Rohit Report....

summer training project
Report on
COMPARATIVE STUDY AND FINANCIAL ANALYSIS OF ULIP PLANS
BY ROHIT SINGH BORA
IDBI LIFE INSURANCE COMPANY LIMITED.

A report submitted in partial fulfillment of the requirements of MBA program of the GEHU University, Dehradun.
SUBMITTED TO: PROF. AKHILESH SHARMA BORA Date of Submission:
SUBMITTED BY: ROHIT SINGH
DECLARATION BY THE CANDIDATE
I, ______________________, hereby declare that the research work entitled ___________________________________________, submitted for the
partial fulfillment for the degree of Master of Business Administration is my original work and the project report has not formed the basis for award of any other degree, diploma, fellowship or similar other title. Also it has not been submitted to any other university or institution for the award of any degree or diploma.
Signature:
Name of the Candidate:
CERTIFICATE BY GUIDE
2
I have a pleasure in certifying that ______________________________ is a student of Graphic Era Hill University of Master of Business Administration (MBA).
He/She has completed his/her research project work __________________________________________________________ under my guidance and supervision.
on
I certify that this is his/her original effort and has not been copied from any other report. This project has also not been submitted in any other university for the purpose of any award r any degree. This project fulfills the requirements of the curriculum prescribed by Graphic Era Hill University, Dehradun for the said course. I recommend this project work for evaluation and consideration for the award of degree of the student.
Signature: Name of the Guide
ACKNOWLEDGEMENT
3
It is a pleasure to express my thanks & gratitude to all the persons in IDBI Federal Life Insurance Co. Ltd., Dehradun where I got the chance, support and encouragement that enabled me to conduct my study with in the stipulated period of time. I take this opportunity to thank Mr. Naveen Kapoor Branch head and Yashwinder raghav Manager Distributor of IDBI Federal Life Insurance Co. Ltd. for his valuable advice & direction which he provided me during the course of my project. I am also grateful to Prof Akhilesh sharma and to all the members & faculty of GEHU, Dehradun for their constant support & inspiration for the lifespan of the project. My special thanks to Prof. Himanshu Kargeti and Prof. Vishal Sagar who provided me valuable guidance & suggestions to complete the project. Without Their guidance & suggestions the project would not have seen the light of the day. They shared their valuable time, long experience through which I have become aware of different tools & aspects of management, which were hard to find elsewhere for the completion of my training & project.
I once again take the opportunity to convey my heartiest thanks to all those who were connected with the project directly & indirectly & have provide me with a wonderful experience & learning opportunity.
Rohit singh bora Gehu , Dehradun
EXECUTIVE SUMMARY
As part of the academic requirement of a B-School, I Rohit singh bora, a student of GEHU, Dehradun, did my Summer Internship Project at IDBI LIFE LIFE INSURANCE COMPANY LTD from 1 july , 2013 to aug 15, 2013. IDBI LIFE is a joint venture between IDBI Bank, LIFE and Federal Bank. The project aims at making a detailed comparative study of the Unit linked Insurance plans (ULIPs) of IDBI LIFE with that of other selected players in the Insurance industry operating
4
in India and in the process identify the strengths and weaknesses of IDBI LIFE. In addition to this, the project tries to capture the consumer perception towards various Insurance products. The different selected companies apart from IDBI LIFE on which the project is entirely focused on are namely: 1. Life Insurance Corporation of India 2. ICICI Prudential 3. TATA AIG Life 4. HDFC Life Insurance
5. Bajaj Allianz
6. Reliance Life Insurance 7. Kotak Om The project can be divided into 4 parts Comparison of the ULIP plans i.e comapison of the features offered by Ulips offered by various Insurance companies with that of IDBI LIFE.The features include various charges levied, maturity benefits, fund options, riders, tax benefits to name a few. Comparison of the performance of equity funds of the above companies and IDBI LIFE.Performance was measured on various factors such as returns, standard deviation of funds and Sharpe Ratio.These were then compared to the benchmark i.e Nifty--A primary research was conducted in which 240 people were surveyed .The method of collecting primary data was approaching people in the malls, online surveys and telephonic interviews. The sample of respondents has been carefully selected, targeting respondents from all age groups. The data gathered from the primary data was analysed using various charts and SPSS and thus factors were extracted.
The last leg of the project was the study of the ULIP business as a whole in India and the problems it has been facing recently.It includes a review of the on going tussle between the IRDA and SEBI and the stands of both the parties and the effect this could have on the future of ULIPs.Along with this a comparison has been made between ULIPs and mutual funds since they are very similar in nature and is one of the prime causes of the debate.Lastly, it is shown how ULIPs would have to change themselves introduction of the Direct Tax Code(DTC) in a few months. After analysing all the above the findings are summarised and recommendations given to the company to improve its services and market share. with the
To sum it up this entire project was an enriching experience for me both as a summer trainee of IDBI LIFE and an GEHU student.
Contents
6
1. INTRODUCTION OF IDBI.........................................................................................9 1.1 IDBI FEDRAL LIFE INSURANCE. .................................................................12 1.2 IDBI FEDRAL BANK........................................................................................15 2. IDBI FEDRAL PROFILE......................................................................................18 2.1 INSURANCE MARKET PRESENT ...............................27 2.2 2.3 2.4 2.5 2.6 PRODUCT PROFILE. .................................................33 SWOT...34 HISTORY OF INSURANCE... .36 ROLE OF IRDA IN INDIA.. .44 ROLE OF PRIVATE SECTOR INSURANCE COMPANY 45
3. UNIT LINKED INSURANCE PLANS........................................................................46 3.1 STRUCTURE OF ULIPs...................................................................................47 3.2 EXAMPLE TO ELABORATE HOW ULIPS WORK................................................49 3.3 ADVANTAGES OF ULIPS..................................................................................50
4. IDBI LIFE LIFE INSURANCE COMPANY..................................................................51

4.1 TATA AIG vsIDBI LIFE.................................................................................56 4.2 HDFC STANDARD vs IDBI LIFE...................................................................64 4.3 LIC vs IDBI LIFE..........................................................................................68 4.4 ICICI PRUDENTIAL vs IDBI LIFE...................................................................73 4.5 FUND OPTIONS AVAILABLE UNDER ULIPs..................................................78 4.6 COMPARISON OF EQUITY FUNDS(2012-13)................................................79 4.6.1 EQUITY OUTLOOK.....................................................................................79 4.6.2 TERMS TO UNDERSTAND.........................................................................79 4.6.3 ICICI PRUDENTIAL EQUITY FUND..............................................................83 4.6.4 HDFC STANDARD - UNIT LINKED ENDOWMENT PLUS EQUITY MANAGED FUND.................................................................................................................84 4.6.5 IDBI LIFE WEALTHSURANCE EQUITY GROWTH FUND...............................85 4.7 ANALYSIS......................................................................................................86 4.7.1 Returns:...................................................................................................86 4.7.2 Fund Standard Deviation........................................................................87 4.7.3 Fund Sharpe Ratio....................................................................................89 5. SURVEY ANALYSIS...............................................................................................91 5.1 AIM.................................................................................................................91 5.2 METHODOLOGY..............................................................................................91 5.3 FINDINGS & ANALYSIS....................................................................................91 7
5.4 FACTOR ANALYSIS (USING SPSS)..................................................................93 6 .ULIP BUSINESS IN INDIA.....................................................................................101 6.1 The Battle Of Ulips........................................................................................102 6.2 ULIPS vs MUTUAL FUNDS..............................................................................110 6.3 EFFECT OF INTRODUCTION OF DIRECT TAX CODE(DTC) ON ULIPS...............114 7. FINDINGS & CONCLUSION..................................................................................115 8. RECOMMENDATION AND SUGGESTIONS............................................................117
CH.1-INTRODUCTION OF IDBI
The Industrial Development Bank of India Limited, now more popularly known as IDBI Bank, was established as a wholly-owned subsidiary of Reserve Bank of India. The foundation of the bank was laid down under an Act of Parliament, in July1964. The main aim behind the setting up of IDBI was to provide credit and other facilities for the Indian industry, which was still in the initial stages of growth and development. After the transfer of its ownership, IDBI became the
8
main institution, through which the institutes engaged in financing, promoting and developing industry were to be coordinated. In January 1992, IDBI accessed domestic retail debt market for the first time, with innovative Deep Discount Bonds, and registered path-breaking success. The following year, it set up the IDBI Capital Market Services Ltd., as its wholly-owned subsidiary, to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services .In September 1994, in response to RBI's policy of opening up domestic banking sector to private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July 1995, public issue of the bank was taken out, after which the Government's shareholding came down (though it still retains majority of the shareholding in the bank). In September 2003, IDBI took over Tata Home Finance Ltd, renamed IDBI Home finance Limited, thus diversifying its business domain and entering the arena of retail finance sector the year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. The new entity continued to its development finance role, while providing an array of wholesale and retail banking products (and does so till date). The following year, IDBI Bank acquired United Western Bank (which, at that time, had 230 branches spread over 47 districts, in 9 states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9 crores and total assets of Rs120, 601 crores.
The Present
Today, IDBI Bank is counted amongst the leading public sector banks of India, apart from claiming the distinction of being the 4th largest bank, in overall ratings. It Is presently regarded as the tenth largest development bank in the world, mainly in terms of reach. This is because of its wide network of 509 branches, 900 ATMs and319 centers. Apart from being involved in banking services, IDBI has set up institutions like The National Stock Exchange of India (NSE), The0
National Securities Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India (SHCIL).
Objectives
The main objectives of IDBI are to serve as the apex institution for term finance for industry in India. Its objectives include (1) Co-ordination, regulation and supervision of the working of other financial institutions such as IFCI , ICICI, UTI, LIC, Commercial Banks and SFCs. (2) Supplementing the resources of other financial institutions and thereby widening the scope of their assistance. (3) Planning, promotion and development of key industries and diversifications of industrial growth. (4) Devising and enforcing a system of industrial growth that conforms to national priorities.
Function To grant loans and advances to IFCI, SFCs or any other financial institution by way of refinancing of
loans granted by such institutions which are repayable within 25 year. To grant loans and advances to scheduled banks or state co-operative banks by way of refinancing of loans granted by such institutions which are repayable in 15 years. To grant loans and advances to IFCI, SFCs, other institutions, scheduled banks, state co-operative banks by way of refinancing of loans granted by such institution to industrial concerns for exports. To discount or rediscount bills of industrial concerns. To underwrite or to subscribe to shares or debentures of industrial concerns
10
To subscribe to or purchase stock, shares, bonds and debentures of other financial institutions. To grant line of credit or loans and advances to other financial institutions such as IFCI, SFCs, etc. To grant loans to any industrial concern. To guarantee deferred payment due from any industrial concern. To guarantee loans raised by industrial concerns in the market or from institutions. To provide consultancy and merchant banking services in or outside India. To provide technical, legal, marketing and administrative assistance to any industrial concern or person for promotion, management or expansion of any industry Planning, promoting and developing industries to fill up gaps in the industrial structure in India. To act as trustee for the holders of debentures or other securities.
Subsidiaries
Small Industries Development Bank of India (SIDBI) IDBI Bank Ltd. IDBI Capital Market Services Ltd. IDBI Investment Management Company
Capital Structure and Operations

As on September 30, 1996, the authorized Capital of IDBI was Rs.2000crores. Issued, subscribed and paid up share capital was Rs.828.76crores.Reserves were Rs.6309 crores.Loan funds were Rs.35450 crores. The total outstanding loans, investments and guarantee of IDBI stood at Rs.39, 221 crore as on 31st March 1996.
1.1-IDBI Federal Life Insurance

