More investors are in the investment group between 20,000-40,000.
7. Table showing duration of the respondents investment:
Page 44.
Years < 1 year 1-2 year 2-6 year >6 years
No of respondents 2 18 14 16
Percentage 4% 36% 28% 32%
Graph
showing duration of the respondents investment:
Page 45.
Interpretation: 4% of the respondents would like to invest for 1 year, 36% wants to invest for 2 years, 28% of respondents would like to invest for 2-6 years and more than 6 years, 32% respondents would like to invest. Inference: Majority of respondents wants to invest for the period > 6 years ie, 32%.
8. Table showing respondents financial goal for investment:
Financial goal investment
for No of respondents
Percentage
Multiple investment By taking risk 03 6%
Retirement planning Secure future dependent
08
16%
27
54%
Buy an asset
00
0%
Page 46.
Educational needs
06
12%
Any other reasons
06
12%
Chart showing respondents financial goal for investment:
Page 47.

Interpretation: 6% of the respondents financial goal is multiple investment by taking risk, 16% of Type of risk Stable risk Moderate risk High risk No of respondents 22 26 02 Percentage 44% 52% 4%
respondents goal is retirement planning, 54% of the respondents financial goal is secure dependent future, there is 0% of respondents towards buying an asset, 12% of respondents goal is educational needs and 12% of respondents goal for some other reasons.
Inference: Most of respondents financial goal is secure dependent future.
9. Table showing respondents risk appetite while investing:
Chart showing respondents risk appetite while investing:
Page 48.
Interpretation: In stable risk 44% of respondents are there, 52% of respondents want to invest in moderate risk and very few ie, 4% wants to take high risk. Inference: Majority of respondents wants to invest in moderate risk.
10. Table showing present strategy of respondents in insurance:
Page 49.

Present strategy Traditional plan ULIP No of respondents 38 12 Percentage 76% 24%
Chart showing present strategy of respondents in insurance:
Interpretation: Respondents are more in traditional plan that is 76% and in ULIP 24% are there. Inference: Respondents are comparatively more in traditional plan than ULIP.
11. Table showing who have life insurance cover:
Page 50.
Those who have life insurance cover Yes No
No of respondents 45 5
Percentage 90% 10%
Chart showing life insurance cover of respondents:
Interpretation: 90% of respondents has life insurance cover and 10% of respondents dont have life insurance cover. Inference:
Page 51.

Almost respondents has life insurance cover.
12. Table showing Objectives of respondents to have life insurance cover:
Objectives of respondents to No of respondents have life cover
Percentage
Just life covers Investment accumulation Tax benefit Future needs
18 10 10 12
36% 20% 20% 24%
Page 52.
Chart showing objectives of respondents to have life insurance cover:
Interpretation: 36% of respondents like for just life covers, 20% of respondents like for investment accumulation, 20% like for tax benefit and 24% like for future needs
Inference: Most of respondents objective is to have just life covers.
Page 53.
Investment Opportunities In Insurance Sector 13. Table showing which company policy respondents would like to hold:
Different life insurance companies LIC OF INDIA ICICI PRUDENTIAL BIRLA SUN LIFE RELIANCE HDFC OTHERS
No of respondents 22 12 5 2 3 5
percentage 44% 24% 10% 4% 6% 10%
Page 54.
Investment Opportunities In Insurance Sector Chart showing different company policy would respondents like to hold:
Interpretation:
More respondents wants to hold LIC company policy ie; 45%, 25% of respondents would like to hold ICICI PRUDENTIAL policy, 10% respondents would like to hold BIRLA SUN LIFE, very few 4% respondents would like to hold RELIANCE policy, a little more 6% of respondents would like to hold HDFC policy and 10% of respondents would like to hold others like BAJAJ ALLIANZ, MET LIFE etc.
Inference: Most of respondents would like to hold a government company LIC OF INDIA.
5. SUMMARY OF FINDINGS CONCLUSIONS AND SUGGESTIONS
Page 55.

5.1 FINDINGS: Out of the total insurance market now private insurance are playing a prominent role, the private insurance companies spread all over the country and seen a tremendous growth.
1. Majority of the respondents were between the age group of 20-30 when compared to other age groups.
2. Large number of males is interested to invest in insurance.
3. The respondents had the life insurance cover for one or other reason, the preferences for their life insurance would be anything such as tax perspective, or investment accumulation, or death benefits of dependents and so on.
4. LIC of India has the largest market acquisition about 45%, among the private players the leading is ICICI prudential which has 25% market acquisition. Then it is followed by Birla Sun life and HDFC and others.
5. Insurance industry has been contributing its own share to GDP.
6. The objective to buy a life insurance policy is an investment for to secure dependent future with the accumulation of their investments.
Page 56.
Investment Opportunities In Insurance Sector 5.2 CONCLUSIONS:
From the study I came to know that there is a lot of growth for the life insurance and it plays an important role by contributing the share to the GDP. Private players are having the competition but they are having their own strategy to survive in the market. Also, there is a high scope for ULIP plus. It is the goodwill and the trust of the company, that people would go for an insurance plan. Without awareness people wont buy anything so people has to be aware, then only they will decide to purchase some product or service.
5.3
SUGGESTIONS:
Page 57.
1. It is recommended to have a weekly or monthly update session to the insurance agents to make them clear about the updates and new policies introduced or going to be introduced.
2. It is recommended to conduct road shows and campaigns to promote the importance of insurance about traditional plan and also ULIP.
3. More number of branches should be opened at north Karnataka as it is a vast market place.
4. Seminars should be conducted in business organization to bring awareness about investment and financial plan for employees and stimulating them to make investment.
5. The sector should penetrate more into rural segment.
Page 58.

Investment Opportunities in Insurance Sector: 1. Introduction of Life Insurance

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INTRODUCTION OF LIFE INSURANCE

The Oxford College Of Business Management