IDBI Federal Life Insurance Co. Ltd.,(formally IDBI Forties Life Insurance) is a joint venture between three financial companies development and commercial bank, IDBI Bank, Indias
11
private sector bank, Federal Bank and European insurer Ageas (formerly Forties), which was formed on March 2008. In this venture, IDBI Bank owns 48% equity while Federal Bank and Areas own 26% equity each.
History
2006: IDBI Bank, Federal Bank and Belgian-Dutch insurance major Forties Insurance International NV signed a MoU to start a life insurance company
2008: IDBI Forties Life Insurance Co. Ltd., which started its operations in March 2008 2008: IDBI Forties opens its second branch in Andhra Pradesh in Vijay Wada 2008: IDBI Forties Life positive on assured return products 2008: IDBI Forties launches the Bondsurance Plan 2009: IDBI Forties announces Rs 250cr capital infusion 2009: Nimbus ropes in IDBI Forties as title sponsor of IndiaSri Lanka series 2009: 'IDBI Forties' Boss-Ka-Boss receives PRCI Award 2009: IDBI Forties launches Retiresurance Pension Plan 2009: IDBI Forties scores with Goalsurance 2009: IDBI Forties reaches the banks of Hoogly 2009: IDBI Forties launches Incomesurance Immediate Annuity 2009: IDBI Forties Life Insurance uses an interactive application to help users easily calculate their taxes
2009: IDBI Forties reaches the City of Eastern Light 2009: IDBI Forties receives bronze Dragon at 'PMAA 2009' 2009: IDBI Forties Life Insurance introduces financial inclusion plan in rural Orissa 2009: IDBI Forties launches Termsurance Protection Plan 2009: IDBI Forties redefines endowment & money back with Incomesurance 2009: IDBI Forties to open 65 more branches; raise headcount by 1,000 2010: IDBI Forties now renamed as IDBI Federal Life Insurance Company.
Technology
12
To monitor and manage its network equipment across 34 sites, IDBI Forties uses Tulip Proactive Managed CE solution. The solution includes device management, proactive troubleshooting and notification support. With the implementation of the solution, IDBI has reported improvement of network performance and availability, with a faster, more effective change and configuration management.
Products
IDBI Forties launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory and Development Authority (IRDA). IDBI Forties offers services through a nationwide network across the branches of IDBI Bank and Federal Bank in addition to a network of advisors and partners. IDBI Forties has 35 branches across the country.
Sponsorships, Awards
IDBI Forties Life Insurance Company was selected as the title sponsor for the India-Sri Lanka Cricket Series 2009, consisting of five One-Day Internationals and a Twenty 20 match. The ODI series will be called the IDBI Forties Wealthsurance Cup. This will be followed by the IDBI Forties Wealthsurance Twenty20.
Wealthsurance Made Easy (WME), a knowledge aid by IDBI Forties for its sales force, won The Bronze Dragon in the category for Best Dealer/Sales Force activity at the Promotion Marketing Awards of Asia (PMAA).
13
1.2- Federal Bank
Type Trade as
Public NSE:FEDERALBANK BSE: 500469 LSE: FEDS
Industry Founded Headquarters
Banking and allied industries Kochi, 1945 FederalTowers, Aluva,Kochi-683101, Kerala, India.
Key people Products
Shyam Srinivasan (CEO) Loans, Savings, etc.

14
Website
www.federalbank.co.in
Federal Bank Limited (NSE: FEDERALBNK, BSE: 500469, LSE: FEDS) is a major Indian commercial bank in the private sector, headquartered at Aluva, Kochi, Kerala. As of March 13, 2012, it has 952 branches spread across 24 states in India and 1029 ATMs around the country (across 108 metro centres, 224 urban centres, 384 semi-urban locations and 87 rural areas). The bank is planning to expand its branch network to 1000 and hire 2000 professionals by June 2012.
History
In the year 1931, Travancore Federal Bank was inaugurated at Vengal Varuttisseril at Nedumpuram, near Tiruvalla, Kerala. The 14 founders included Sri Vengal Varuttisseril Oommen Varghese, his brothers Oommen Chacko, Oommen Kurian, Oommen George and also another person from Tiiruvalla, Kavumbhagam Mundapallil Lukose, and others. Oommen Varghese was the Chairman and Oommen Chacko the Manager. After it had functioned for nearly 10 years, the bank's day to day transaction had to be stopped due to the ill-health of the Manager.Understanding this situation, a lawyer from Perumbavoor named Sri K.P.Hormis and his acquaintances joined together, bought the bank and took over the management. In 1945, they moved the bank's registered office to Aluva and Hormis became the Managing Director. In 1947, the bank's name was shortened from Travancore Federal Bank to Federal Bank. In 1970, the bank became a Scheduled Commercial Bank. Recently, it opened a representative office in Dubai.
Acquisitions and Mergers
15
In 1964, the bank embarked on a series of acquisitions that would substantially increase its size. It acquired the Chalakudy Public Bank in Chalakudy, the Cochin Union Bank in Thrissur, and the Alleppey Bank in Alappuzha.
In 1965, it acquired the St.George Union Bank in Puthenpally. In 1968, it acquired the Marthandom Commercial Bank in Thiruvananthapuram. In 2006, Federal Bank acquired Ganesh Bank of Kurundwad after the Reserve Bank of India suspended the bank. Established in 1920, Ganesh Bank had its headquarters at Kurundwad, Maharashtra. The bank had a network of 32 branches and its operations were concentrated in Sangli and Kolhapur in Maharashatra and Belgaum in Karnataka. Prior to the merger, Federal Bank had 20 branches in Maharashtra.
In March 2008, Federal Bank entered into a joint venture with IDBI Bank and Fortis Insurance International to form IDBI Fortis Life Insurance, of which Federal Bank owns 26 percent. The company ended the year with over 300 Cr in premiums as on 31 March 2009.
On 24 August 2010, IDBI Fortis, rejuvenated as IDBI Federal Life Insurance with Aegas of Belgium.
Ageas
IDBI targets 1.5 lakh customers with pension plan
For IDBI Federals newly introduced Retiresurance Guaranteed Pension Plan, it has set a target of about 1.5 lakh customers Pan India this year.
IDBI Federal Life eyes 70% growth in total premium income
IDBI Federal Life CEO G Nageshwara Rao stated that for 2010-11, it is anticipating a 70% growth in its total premium income while in 2009-10 also, their total premium income had risen by 70%. According to the Irda data.
16
IDBI Federal Life Insurance launches operations in Madurai
IDBI Federal Life Insurance (IDBIFLI) has officially launched its commercial operations in Madurai due to this its presence spread across 53 cities. It had commenced its operations in March, 2008 and had issued more than 2.10 lakh policies.
CH.2-IDBI Federal Life Insurance Company Profile

Established in March 2008, IDBI Federal Life Life Insurance Company is a joint venture between three major companies- IDBI Bank- Indias premiere industrial bank, Federal bank private sector bank and Ageas - international insurance company operating out of Europe. IDBI Bank holds 48% equity whereas Federal and Ageas hold 26% of equity each.
Product Portfolio: Being a new entrant, IDBI is slowly increasing its portfolio which
includes: Retirement Plan: With rising inflation, its absolutely necessary to make provisions for the future which makes retirement plan an important financial decision. Better known as Pension plan, this plan takes care of financial needs after retirement by investing a part of your savings for limited period. Pension plan provides steady income after retirement and takes care of daily needs. The pension plan offered by IDBI Federal is Retiresurance.
Term Plan: A risk plan which provides comprehensive cover for your family in the
unfortunate event of untimely demise. A term life insurance plan provides good cover at relatively nominal cost and has no survival benefits. IDBI Federal Life term plan is Termsurance.
Investment Plan: Popularly known as ULIP, an investment plan invests part of your savings
in equity or debt market as per your preference. The objective of investment plan is to give you returns which easily beat the rising costs since the usual returns in a bank are extremely low. ULIPs offered by IDBI Federal Life are Wealthsurance, Bondsurance and Incomesurance.
17
Health Plan: Slightly different from health insurance, health plan provides cover for surgery
costs, critical illness. A lump sum is paid irrespective of actual hospital bill. Healthsurance is IDBI Federal Lifes health plan.
Distribution Network:
IDBI Federal Life Life Insurance Company leverages on the strong distribution network of its promoters and advisors.
Financial Information:
The total premium earned for the half year ended September 30, 2010 was Rs 3,427 million. The profit after tax for the same period is Rs 513 million. There have been 132 death claims reported during the period out of which 43 claims were settled and 19 claims were rejected.
Marketing Campaigns:
IDBI Federal Life recently launched television commercials focusing on its frontline products Wealthsurance and Incomesurance. The campaign taglines are Jisne bhi suna khareed liya and Guaranteed Income ki Bhavishavani Whereas the first advertisement reflects that the product is so great that whoever hears about it, buys it instantly, the second advertisement promises to be clear and transparent on the issue of returns in the investment product. IDBI Federal has also introduced two animation characters Happy and Lucky.
Management:
GV Nageswara Rao is the MD & CEO of IDBI Federal Life Insurance.
18
Aneesh Srivastava is the CIO of IDBI Federal Life Insurance. Michael J Wood is the appointed actuary of IDBI Federal Life Insurance.
IDBI Federal Life Insurance Product Table:

Retirement/Pension Plan Term Plan Savings & Investment Plan Savings & Investment Plan Savings & Investment Plan Health Plan Retiresurance Termsurance Wealthsurance Bondsurance Incomesurance Healthsurance
Ageas
Ageas N.V./S.A. (Belgium) Ageas N.V. (Netherlands)
Type
Naamloze vennootschap / Socit anonyme
Traded as Industry
Euronext: AGS Financial services
Predecessor(s) Fortis Holding Founded Headquarters 1990 (as Fortis); 2010 (as Ageas) Brussels, Belgium Utrecht, Netherlands 19
Key people
Jozef De Mey (Chairman), Bart de Smet (CEO)
Products Revenue Profit Total assets Total equity Employees Website
Insurance 13.65 billion (2010) 223.1 million (2010) 99.17 billion (end 2010) 9.869 billion (end 2010) 11,710 (end 2010) www.ageas.com
Ageas N.V. /S.A. is a Belgium-Dutch multinational insurance company co-headquartered in Brussels, Belgium and Utrecht, Netherlands. Ageas is Belgium's largest insurer and operates in 14 countries worldwide. The company was renamed from Fortis Holding in April 2010 and consists of those insurance activities remaining after the breakup and sale of the financial services group Fortis during the financial crisis of 2007-2010. It is listed on the Euronext Brussels, Euronext Amsterdam, and Luxembourg stock exchanges and forms part of the blue-chip BEL20 stock market index.
History
The company's roots reach back to the 1824 foundation of the Belgian life insurer Assurances Gnrales (now AG Insurance).[2] In 1990 AG merged with the Netherlands-based bancassurer AMEV/VSB to form Fortis. AMEV/VSB had itself been formed earlier that year by the combination of savings bank VSB (Verenigde Spaarbank) and insurer AMEV, which took advantage of the recent relaxation of Dutch legislation preventing mergers between banks and insurers. AMEV had originally been founded in Utrecht in 1920 as Algemeene Maatschappij tot Exploitatie van Verzekeringsmaatschappijen (English: General Society for Operation of Insurance). After its creation in 1990, Fortis expanded its offerings to include private and investment banking and asset management, establishing subsidiaries around the world, and by 2007 it had become the 20th largest business in the world by revenue. That year Fortis agreed to jointly purchase ABN AMRO with Banco Santander and Royal Bank of Scotland Group, but the onset of the major
20
financial crisis exacerbated problems with financing its part of the large acquisition and prompted fears of impending insolvency. Considered "too big to fail", Fortis received an 11.2 billion bailout from the Benelux governments and saw its retail banking operations in Belgium sold to BNP Paribas and its insurance and banking subsidiaries in the Netherlands nationalised. The remaining assets of the company, consisting principally of insurance operations but also including some distressed assets, were rebranded Fortis Holding. In April 2010 its shareholders agreed a formal change of name to Ageas N.V. /S.A., with ownership of the Fortis brand passing to BNP Paribas.
Operations
The company is the largest provider of insurance in Belgium, owning 75% of AG Insurance the remainder is held by Fortis Bank N.V./S.A., which was sold to BNP Paribas in 2009). Products are sold through independent agents, brokers and financial planners, and through branches of BNP Paribas Fortis and its subsidiary Banque de La Poste/Bank van De Post. Ageas also wholly owns the subsidiary Ageas Insurance International (formerly Fortis Insurance International), through which it is the United Kingdom's third-largest provider of private vehicle cover and fourth-largest provider of travel insurance through subsidiaries such as Kwik Fit Insurance. Fortis Insurance International also operates in France, Germany, Turkey, Ukraine and Hong Kong and holds partnerships or joint ventures in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand. In addition, Ageas holds 45% of Royal Park Investments, a special purpose vehicle which manages a portfolio of "toxic" structured credit assets previously held by Fortis Bank.
VISION:
To be the leading provider of wealth management, protection and recruitment solutions that meets the needs of the customers and adds values to their lives.
21
Mission:
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 life;
22
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
Values:
SECURITY: Providing long term financial security to our policy holders will be a constant endeavour, by offering life insurance and pension products. TRUST: Appreciate the trust placed by policy holders. Hence, It aim to manage their investments very carefully and life up to this trust.
INNOVATION: Recognizing the different needs of customers, we will be offering a range of innovative products to meet these needs. Mission is to be the best new life Insurance Company in India and these are the values that will guide us in this.
23
1995 March 1995 July 1996 October 1996 December 1996 1998 April 1999 February 1999 November 2002 March
Commenced Equity Broking on NSE CM segment Built agent Distribution Network across the country Commenced Debt Broking on NSE WDM segment Started operations as a Depository Participant Started to act as Arranger to Privately Placed Bond issues Commenced operations as a Portfolio Manager Acquired membership of BSE, Mumbai Started operations as a Primary Dealer Achieved an outright secondary market turnover
exceeding Rs.100000 crore in G-Secs 2000 June 2002 October 2004 June Acquired Derivatives memberships of BSE and NSE Commenced trading in Interest Rate Swaps Commenced Merchant Banking & Corporate Advisory Services 2006 January Launched the online investing portal
www.idbipaisabuilder.in 2006 September IDBI Capital bags CNBC TV18 'Best National Financial Advisor-Institutional' award. 2006 November IDBI Capital ties up with Punjab National Bank and Bank of Rajasthan Bank.
24
2007 March 2007 May 2008 January
IDBI Capital ties up with Oriental Bank of Commerce IDBI Capital ties up with Karur Vysya Bank (KVB) IDBI Capital bags CNBC TV18's prestigious National Financial Advisor Award
2008 March
IDBI Capital ties up with Union Bank of India
2.1-INSURANCE MARKET PRESENT

The insurance sector was opened up for private participation seven years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and nonlife segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe.
25
LIFE INSURANCE COMPANIES

Sl. No. 1 2 3 4 5 6 7 8 Insurer HDFC Standard Life Insurance Co. Ltd. Standard Life Assurance, UK ICICI-Prudential Life Insurance Co. Ltd. Om Kotak Life Insurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. Tata-AIG Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Ltd. Allianz Bajaj Life Insurance Co. Ltd. Metlife India Insurance Co. Ltd. Reliance Life Insurance Co. Ltd. AVIVA Sahara Life Insurance Co. Ltd. Shriram Life Insurance Co. Ltd. Bharti AXA Life Insurance Co. Ltd. Future Generali India Life Insurance Company Ltd Foreign Partners Standard Life Assurance, UK New York Life, USA Prudential , UK Old Mutual, South Africa Sun Life, Canada American International Assurance Co., USA BNP Paribas Assurance SA, France ING Insurance International B.V., Netherlands Allianz, Germany Metlife International Holdings Ltd., USA Aviva International Holdings Ltd., UK Sanlam, South Africa AXA Holdings, France Pantaloon Retail Ltd.; Sain Marketing Network Pvt. Ltd. (SMNPL), Generali, Italy
9 10 11 12 13 14 15 16
17 18 19 20 21
IDBI Fedreral Life Insurance Company Ages, Ltd. Canara HSBC OBC Life Insurance HSBC, UK Company Ltd. Aegon Religare Life Insurance Company Religare, Netherlands Ltd. DLF Pramerica Life Insurance Co. Ltd. Prudential of America, USA Life Insurance Corporation of India
TOP 10 LIFE INSURANCE COMPANIES IN INDIA

LIC (Life Insurance Corporation of India) still remains the largest life insurance company accounting for 64% market share. Its share, however, has dropped from 74% a year before, mainly owing to entry of private players with innovative products and better sales force.
26
ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It experienced growth of 58% in new business premium, accounting for increase in market share to 8.93% in 2007-08 from 6.97% in 2006-07. Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%. SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. New premium collection for the company was Rs 4,792.66 crore in 2007-08, an increase of 87% over last year. Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market share went up to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th in number of new policies sold in 2007-08. HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08, registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6 th among the insurance companies and 5th amongst the private players. Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs 641.83 crore as against Rs 387.51 crore. Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 200708. Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last year. It has presence in more than 3,000 locations across India via 221 branches and close to 40 banc assurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344 crore.
27
MARKET SHARE OF VARIOUS LIFE INSURANCE COMPANIES IN INDIA

Here is the market share of various Life Insurance Companies in India at the end of FY2012.
Company Name LIC ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Birla Sunlife Reliance Life Max New York IDBI Federal
Market Share (in %) 63.47% 5.88% 2.73% 4.40% 5.66% 2.46% 2.30% 3.14% 1.05% 0.99%
AEGON RELIGARE Tata AIG
1.27%
BOOMING INSURANCE MARKET IN INDIA

With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% annually. This impressive growth in the market has been driven by liberalization, with new players significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market. Moreover, saturation of insurance markets in many developed economies has made the
28
Indian market more attractive for international insurance players. This research report will help the client to analyze the leading-edge opportunities critical to the success of insurance industry in India. Based on this analysis, the report gives a future forecast of the market that is intended as a rough guide to the direction in which the market is likely to move. Total life insurance premium in India is projected to grow Rs 1,230,000 Crore by 2010-11.
Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11.
With the entry of several low-cost airlines, along with fleet expansion by existing ones and increasing corporate aircraft ownership, the Indian aviation insurance market is all set to boom in a big way in coming years.
Home insurance segment is set to achieve a 100% growth as financial institutions have made home insurance obligatory for housing loan approvals.
Health insurance is poised to become the second largest business for non-life insurers after motor insurance in next three years.
A booming life insurance market has propelled the Indian life insurance agents into the top 10 country list in terms of membership to the Million Dollar Round Table (MDRT) an exclusive club for the highest performing life insurance agents.
To make comparison of ULIP plans with Mutual funds in IDBI Life Insurance Co. Ltd. and to Create awareness about Unit Linked Insurance Plan (ULIP) Benefits. The overall goal of this project was to create awareness about investments. The Above problem arises because every life insurance company has their products having different positive and negative aspects. Life Insurance is booming sector in todays economy. So the responsibilities of the insurance companies have been increased as compare to the past. Because in past people were taking insurance policies for protection tool only. In present scenario insurance sector is providing more services with the basic life insurance. IDBI Life Insurance has number of products, which gives the right way to save the money and earn good profit by invested premium. Today people want more services and more return on their investment. So this insurance company is providing more value added services with the basic insurance operation. By doing this type of study in this Insurance sector and looking at the vast scope and opportunity to study this booming field of Life Insurance and the growing awareness among the public regarding insuring their life through Life insurance policies as well as the growing contribution of
29
Insurance in GDP of country with the number of private players making entrance in this booming industry of Insurance. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost . At IDBI Federal Life Insurance Co. Ltd., the Endeavour is to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery, the intent is to deliver world class wealth management, protection and retirement solutions to Indian customers.
TRACK RECORD
Indias fastest growing life insurance company with Pan India presence. Modal premium Rs.316 crores in the first year of operation. Above Rs.3000 crores of sum assured, 90000 policies and 7000 distributors. Moved into 13th position from 18th as on 31st March 2011. Fastest Rs.100 crores and fastest Rs.300 crores business targets met since inception. Funds performing in the top quartile consistently. Achieved one of the lowest cost ratios in the industry.
PRODUCTS OFFERED BY IDBI FEDERAL LIFE INSURANCE CO. LTD.

Childsurance Lifesurance Wealthsurance Group Microsurance Incomesurance Healthsurance Bondsurance Homesurance
30
Termsurance Loansurance Retiresuran
2.2-PRODUCTS PROFILE
Unit Linked Plan

New family gain New unit gain plus New unit gain premier
Traditional plan
Invest gain Cash gain Child gain
Retirement Solutions
Swarna visranthi New unit gain easy pension plus
Health Plan
Care first Health care
Term Plan
Risk care Term care
31
2.3- SWOT
STRENGTHS
WEAKNESSES
Strong tie up Brand Equity Strong Network Huge customer Database
Low customer Awareness
Less Promotion
OPPORTUNITIES
THREATS
Uninsured Population Network Building
LIC Aggressive new Entrants
AN OV
32
ERVIW ON CONSUMER PERCEPTION TOWARDS LIFE INSURANCE

Life is full of risk and uncertainties. Since we are the social human being we have certain responsibilities too. Indian consumers have big influence of emotions and rationality on their buying decisions. They believe in future rather than the present and desire to have a better and secured future, in this direction life insurance services have its own value in terms of minimizing risk and uncertainties. Indian economy is developing and having huge middle Class societal status and salaried persons. Their money value for current needs and future desires here the pendulum moves to another side which generate the reasons behind holding a policy. Here the attempt has been made in this research paper to study the buying behavior of consumers towards life insurance services. Analyzing consumer behaviour is perceived as cornerstone of a successful marketing strategy. Consumer behaviour is the mental and emotional processes and the observable behaviour of consumers during searching purchasing and post consumption of a product and service. Similarly consumer behaviour is action and decision process of people who purchase goods and services for personal consumption. Now if these defining criteria are closely observed, it is evident that analyzing consumers decision making process is the foundation of entire notion of consumer behaviour.
2.4- History of Insurance

In some sense we can say that insurance appeared simultaneously with appearance of human society. In earlier economies, we can see insurance in the form of people helping each other. For example, if a house is burnt, the members of the community help build a new one. Should the same thing happen to ones neighbour, the other neighbors must come to help? Otherwise, neighbors will not receive help in the future. Insurance in the modern sense, started as a methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants traveling treacherous river rapids would redistribute their cargo across many vessels to limit the loss due to any single vessels capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lenders guarantee to cancel the loan should the shipment be stolen.
33
Greek monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. They invented the concept of the general average. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinking of the vessel in the sea. The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called benevolent societies which cared for the families and paid funeral expenses of members upon death. Guilds in the middle Ages served a similar purpose. Before insurance was established in the late 17th century, friendly societies existed in England, in which people donated amounts of money to a general sum that could be used for emergencies. Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Greeks rulers in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed. Insurance as we know it today can be traced to the Great Fire of London, which in 1666 A.D devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established Englands first fire insurance company, The Fire Office, to insure brick and frame homes. The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.
Types of Insurances
Insurance business is divided into four classes: a) Life Insurance
34
b) Fire c) Marine d) Miscellaneous Insurance. Life insurers undertake the Life Insurance business; general insurers handle the rest. The Business of insurance essentially means defraying risks attached to an activity (including life) and sharing the risks between various entities, both persons and organizations. Insurance companies are important players in financial markets as they collect and invest large amounts of premium in various investment instruments. Insurance offers the following benefits: a) Protection to investors b) Accumulation of savings c) Channeling these savings into sectors needing huge long-term investments. Insurance companies receive a steady cash stream of premium or contributions to pension plans. Their cash flows are determined on the basis of various actuary studies and models. Since their liabilities are long-term or contingent in nature, their investments are also long-term and they are able to maintain a healthy liquidity position. Since they offer more than the return on savings in the shape of life cover to the investors, the rate of return guaranteed on their insurance policies is relatively low. Consequently, the need to seek high rates of return on their investments is also low. Since the risk factor in the insurance business is quite high, insurance companies usually invest in relatively safer bets such as bonds of GOI, PSUs, state governments, local bodies, corporate houses and mortgages of long-term nature. Lately, insurance companies have.
Introduction of life insurance industry in India

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta, which failed in 1834. However, the success of Indian life insurance can be traced back roughly to the second decade of the nineteenth century when the Madras Equitable began transacting life insurance business in the Madras Presidency in 1829. After that, it was a rather dull phase with regard to the growth in life insurance enterprise. This dullness was due to the very critical phase through which the British
35
insurance companies were passing due to mismanagement and inexperience, thus resulting in the failure of several British offices before 1870 and leading to the enactment of the British Insurance Act, 1870. Till the 70s of the nineteenth century, insurance had found no real place in the scheme of things and only certain European companies operating in parts of India did life insurance business on some scale. But Indian enterprise in this sphere later began to expand and in the last three decades of the nineteenth century the following companies were started in the Bombay Presidency:
a) Bombay Mutual (1871) b) Oriental (1874) c) Empire of India (1897) Few other companies were also set up in other parts of India. However, this period was
Dominated by foreign insurance offices, which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance. The Indian offices that were setup during this period came up the hard way and had to struggle against the prevailing prejudice against life insurance and natural ignorance of the people. 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 Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life insurance business. Later in 1928 the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life insurance business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of insuring public, the earlier legislation was consolidated and amended by the Insurance Act1938 with comprehensive provisions detailed and effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were legations 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 (LIC) came into existence in the same year. The LIC absorbed 154Indian, 16 non-Indian insurers as also 75 provident societies. Since then LIC was the only player till the late 90s when the Insurance sector was reopened for the private sector.
36
India's economic development made it a most lucrative Insurance market in the world. Before the year 1999, there was monopoly state run LIC transacting life business and the General Insurance Corporation of India with its four Subsidiaries transacting the rest. In the wake of reform process and passing Insurance Regulatory and Development Authority (IRDA) Act through Indian parliament in 1999, Indian Insurance was opened for private companies. Liberalization on the Insurance sectors has allowed the foreign players to enter the market with their Indian partners. Most of the foreign Insurers have joined within the local market. India offers immense possibilities to foreign Insurers since it is the world's most populous country having over a billion people. Insurance industry had ten and six entrants in life and non-life sector respectively in the year 2000-2001. The industry again saw two and three entrants in the life and non-life business respectively in the year 2001-2002. One additional entrant was made both in the life and in nonlife business in 2004 and 2005 respectively. At present there are fourteen companies each in Life and General Insurance. The Funds earlier generated by the state owned insurers have been diversified with other new insurers. We should wait and see how the new players are going to boost up our economy. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party on happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. The Indian insurance market is characterized by the presence of 'young pensioners', as per an article in the 'Times of India'. Young pensioners are typically under 40 individuals who are purchasing retirement plans. The growing Indian economy has created an upwardly mobile, affluent young generation, who believe in going for a planned retirement. As per data from IRDA, 28% of the premiums collected by the Indian Insurance companies are from retirement plans .Life Insurance Corporation (LIC) is India's biggest domestic institutional investor. It is also the largest life insurance company in India. LIC envisages augmenting its equity investment by one third in 2008. LIC plans to buy equities worth Rs 450
37
billion for the year 2008-09. The comparable figure for 2007-08 was Rs 340 billion. Thomas Mathew, LIC Managing Direct or expects the volatility in the stock markets to continue till October-November. The prime objective of the company is to ensure the safety of the resources invested by the company's shareholders. LIC is slated to buy up bonds worth Rs1.15 trillion in the current fiscal year. LIC expects to earn a gross investment income ranging from Rs 400 billion to Rs 450 billion in the current year, depending upon the prevalent market conditions. LIC manages total assets worth around US$175 billion. According to K N Bhandari, the Secretary General of General Insurance Council, India's general insurance sector is slated to grow at 18% rate in 2008. The comparable figure for 2007 was 13%.As per Mr. Bhandari, the present market value of the Indian general insurance sector is Rs 30,000-crore. The current penetration level of the Indian insurance sector is 0.65 %.The Indian urban sector is a significant contributor to the general insurance market P.Chidambaram, the then Indian Finance Minister, called for the insurance companies in India to make simple products for the Indian masses. It is.
Current scenario of life insurance sector:

The insurance sector was opened up for private participation four years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and nonlife segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. There are now 29 insurance companies operating in the Indian market 14 private life insurers, nine private non-life insurers and six public sector companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario.
38
There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion. There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first license for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society.
State Insurers Continue To Dominate

There may be room for many more players in a large underinsured market like India with a population of over one billion. But the reality is that the intense competition in the last five years has made it difficult for new entrants to keep pace with the leaders and thereby failing to make any impact in the market. Also as the private sector controls over 26.18% of the life insurance market and over 26.53% of the non-life market, the public sector companies still call the shots. The countrys largest life insurer, Life Insurance Corporation of India (LIC), had a share of 74.82% in new business premium income in November 2005. Similarly, the four public-sector non-life insurers New India Assurance, National Insurance, Oriental Insurance and United India Insurance had a combined market share of 73.47% as of October 2005. ICICI Prudential Life Insurance Company continues to lead the private sector with a 7.26% market share in terms of fresh premium, whereas ICICI Lombard General Insurance Company is the leader among the private non-life players with a 8.11% market share. ICICI Lombard has focused on growing the market for general insurance products and increasing penetration within existing customers through product innovation and distribution.
39
Intense Competition
In a de-tariff environment, competition will manifest itself in prices, products, underwriting criteria, innovative sales methods and creditworthiness. Insurance companies will vie with each other to capture market share through better pricing and client segmentation. The battle has so far been fought in the big urban cities, but in the next few years, increased competition will drive insurers to rural and semi-urban markets.
Global Standards
While the world is eyeing India for growth and expansion, Indian companies are becoming increasingly world class. Take the case of LIC, which has set its sight on becoming a major global player following a Rs280-crore investment from the Indian government. The company now operates in Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon start operations in Saudi Arabia. It also plans to venture into the African and Asia-Pacific regions in 2006.The year 2005 was a testing phase for the general insurance industry with a series of catastrophes hitting the Indian sub-continent.
Market Share of Indian life Insurance Industry

The introduction of private players in the industry has added value to the industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of the insurance industry. Table shows the mane of the player in the market
2.5-Role of IRDA in Insurance Sector

40
IRDA plays an important role in insurance sector giving important guide lines to various companies in the area of insurance. The IRDA's green signal to insurance companies for investments in venture capital funds would provide a boost in growth pertaining to the infrastructure segment. The insurance companies would be allowed to invest about 5% of the total investment in the venture capital funds pertaining to infrastructure based projects. The total aggregate of the assets under the life insurance companies is Rs 699,375 crores. The proposed alterations in the regulations pertaining to investments of the insurance companies were settled by the Insurance Regulatory and Development Authority of India (IRDA), at the board meeting on the 25th of March 2008. Several other alterations were also done with the investment norms. The other important norm is the expansion of the sanctioned investments category, which would also include the mortgaged securities and the initial public offerings unlike previously when these two were not included. The proposal would be submitted to the Insurance Regulatory and Development Authority of India (IRDA) board for approval. The final draft was published in the Gazette of the Central Government at the end of March 2008. The alterations would help in developing the instruments of investment and provide flexibility for insurers. The alterations would provide more margins pertaining to the investments in certificates of deposit issued by the banks and term deposits. At present the insurance companies may invest about 10% of its investment funds to a particular sector. The Insurance Regulatory and Development Authority of India (IRDA) constituted a working group in the year 2006 to probe the existing investment regulations and provide review on the present statutory advices and the trends of investments for insurance companies. According to the Insurance Regulatory and Development Authority (IRDA), the private insurers had collected premium income from new business of about Rs. 18,980 crores, in 2007.
2.6-Role of Private Insurance Companies in Insurance Sector

Private sector also plays important role in this sector and tried to capture maximum shares in this sector. Max New York Life Insurance Company is the leading private life insurance company in India. Max New York Life Insurance Company Ltd. launched 'lifeline' a health insurance product on March 2008, across India. Now, the company can boast of offering complete health and life insurance products across 11 regions in India. This newly launched health insurance product of Max New York Life Insurance Company offers three groups of heath insurance solutions. The director marketing product management and corporate affairs of Max New York Life Insurance said that these three distinct heath insurance products are meant to cover eventualities like
41
hospitalization, surgery and critical illness of the insured and these plans have been structured with features like coverage for a wide range of ailments, no claim discount on revised premium for a healthy life, a fixed premium for a five-year term, free second opinion from the best healthcare institutions of India on detection of illness. Further, it also has provision for a free telephonic medical helpline across India. The hospitalization is covered by "Medicash Plan", which is meant to provide a fixed amount of cash benefit on a day-to-day basis during the entire period of hospitalization of the insured. The Medicash Plan would also cover expenses for admission in ICU, lump sum benefits against an unlimited number of surgeries and recuperation benefits. The second plan of the newly launched health insurance of Max New York Life Insurance is the "Wellness Plan", which is a more attractive one and covers 'critical illness' like cancer, Alzheimers, heart ailments, liver disease, deafness, permanent disability, etc. The Wellness plan covers thirty eight critical illnesses, which is the highest number of illness covered under one insurance plan in India by any insurance company. The third health insurance policy of Max New York Life Insurance is a term plus health protection plan known as "Safety Net". Max New York Life Insurance Company is one of the fastest growing life insurance companies in India and is the first life insurance company of India to be awarded with ISO9001:2000 certification.
42
CH.3-UNIT LINKED INSURANCE POLICY (ULIP)

Unit linked insurance plan (ULIP) is a life insurance solution that provides the client with the benefits of protection and flexibility in investment. It is a solution which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. The investment is denoted as unit and is represented by the value that it has attained called as Net Asset Value (NAV). ULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing a life cover. The residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by the customer. Simply put, ULIPs are structured in such that the protection element and the savings element are distinguishable, and hence managed according to your specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency. ULIPs came into play in 1960s and became very popular in Western Europe and America. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers to the clients. As time progressed the plans were also successfully mapped along with life insurance needs to retirement planning .In todays times ULIP provides solution for all the needs of a client like insurance planning, financial needs, financial planning for childrens future and retirement planning.
43
3.1
STRUCTURE OF ULIPs
ULIPs offered by different insurers have varying charge structures. Broadly the different types of fees and charges are given below. However the insurers have the right to revise or cancel the fees and charges over a period of time
Premium Allocation charges This is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge normally includes initial and renewal expenses apart from commission expenses. Mortality Charges These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc
Fund Management Charges These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV) . Policy/ Administration Charges These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate Surrender Charges A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions Fund Switching Charge Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge. But now a days many insurers offer fund switching free of cost.
44
Service Tax Deductions Before allotment of the units the applicable service tax is deducted from the risk portion of the premium
ULIPs Structure
Administration
Mortality Charges
Fund Management C harges
Charges Premium Allocation Charges Invested Amount
45
3.2-EXAMPLE TO ELABORATE HOW ULIPS WORK

Client pays annual premium of Rs.20,000 Deduct 40% as Premium Allocation Charge - Rs.8,000 Deduct Rs.200 per month as fixed monthly administration expense Deduct Rs.100 on the first month as mortality charge Balance Rs.11,700 is used to purchase units as per investment choice of the customer Investment Fund (Rs.11,700) is used to buy units based upon NAV Values of the fund on that Day If NAV is Rs.10 on that day then Rs.11,700/10 = 1170 units are purchased For the first month the units are cancelled upfront and amount deducted to pay for the risk cover and expenses, this is 1/12 th of the annual amount so calculated Every month the required no. of units are cancelled to cover mortality charges and fixed monthly administration expenses Suppose in the second month the NAV is 12, 16.6666 units cancelled at Rs.12/-, to generate Rs.200/- so 963.3334 Units Remain This is repeated every month till end of the year Client pays renewal annual premium of Rs.20,000 Deduct 20% as 2nd year Premium Allocation Charge - Rs.4,000 Deduct Rs.200 per month as fixed monthly administration expenses Deduct Rs.80 on the first month of the second yr. as mortality charge Suppose in the second year beginning the NAV is Rs.14 Per Unit, so Rs.13,720/14 = 980 Units are purchased So total units= units at end of first year + 980 units
3.3-ADVANTAGES OF ULIPS
46
ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one stop solution for everything the customers want. Unit Linked Insurance Plans (ULIPs) are different from traditional plans purely because, they are much more transparent, various charges are shared with the customer before the sale of the product, so as to enable the customer to make an informed decision. Customers have the flexibility to choosetheir life cover. Also the customers have the choice of multiple fund options based on their risk appetite, thereby enabling an investor to make the desired returns from the investment. The following are some of the advantages of Unit linked plans: a. Life protection b. Investment and Savings Market linked fund based on risk profile Switch option Premium redirection Automatic Transfer Plan(ATP) c. Tax Planning d. Flexibility of cover continuance e. Transparency f. Extra protection with riders Death due to accident Disability Critical illness g. Liquidity Partial withdrawals during the term At maturity h. Variable investment options i. holiday j. Allow Top-ups Premium
CH.4- IDBI LIFE INSURANCE COMPANY

47
There are many financial plans that can meet different needs of yours, but very few can offer comprehensive investments and protection benefits on a single platform. This is the very reason for choosing Wealthsurance the flagship product of IDBI LIFE, an Unit linked insurance plan (ULIP), which we have taken up for our comparative study and analysis with the other prominent ULIP plans of the selected players. Also since the Wealthsurance Plan was introduced in 2008, for a fair comparative ULIP plans of the selected players which were evaluation , we have selected
introduced in the market at the same time. As discussed earlier we would be comparing the Unit Linked Insurance Plans (ULIPs) of the companies selected with those of IDBI LIFE and then make a detailed analysis. This analysis would be well supported by the primary data analysis and then the final results would be analysed
FEATURE Min/Max Entry Age Min/Max Maturity Age Min Premium
WEALTHSURANCE 1 Month/65 Years 75 Years Rs. 20,000 yearly/Rs. 10,000 for half yearly /Rs. 5,000 for quarterly/ Rs. 2,000 for monthly mode Term can be chosen in multiples of 5 years starting from a min term of 10 years. 10 Fund Options Monthly Guaranteed Interest Fund Guaranteed Retun Funds Dynamic Guaranteed Funds Market Fund Options Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund Asset Allocator Funds
Term
Fund Options
48
Fund Management Charges
1.25% p.a. + investment guarantee charge of 0.15% p.a. for MGIF. 1.25% p.a. + 0.25% p.a. for GRF 1.35% p.a. + 0.90% p.a. for DGF 1.35% p.a. for Market Funds. No FMC for Asset Allocator Fund.
Partial Withdrawal
Allowed provided fund value after the partial withdrawal is not less than two times the annual regular premium or 50% of initial single premium subject to a minimum of Rs 20,000 in case of a single premium policy.
Increase of sum assured on top -ups
Whenever top-up premiums are paid, sum insured will automatically increase by 125% of the top-up premium paid. Nil Rs 50,000- Rs 99,999 : 0.5% Rs 100000- Rs 4,99,999 : 1.5% Rs 5,00,000 + : * 2.5% Monthly charge expressed as a percentage of sum insured Varies by premium payment term and policy year* Based on policy year and number of annual premiums paid. No surrender charge after 5th year. *
Premium allocation charges Additional allocation on premium
Policy Administration charges
Surrender charges
49
Riders
Mortality Charges
Maturity benefits
Life & Terminal illness benefit, Accidental death benefit, Accidental death & disablement benefit, Major diseases benefit, Hospital cash benefit, Waiver of premium benefit. Mortality and Terminal Illness Charges are calculated on the Sum at Risk which is Sum Insured - Fund Value. These are deducted at the beginning of each month by cancellation of units in your Investment Account* Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Contributions by way of premiums are eligible for deduction under Sec 80C. Insurance charges for health benefits are eligible for deduction under Sec 80D. Benefits are tax-free under Sec 10(10D), allowing you to earn tax-free income and benefits.
Tax benefits
Other benefits
Free switching b/w Funds, Plan flexibility.
Additional allocation Premium (IDBI LIFE)
Policy Administration Charges (IDBI LIFE) 50
Mortality Charges (IDBI LIFE)
Surrender Charges (IDBI LIFE)
51
4.1- TATA AIG vs IDBI LIFE
FEATURE Min/Max Entry Age Max Maturity Age Min Premium
TATA AIG LIFE LAKSHYA PLUS 30 Days/60 Years 75 Years Rs. 18,000 p.a.
WEALTHSURANCE 1 Month/65 Years 75 Years Rs. 20,000 yearly/Rs. 10,000 for half yearly /Rs. 5,000 for quarterly/ Rs. 2,000 for monthly mode Term can be chosen in multiples of 5 years starting from a min term of 10 years.
Term Min Premium Payment Term
15/20/25/30 Years Same as Policy Term
52
Fund Options
8 Fund Options Top 50 Fund Top 200 Fund Aggressive Flexi Fund Stable Flexi Fund Bond Fund Large Cap Equity Fund Infrastructure Fund Super Select Equity Fund
10 Fund Options Monthly Guaranteed Interest Fund Guaranteed Retun Funds Dynamic Guaranteed Funds Market Fund Options Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund Asset Allocator Funds A FMC of 1.20 % p.a. 1.25% p.a. + of the fund value is investment charged for each of the guarantee charge 8 funds. of 0.15% p.a. will be appropriated while computing the Net Asset Value of the MGIF. 1.25% p.a. + 0.25% p.a. for GRF 1.35% p.a. + 0.90% p.a. for DGF 1.35% p.a. for Market Funds. No FMC Asset Allocator
53
Partial Withdrawal
Withdrawals from Regular Premium Account are allowed from the 6th policy year and only after the insured has attained 18 years of age. Min partial withdrawal is Rs.5,000 and the Total Fund Value after any withdrawal should be such that the Surrender value does not fall below an amount equal to One Annualised Regular Premium. There are no partialwithdrawal charges under this product. You have the flexibility to pay additional premium as "Top-Up Premium" at any time during the policy term without taking additional Sum Assured.
Whenever top-up premiums are paid, sum insured will automatically increase by 125% of the top-up premium paid.
54
Premium allocation charges
This will be deducted from the premium amount at the time of premium payment & units will be allocated thereafter. 1st Yr- 30% of Annualised Premium, 0% from 2nd Yr o/w. Top-up premium allocation charge: 1.5% of the Top-Up Premium.
No premium allocation charge for all policies.
Additional allocation on premium
The Additional allocation is additional premium credited to the respective funds every year till end of policy term, begins from the third policy anniversary of your policy.* Additional Allocation is not available on TopUp Premium.
Rs 50,000- Rs 99,999 : 0.5% Rs 100000- Rs 4,99,999 : 1.5% Rs 5,00,000 + : 2.5%*
A monthly PMC of Re.1.1 per Rs.1000 Basic Sum Assured will be deducted by cancelling Units at Unit Price from the Fund Value of the Policy + there will be Sum Assured related charge of Rs. 4 p/m per Rs.1000 of Basic Sum Assured for the first 2 policy years.
Monthly charge expressed as a percentage of sum insured Varies by premium payment term and policy year*
55
Switching Charge
There are 12 free switches per policy year. Thereafter a charge of Rs.100/- per switch will be applicable. Policy can be surrendered any time during the term. However when the request is received in first three policy years, the surrender value will be frozen as on date of surrender and shall be payable at the end of three policy years. These will be subject to the surrender charges applicable at that time of surrender.*
No Switching charges. Any Number of switches can be made in a month .
Surrender charges
Based on policy year and number of annual premiums paid.

No surrender charge
after 5th year. *
Riders
Death benefit- In case
of unfortunate death of the insured while the policy is in force & before the maturity date, the nominee will get Higher of (I) the Sum Assured net of all Deductible Partial Withdrawals, if any, from the Regular Premium Account , or (ii) the Regular Premium Fund Value at applicable unit price.
Life & Terminal illness benefit, Accidental death benefit, Accidental death & disablement benefit, Major diseases benefit, Hospital cash benefit, Waiver of premium benefit.
56
Mortality Charges
Mortality charge is the amount of insurance cover for the month multiplied by the applicable Mortality Charges for the month, based on the age of the Life Assured. It is deducted on a monthly basis on the life cover. Indicative charges per thousand Sum Assured for a sample age are as shown below.* On survival to the end of the policy term, you will not only receive the Total Fund Value which is equal to the value of the Regular Premium Account plus the value of the TopUp Premium Account(if applicable) valued at applicable unit price but also the Guaranteed Maturity Addition of 8% of your Regular Premium Fund Value.
Mortality and Terminal Illness Charges are calculated on the Sum at Risk which is defined as Sum Insured minus Fund Value. Mortality and Terminal Illness Charges are deducted at the beginning of each month by cancellation of units in your Investment Account* Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Maturity benefits
57
Tax benefits
Premiums paid under this plan are eligible for tax benefits under 5 section 80C of the Income Tax Act, 1961+ life insurance proceeds enjoy tax benefits as per section 10(10D) of the said Act.
Other Remark
Optimize market returns by investing through Systematic Money Allocation & Regular Transfer Investment (SMART). Flexibility to Inc/ Dec the Top-up Sum Assured. Flexibility of Premium Mode. Flexibility To Get additional Cover under Tata AIG Life Accidental Death Benefit Limited Underwriting Rider
Free switching b/w Funds, Plan Flexibility.
58
4.2 HDFC STANDARD vs IDBI LIFE

FEATURE Min/Max Entry Age Max Maturity Age Min Premium HDFC SIMPLILIFE 18 /45 Years 60 Years Rs. 15,000 (Annual) WEALTHSURANCE 1 Month/65 Years
75 Years Rs. 20,000 yearly/Rs. 10,000 for half Rs. 8,000 (Half- Yearly) yearly /Rs. 5,000 for quarterly/ Rs. 2,000 for monthly mode 15/20 Years Term can be chosen in multiples of 5 years starting from a min term of 10 years. 10 Fund Options Monthly Guaranteed Interest Fund Guaranteed Retun Funds Dynamic Guaranteed Funds Market Fund Options Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund Asset Allocator Funds
Min Premium Payment Term Min/Max Term
Fund Options
7 Fund Options Liquid Fund Options II Stable Managed Fund II Secure Managed Fund II Defensive Managed Fund II Balanced Managed Fund II Equity Managed Fund II Growth Fund II
59
A fund management charge of 1.35% per annum will be applicable. There will be an additional charge for the cost of investment guarantee of 0.10% per annum. These will be made by adjustment to the NAV.
1.25% p.a. + investment guarantee charge of 0.15% p.a. will be appropriated while computing the Net Asset Value of the MGIF. 1.25% p.a. + 0.25% p.a. for GRF 1.35% p.a. + 0.90% p.a. for DGF 1.35% p.a. for Market Funds. No FMC Asset Allocator Allowed provided fund value after the partial withdrawal is not less than two times the annual regular premium or 50% of initial single premium subject to a minimum of Rs 20,000 in case of a single premium policy.
Partial Withdrawal
From 6th policy year onwards, 1 partial withdrawal allowed every year, subject to a max 20% of the Fund Value as on the date of partial withdrawal. The minimum amount is Rs.2000 .These partial withdrawals will be free of charge. Also this will have an impact on the Sum Assured. Top Up premium is not allowed under this product.
60
This will be deducted from the premium amount at the time of premium payment & units will be allocated thereafter.* On maturity, there will be an Additional Allocation to the policy. This will be calculated as 3% of the Fund Value on the date of maturity. 0.3% of the original annualised premium per month.
Rs 50,000- Rs 99,999 : 0.5% Rs 100000- Rs 4,99,999 : 1.5% Rs 5,00,000 + : 2.5%*
Monthly charge expressed as a percentage of sum insured Varies by premium payment term and policy year* No Switching charges. Any Number of switches can be made in a month . Based on policy year and number of annual premiums paid.
No surrender charge after 5th year. *
Switching Charge
Surrender charges
24 switches will be given free in a policy year & any additional switch will be charged Rs 100 per switch. The Surrender Value where 3 full years' premiums have not been paid will be 30% of the Fund Value. The Surrender Values where 3 full years' premiums have been paid- see table below*
61
Riders
Death benefit
Mortality Charges
Mortality charges will be deducted on a monthly basis on the life cover. Life cover is the difference between the Sum Assured and the Fund Value at the time of deduction of charges. Indicative charges per thousand Sum Assured for a healthy male and female life are as shown below.*
Life & Terminal illness benefit, Accidental death benefit, Accidental death & disablement benefit, Major diseases benefit, Hospital cash benefit, Waiver of premium benefit. Mortality and Terminal Illness Charges are calculated on the Sum at Risk which is defined as Sum Insured minus Fund Value. Mortality and Terminal Illness Charges are deducted at the beginning of each month by cancellation of units in your Investment Account* Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Maturity benefits
At maturity, the higher of the Fund Value and Guaranteed Value as on the maturity date, along with the Additional Allocation shall be payable.* Premium and any benefit amount received under this policy will be eligible for the tax benefit as per the prevailing Income Tax
Tax benefits
Contributions by way of premiums are eligible for deduction under Sec 80C. Insurance charges for health benefits are eligible for deduction under Sec 80D. Benefits are tax-free under
4.3- LIC vs IDBI LIFE
62
FEATURE Min/Max Entry Age Min/Max Maturity Age Min Premium
LIC Market Plus -1 18 Years/65 Years
WEALTHSURANCE 1 Month/65 Years
40 Years/75 Years Rs. 5000 p.a. for deferment term of 20 years & + Rs 10000 p.a. for term of 15-19 years Rs 15000 p.a. for term of 10-14 years
75 Years Rs. 20,000 yearly/Rs. 10,000 for half yearly /Rs. 5,000 for quarterly/ Rs. 2,000 for monthly mode
Min Premium Payment Term Term
10 years Regular Premium/ 5 Years -Single Term can be chosen in multiples of 5 years starting from a min term of 10 years. 10 Fund Options
Fund Options
4 Fund Options
63
Bond Fund Secured Fund Balanced Fund Growth Fund
Monthly Guaranteed Interest Fund Guaranteed Return Funds Dynamic Guaranteed Funds Market Fund Options
-
Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund Asset Allocator Funds
0.50% p.a. of Unit Fund for Bond Fund
1.25% p.a. + investment guarantee
0.60% p.a. of Unit Fund for Secured Fun 0.70% p.a. of Unit Fund for Balanced Fund 0.80% p.a. of Unit Fund for Growth Fund
charge of 0.15% p.a. will be appropriated while computing the Net Asset Value of the MGIF. 1.25% p.a. + 0.25% p.a. for GRF 1.35% p.a. + 0.90% p.a. for DGF 1.35% p.a. for Market Funds. No FMC for Asset Allocator Fund.
64
Partial Withdrawal
No Partial Withdrawal will be allowed
No Such Increase
Whenever top-up premiums are paid, sum insured will automatically increase by 125% of the top-up premium paid. No premium allocation charge for all policies.
Single Premium Policy : 3.3% Regular Premium Policy: see table below* No Additional allocation
Rs 50,000- Rs 99,999 : 0.5% Rs 100000- Rs 4,99,999 : 1.5% Rs 5,00,000 + :2.5%*
Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter, throughout the term of the policy.
65
Switching Charges
4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch. No surrender charge
No Switching charges. Any Number of switches can be made in a month .
Surrender charges
Based on policy year and number of annual premiums paid. No surrender charge after 5th year. *
Riders
Death benefit, Life cover option, Accidental benefit option, Critical benefit option rider
Life & Terminal illness benefit, Accidental death benefit, Accidental death & disablement benefit, Major diseases benefit, Hospital cash benefit, Waiver of premium benefit. Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Maturity benefits
Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Contributions by way of premiums are eligible for deduction under Sec 80C. Benefits are taxfree under Sec 10(10D), allowing you to earn tax-free income and benefits.
Tax benefits
66
Other Remark
No Free switching b/w Funds, No Plan FLexibilty, An alteration such as reduction in policy term , change in premium mode subject to a charge of Rs. 50/-. A service tax levied on all of the above policy charges. Allocation charge for top up-1.25%
Free switching b/w Funds, Plan FLexibilty
67
4.4- ICICI PRUDENTIAL vs IDBI LIFE

FEATURE Min/Max Entry Age Max Maturity Age Min Premium ICICI PRU PINNACLE 8 /65 Years 75 Years Rs. 50,000 p.a. WEALTHSURANCE 1 Month/65 Years 75 Years Rs. 20,000 yearly/Rs. 10,000 for half yearly /Rs. 5,000 for quarterly/ Rs. 2,000 for monthly mode Term can be chosen in multiples of 5 years starting from a min term of 10 years. 10 Fund Options Monthly Guaranteed Interest Fund Guaranteed Retun Funds Dynamic Guaranteed Funds Market Fund Options Equity Growth Fund Nifty Index Fund Midcap Fund Bond Fund Income Fund Liquid Fund Asset Allocator Funds
Min Premium Payment Term Term
3 Years 10 years
Fund Options
1 Fund Option Pinnacle Fund*- The investment objective of the fund is to generate optimal returns through an actively managed equity portfolio while using debt instruments to manage the guarantee.
68
A fund management charge of 1.35% per annum will be applicable. There will be an additional charge for the cost of investment guarantee of 0.10% per annum. These will be made by adjustment to the NAV.
1.25% p.a. + investment guarantee charge of 0.15% p.a. will be appropriated while computing the Net Asset Value of the MGIF. 1.25% p.a. + 0.25% p.a. for GRF 1.35% p.a. + 0.90% p.a. for DGF 1.35% p.a. for Market Funds. No FMC Asset Allocator Allowed provided fund value after the partial withdrawal is not less than two times the annual regular premium or 50% of initial single premium subject to a minimum of Rs 20,000 in case of a single premium policy.
Partial Withdrawal
From 6th policy year onwards, 1 partial withdrawal allowed every year, subject to a max 20% of the Fund Value as on the date of partial withdrawal. The minimum amount is Rs.2000 .These partial withdrawals will be free of charge. Also this will have an impact on the Sum Assured. Top Up premium is not allowed under this product.
69
This will be deducted from the premium amount at the time of premium payment & units will be allocated thereafter.* On maturity, there will be an Additional Allocation to the policy. This will be calculated as 3% of the Fund Value on the date of maturity. The PMC is a percentage of the annual premium and will be charged only in the first 3 policy years, regardless of the premium payment status. These charges will be deducted by cancellation of units.* N.A
Rs 50,000- Rs 99,999 : 0.5% Rs 100000- Rs 4,99,999 : 1.5% Rs 5,00,000 + : 2.5%*
Switching Charge
Surrender charges
The Surrender Value where 3 full years' premiums have not been paid will be 30% of the Fund Value. The Surrender Values where 3 full years' premiums have been paid- see table below* Death benefit
No Switching charges. Any Number of switches can be made in a month . Based on policy year and number of annual premiums paid.
No surrender charge after 5th year. *
Riders
Life & Terminal illness benefit, Accidental death benefit,
70
Mortality Charges
Mortality charges will be deducted on a monthly basis on the life cover. Life cover is the difference between the Sum Assured and the Fund Value at the time of deduction of charges. Indicative charges per thousand Sum Assured for a healthy male and female life are as shown below.*
Accidental death & disablement benefit, Major diseases benefit, Hospital cash benefit, Waiver of premium benefit. Mortality and Terminal Illness Charges are calculated on the Sum at Risk which is defined as Sum Insured minus Fund Value. Mortality and Terminal Illness Charges are deducted at the beginning of each month by cancellation of units in your Investment Account* Maturity Benefit is equal to the Fund Value in your Investment account on the date of maturity.
Maturity benefits
At maturity, the higher of the Fund Value and Guaranteed Value as on the maturity date, along with the Additional Allocation shall be payable.* Premium and any benefit amount received under this policy will be eligible for the tax benefit as per the prevailing Income Tax laws.
Tax benefits
71
4.5- FUND OPTIONS AVAILABLE UNDER ULIPs

Most insurers offer a wide range of funds to suit ones investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available along with an indication of their risk characteristics.
FUND Equity Funds
Nature of investments Primarily invested in company stocks with the general aim of capital appreciation. Invested in corporate bonds, government securities and other fixed income instruments. Sometimes known as Money Market Funds invested in cash, bank deposits and money market instruments Combining equity investment with fixed interest instruments
Risk category High
Income, Interest and Bond Funds
Fixed
Medium
Cash Funds
Low
Balanced Funds
Medium
72
4.6- COMPARISON OF EQUITY FUNDS (2012-13)

4.6.1 EQUITY OUTLOOK
Fiscal year 2012-13 was a stupendous year for the Indian equity markets. Booming growth in India's economy, robust quarterly results from companies and consistent investments from FIIs fuelled the rise over the past year. From the point of extreme pessimism in March 2012, investors' money almost doubled. Sensex gained 80.54% and Nifty rose 73.76%. Broader market indices outpaced the key benchmarks by a huge margin. BSE Midcap rose 130.23% while BSE Smallcap gained 161.73%. FIIs parked in a whopping Rs 1.10 lakh crore in the Indian stock markets for the FY 12-13. Spirits were lifted by the stability and continuity at the Centre with the Congress-led UPA government taking charge last year. The momentum continued, supported by the earnings upgrade on the back of better growth guidance from companies and the strong performance in the past few quarters. Signs of recovery in global markets also helped the return of the risk appetite. Optimism continued to build up as the government tabled the framework for India's growth at the Union Budget. FM Pranab Mukherjee announced plans to bring down fiscal deficit from 6.5% of GDP in FY12 to 4.8% in FY13 and 4.1% in the following year. Allocations to infrastructure development and direct tax concessions were cheered by the market. Meanwhile, the gradual withdrawal of stimulus packages was inevitable, given the need for fiscal consolidation. On the other hand, RBI raising LAF lending rates by 25 bps was on expected lines, though the timing surprised the market. Equity markets are expected to react positively to earning upgrades and robust liquidity flows.However, high inflation, interest rates tightening and high fiscal deficit numbers can act as dampener for the markets.
4.6.2 TERMS TO UNDERSTAND
Normally people and agents just look into one aspect of the funds i.e the returns and make a decision.But considering the returns is not enough and while choosing a fund or a company various other aspects should be taken into consideration.They are as follows
73
RETURNS ANNUALISED STANDARD DEVIATION SHARPE RATIO
Fund: This is a collective pool of money created from individual investments such that each individual shares risks and rewards in the proportion of their contribution. Since a fund is managed as a single investment vehicle, all the investors will face the same risks and rewards. A professional fund manager invests the fund according to the objective of the fund defined in the offer document or policy document. In case of a policyholder who pays premium, a predetermined part of this is used to pay for life cover and other expenses. The remaining part of the premium is the investment which is put in the various funds (such as Maximiser and Balancer) as per the investors instructions. The investor is free to change the allocation of investments at any time during the term of the policy. NAV: Net Asset Value of a fund on a given day is the total closing value of the securities held in the portfolio of the fund divided by the number of units outstanding. When a person invests a sum (say Rs. 10000) in a fund on a certain day when the NAV was Rs. 20 per unit he is assigned 1000020=500 units. On any given day, the investor can find the value of his investment in the fund by multiplying the units he holds by the NAV of the day. So if the NAV of the fund has become Rs. 30 per unit, the investor can calculate the value of his holdings as 500x30=Rs. 15000. The NAV changes with changes in value of investments in the fund. Risk: Concept of risk of an investment essentially captures the possibility of loss in that investment. Risk, in terms of portfolio management, is defined as variability of the returns of a fund or more correctly expected variability. So if fund A and fund B both given 10% annualized returns, however fund A gives this same 10% consistently every year but fund B gives 3% in one year, 12% in another year and so on but still averages 10% per annum in the long run, then fund B is said to be more risky than fund A. Risk is generally measured as standard deviation or variance of returns. For similar levels of returns a rational investor will always choose the least risky asset.
74
Returns: Return is the reward one has got for taking risk and giving time. Absolute rate of return (or simply return) in a period is the ratio of increase (or decrease) in the NAV of the fund at the end of the period over the NAV at the start of the period. Generally when reporting for a period longer than 1 year, the return is annualized (generally using the CAGR method) for the purpose of comparison. For example if in the last 1 year, the NAV of a fund has increased from Rs. 20 to Rs. 25, then absolute return (and in this case the annualized return as well) is (25-20)20=25%. If over the last 2 years, the NAV has grown from Rs. 15 to Rs. 30 then the absolute return in 2 years is (30-15)15=100%; however the annualized return, or compound annual growth rate is 41.4% per annum. Benchmark: Every investment has to have a yardstick to evaluate whether it has met the objective of investment. A benchmark is a standard against which the performance of a fund can be compared. The benchmark for each fund is predetermined based on the investment objective and target asset allocation of the fund. At a macro level, a benchmark captures the average returns of all funds which have the same objective and funds that perform better than the benchmark can be said to be better than the average. Benchmarks can be either those that are readily available in the market or synthetically created.The benchmark taken for comparison with Equity funds is the NIFTY 50. Debt: Debt or fixed income as an asset class refers to investment in securities that have well defined pay offs, and mostly pf a fixed nature or a fixed rate of return for a fixed period. Because of the fixed nature of returns debts as an asset class is less risky than equity. All securities where the borrower is the government are classified as government securities or gifts and have a negligible level of risk of default, i.e., Non-payment. Other borrowers have varying levels of risk of default, determined by a neutral third party such as CRISIL or Moody by looking at the financial strength of the borrower and being described in the rating of the security where AAA is the safest followed by AA+,AA and so on. Among debt securities there are various types of instruments viz., money market instruments, Certificate of Deposits, Fixed Deposits, Corporate bonds, Gifts, Loans, etc., which have different maturity, risk and reward profiles. Equity: Equity investment means holding shares of companies, meaning that the investor is taking part ownership of a company rather that lending to the company. As a part owner of a
75
business, the shareholder shares all the risks and rewards of the business. Several factors lead to appreciation in equity investments - all of which in some way relate to current and future prospects of the business of the company, also called fundamentals. Because of the variable nature of these factors, equity investments are more risky than debt investments, but have historically shown signifantly better returns in the long-run (investment horizon greater than 5 years). Sharpe Ratio: This is a popular measure of risk adjusted returns. This is an important measure because it is inaccurate to compare the returns of funds that have different risk profiles or objectives. For instance, fund A may perform better than fund B but this may be because it is investing in small cap companies that are more risky. Sharpe ratio helps to compare the returns of funds taking into account the riskiness of returns, and is defined as reward of investing in a risky asset per unit risk taken. More accurately, it is measured as: Sharpe Ratio = Annualized Excess Return/Annualized Std Deviation of Excess Returns Excess Return is the difference between the fund return and the risk free rate of return. Standard Deviation is a common measure of risk. So a higher Sharpe Ratio means a fund has given superior returns (over an asset that has no risk such as a government security) for every unit of risk.
76
4.6.3-ICICI PRUDENTIAL EQUITY FUND
FUND
x NAV(1.4.09) 6.4 Y g NAV(31.3.10) Growth=((y-x)/x)*100 10.62 Standard Dev. 65.94 % Sharpe Ratio 31.11% 1.93%
BENCHMARK(NIFTY )
Returns 73.76%
Annualised Standard Deviation(Calculated in Excel) Risk free rate(G sec)
24.56 %
5%
Sharpe Ratio=(g-r)/z
2.48
77
4.6.4- HDFC STANDARD - UNIT LINKED ENDOWMENT PLUS EQUITY MANAGED FUND
FUND
x NAV(1.4.09) 35.6
NAV(31.3.10) 63.41
Growth=((y-x)/x)*100
78.12 %
BENCHMARK(NIFTY )
Returns 73.76% 31.11% 1.93%
22.99 %
Standard Dev. Sharpe Ratio
5%
3.18%
78
4.6.5 IDBI LIFE WEALTHSURANCE EQUITY GROWTH FUND
BENCHMARK(NIFTY FUND
x Y NAV(1.4.09) NAV(31.3.10) 7.01 12.87 Standard Dev. g Growth=((y-x)/x)*100 83.60 % Sharpe Ratio 31.11% 1.93%
)
Returns 73.76%
26.66 % 5%
2.94
79
4.7- ANALYSIS
4.7.1 Returns: Fund returns: Fund returns here would be the percentage difference in the NAV values between the starting date(1.04.12)and the last day(31.3.13) of the financial year. Benchmark returns: Benchmark returns here would be the percentage difference in the benchmark values between the starting date(1.04.12)and the last day(31.3.13) of the financial year.The Benchmark for Equity Funds is NIFTY
Company IDBI LIFE TATA AIG KOTAK SBI LIFE RELIANCE LIFE HDFC STANDARD ICICI PRUDENTIAL
Returns(2012-13) 83.60% 76.07% 72.97%
NIFTY Returns(201213)
73.76% 70.36% 68.21% 78.12% 65.94%
RETURNS EQUITY FUNDS 2012-13
Comparing the 7 plans above it is clear that IDBI LIFE has given the highest rreturns this despite being the youngest player. Therefore if we were to rank these in order of the returns given by the equity funds in the past financial year(2012-13) their ranking would be as follows
80
1. 2. 3. 4. 5. 6. 7.
IDBI LIFE Wealthsurance Equity Growth Fund HDFC Standard - Unit Linked Endowment Plus Equity Managed Fund TATA AIG Equity Fund Kotak Easy Growth Plans(5 Times) Sbi Horizon Reliance Golden Years Plan - Equity Fund ICICI Prudential
If we compare these to the benchmark i.e NIFTY we find that 3 out of the 7 funds have been able to outperform it.These areIDBI LIFE Wealthsurance Equity Growth Fund HDFC Standard - Unit Linked Endowment Plus Equity Managed Fund TATA AIG Equity Fund
4.7.2 Fund Standard Deviation

Risk of investing in a fund is identified by the volatility of the funds periodic returns. Standard deviation measures the volatility of the funds returns for a given time period. In other words, Fund Standard Deviation for a particular time period gives us the deviation from the mean returns, that has occurred for that fund during that time period. For e.g. let us assume that the Balanced Fund has generated an average (mean) return of 11.55% for the last 2 years and that the corresponding standard deviation was 4.44%. That means that during the last 2 year time period, the balanced fund return varied between 15.99% (i.e. 11.55+ 4.44) and 7.11% (i.e. 11.55-4.44) during 65% of the time. Higher the standard deviation, the greater the volatility, and therefore, the greater the risk of investing in that fund. Thus, an investor has more information available at his disposal to evaluate the quality of performance of the fund and how volatile its returns are. To carry it a step further, it is highly unlikely that a funds return in any one year will be exactly the average. Rather, it will always be either higher or lower than the average. Thus, standard deviation teaches us to look beyond the average annual return figures that are touted by investment advisors.
81
Company
Fund Standard Deviation(Annualised)
NIFTY Standard Deviation (Annualised)
82
IDBI LIFE
26.66%
31.11%
TATA AIG KOTAK SBI LIFE RELIANCE LIFE HDFC STANDARD ICICI PRUDENTIAL
26.12% 26.27% 28.98% 23.22% 22.99% 24.56%
4.7.3 Fund Sharpe Ratio Sharpe ratio of a fund tells us how much return the fund has been able to generate per unit of risk. The higher the Sharpe Ratio, the better the performance of a fund from a risk point of view. The excess return generated by a fund for a particular time period is first calculated by subtracting the risk free rate from the rate of return generated by that fund during that time period. Dividing this result by the standard deviation of the fund return during that time period, one can obtain the Sharpe ratio.
Sharpe Ratio = Excess return / Annualized standard deviation of fund return The "risk-free return" is the annualized return currently available on "risk-free" investments. This is usually assumed to be the return on a short government security like Treasury bill. A government security is sovereign credit which is the nearest to a risk free asset that one can get. For our calculations of the Sharpe ratios for all funds, risk free rate of interest to be at 5% has been assumed.
83
The Sharpe ratio tells us whether the returns of a portfolio are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been.
Company IDBI LIFE
Sharpe Ratio 2.95
TATA AIG KOTAK
2.72 2.59
SBI LIFE RELIANCE LIFE HDFC STANDARD ICICI PRUDENTIAL
2.420 2.72 3.18
2.48
84
CH.5-SURVEY ANALYSIS
5.1-AIM
The Survey was aimed at establishing the various expectations that people have in mind while deciding the insurance policy in which they should invest their savings. How do they react to risk while parking their money in an insurance instrument? Depending on what is are the demographics of the person how he behaves e.g. if he is employed in a job the only earning member in house, in which type of plan he wish to invest his money in? The questionnaire has been designed to capture the awareness level among the people about the products offered by the IDBI LIFE in general.
5.2-METHODOLOGY
For the primary data, a questionnaire has been prepared, It was formulated on the basis of information carefully gathered by me about and guidelines provided by the company and incorporated user friendly rating scales such as Likert scale keeping in mind various mindsets of the people. This questionnaire was mainly formulated to target the common man to see his perception and awareness of various investment options available through online surveys, approaching people directly in Bangalore and even telecalling.This data was analyzed critically using SPSS. A factor analysis done on the data brought out the top most factors affecting the consumer minds in insurance products.The number of respondants was 240.
5.3-FINDINGS & ANALYSIS

Following is the analysis of the primary data collected through questionnaires. (Please refer to annexure I Out of the 240 people surveyed 84% were male and and the16% female The sample includes respondents having diverse qualifications to help understand the various mindsets. The sample of respondents was heterogeneous with people from various occupations. Out of these people who were working in private companies constituted around 50% and the businessmen constitute 49% Again the
respondents surveyed were from various income groups which helped in getting a clearer picture.
85
What do you consider while making an investment decision? And when we talk about making investment decisions around 53% respondents considered their own decision and another 29% respondents considered their familys opinion before making any important investment decision.
Your opinion about investment ? This question answers the reason as to why people invest.The results show that almost 49% people invest to create wealth which is a very signifanct number.Other objectives of investment were getting good returns, tax savings and a better future after retirement
If given an option you would like to invest in Also the customers preference for parking his/her savings in different investment avenues has been carefully studied. It should be noted that the question was where a person would like to invest if given an opportunity and not where she/he has already invested.The main savings instruments preferred by customers fixed deposits, mutual funds and also surprisingly stocks and shares . The Preferred savings pattern of the people is depicted below with Insurance still not being a preferred alternative investment option, getting just 12% of the share. This clearly indicates that Insurance as a segment has still a lot of untapped potential. Name an insurance companies that come to your mind: There were no surprises here.LIC the market leader was still the favourite and the private players have a lot of catching up to do to be any potential threat.HDFC standard was the second most popular brand followed by Bajaj Allianz and ICICI Prudential.Unfortunately none of the people surveyed had IDBI LIFE as the most recalled brand
Do you own an insurance policy? Further it was observed that, out of the whole sample of 240 respondents, 86% owned an insurance policy and only 14% did not have a policy.
Have your heard about IDBI LIFE Life Insurance ? This question was included inthe questionnaire to understand the awareness about IDBI LIFE as a brand.The results were not so positive.63% of the people had not even heard about the company.This may be because of the fact that they do not have a strong presence across India as yet and have not advertised enough to let people know of theirpresence.
86
Have your invested in ULIP plans? There is a huge potential for the company here since it is found that 65% of the respondents have still not invested in ULIPs
According to you what is the amount of risk involved in (ULIPs) Around 57% respondents felt that there was an amount of moderate to high risk involved with ULIPs as compared to other alternative investment avenues. The following pie chart captures the consumers perception of risk attached with an ULIP.
What would be your time horizon when investing in ULIP? This is a very important question to be answered because it is ultimately the number of years that someone is ready to invest that determines the returns especially in Ulips.Equity funds are unpredictable in the short term but are the best when it comes to long term.Therfore insurance companies need to study the mindset of consumers carefully.
5.4 FACTOR ANALYSIS (USING SPSS)

Objective: The main objective of undertaking factor analysis is to extract the most prominent factors that are considered by a consumer before making an investment decision/ purchasing an insurance product. Procedure: We initially listed a total of 17 factors, which can influence a customers investment decision and then asked the customers to rate those factors on a scale of 1-5 according to their degree of importance . The scale was constructed as follows: 1- If the factor has no effect on your preference for the investment option 2- If the factor has only a slight affect on your preference for investment option 3- If the factor affects your preference for an investment option 4- If the factor will strongly affect your preference for the investment option 5- If the factor will be decisive in your preference for the investment option
87
Variables
Variable No. 1 2 3 4 Variables Return on Investment Market Scenario Post Sales Services Support Influence of Relatives/Friends in investment decision making Flexible Withdrawals Option of changing the underlying portfolio Financial Health of the company Tax Savings Policy Features Riders & other benefits Insurance Coverage Policy Term Guarantee of even min returns Investment Risk Various charges under ULIP Flexible premium payment options Lock in period
5 6 7 8 9 10 11 12 13 14 15 16 17
88
OUTPUT SHEET & DETAILED ANALYSIS

Now the problem formulation has been done and we are set to run the factor analysis and determine the model fit. The following are the results.
1. Kaiser- Meyer-Olkin (KMO) & Bartletts Test Kaiser-Meyer-Olkin (KMO) is a measure of sampling adequacy . This index compares the magnitude of observed correlation coefficients to the magnitude of partial correlation coefficients. Typically it should be > 0.5, which is considered as good enough for conducting Factor analysis for the data under consideration. Here in our Output result we can see that KMO is 0.520, greater than 0.5. Hence the data under consideration is appropriate for factor analysis. Bartlett test of sphericity : It is a test used to examine the hypothesis that the variables are uncorrelated in the population. In other words the population correlation matrix is an identity matrix: each variable correlates perfectly with itself (r=1) but has no correlation with the other variables (r=0). If the hypothesis can be rejected then the data is suitable for factor analysis. We can construct our hypothesis as follows- NH0(Null Hypothesis) : Variables are uncorrelated NH1(Alternate Hypothesis) : Variables are correlated. Since we can clearly see from the table below that we have a very high chi-square value, which is significant. Hence we reject the null hypothesis and accept the alternate hypothesis. Thus our model is suitable for factor analysis.
89
2. Communalities Communality is the amount of variance a variable shares with all the other variables being considered. This is also the proportion of variance explained by the common factors. As a rule each variable should have a communality greater than 0.25, which is seen in all the variables take under consideration in our case. Hence we take all the variables for consideration. The following is the table showing communalities.
Communalities Initial Rate of Return Market Scenario Post Sales Services Support Influence of Relatives/Friends in investment decision making Flexible Withdrawals Option of changing the underlying portfolio Financial Health of the company Tax Savings Policy Features Riders & other benefits Insurance Coverage Policy Term Guarantee of even min returns Investment Risk Various charges under ULIP Flexible premium payment options 1.0 00 1.0 00 1.0 00 1.0 00 .5 91 .6 17 .4 80 .6 78 .6 09 .6 46 1.0 00 .6 99 1.0 00 1.0 00 .5 85 .7 19 1.0 00 1.0 00 1.0 00 1.0 00 Extractio n .2 85 .5 42 .4 81 .5 48
1.0 00 Lock in Period Extraction Method: Principal Component Analysis. 1.0 00
1.0 00 1.0 00 1.0 00
.6 16 .7 05 .6 36
90
1.0 00
.7 13
3. Eigen Values The Eigen value represents the total variance explained by each factor. Generally only factors with an Eigen Value of greater than 1 are only included in the model. Hence in our case we have extracted 7 factors out of a total of 17 variables. These 7 factors are the main factors which have an Eigen value of greater than 1 and account for the maximum variance explained. These 7 factors together account for approx 60% of the explained variance, which is a quite a decent result. The following table illustrates the above result:
Total Variance Explained Component Initial Eigenvalues % of Varian ce12.9 90 9.3 12 9.0 28 8.1 46 7.3 75 6.9 57 5.8 91 5.8 70 5.7 41 5.3 10 4.4 51 Cumulati ve % 12.9 90 22.3 02 31.3 30 39.4 75 46.8 50 53.8 08 59.6 99 65.5 68 71.3 10 76.6 20 81.0 70 Extraction Sums of Squared Loadi % ngs of Varian ce12.9 90 9.3 12 9.0 28 8.1 46 7.3 75 6.9 57 5.8 91 Cumulati ve % 12.9 90 22.3 02 31.3 30 39.4 75 46.8 50 53.8 08 59.6 99
Rotation Sums of Squared Loadings % of Varian ce 9.2 91 9.1 81 8.9 42 8.8 16 8.6 18 8.2 32 6.6 18 Cumulati ve % 9.2 91 18.4 73 27.4 15 36.2 31 44.8 49 53.0 81 59.6 99
Total 1 2 3 4 5 6 7 8
e n s i o n 0
Total 2.2 08 1.5 83 1.5 35 1.3 85 1.2 54 1.1 83 1.0 01
Total 1.5 80 1.5 61 1.5 20 1.4 99 1.4 65 1.3 99 1.1 25
2.208 1.583 1.535 1.385 1.254 1.183 1.001 .998 .976 .903 .757 .714 .607 .561 .483 .436 .419
9 10 11 12 13 14 15 16 17
Extraction Method: Principal Component Analysis. 4.1 85.2 97 68 3.5 68 3.2 97 2.8 41 2.5 63 2.4 88.8 36 92.1 33 94.9 74 97.5 36 100.0
91
. Scree Plot
A scree plot is a plot of the Eigen values against the number of factors. Typically, the plot has a distinct break with a gradual trailing off with the rest of the factors. This trailing off is referred to as Scree. Experimental evidence indicates that the point at which the scree begins denotes the number of true factors. Thus from the below Scree Plot , we can verify our Although the initial or unrotated factor matrix indicates the relationship between the factors and individual variables, it seldom results in factors that can be interpreted, because the factors are correlated with many variables. Therefore, through rotation the factor matrix is transformed into a simpler one that is easier to interpret. In rotating the factors, we would like each factor to have nonzero, or significant, loadings or coefficients for only some of the variables. factors, if possible with only one. The most commonly used method for rotation is the varimax procedure. This is an orthogonal method of rotation that minimizes the number of variables with high loadings on a factor, thereby enhancing the interpretability of the factors. Likewise, we would like each variable to have nonzero or significant loadings with only a few
92
Rotated Component Matrixa Component 1 Rate of Return Market Scenario Post Sales Services Support Influence of Relatives/Friends in investment decision making Flexible Withdrawals Option of changing the underlying portfolio Financial Health of the company Tax Savings Policy Features Riders & other benefits Insurance Coverage Policy Term Guarantee of even min returns Investment Risk Various charges under ULIP Flexible premium payment options Lock in Period -.017 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 17 iterations. .109 -.266 .775 .062 -.088 .130 -.420 .052 .104 -.240 -.150 -.206 .097 .137 .173 .498 .158 .033 .280 .061 -.721 .088 .780 -.176 .198 .154 -.034 -.074 .213 -.154 .738 -.139 .705 -.379 .341 .119 -.036 .726 -.210 .066 .468 .645 -.161 -.053 .007 .089 .044 -.150 -.004 -.008 -.017 -.001 -.136 -.045 -.289 .177 .318 -.645 -.430 .041 .140 .133 .006 .118 .177 -.006 .055 -.106 .056 .083 .114 .157 .713 -.276 .171 -.199 -.099 .035 .678 .011 .210 -.005 .171 .035 .086 -.078 -.117 .008 .148 .843 -.202 -.049 -.415 .142 2 .070 .282 .148 .044 3 .267 -.180 .480 .127 4 -.104 -.197 -.041 .029 5 .338 -.125 .041 .633 6 .159 .050 .116 -.145 7 .133 .458 .198 -.294
93
6. Interpretation of Factors Interpretation is facilitated by identifying the variables that have large loadings on the same factor. The factor can be interpreted in terms of the variables that load high on it. In the rotated factor matrix table. These 7 factors together explain 59.699% of the total variance. Hence we can conclude that from a total of 17 variables we have reduced to seven prominent factors which explain most of the investment decision undertaken by customers and the model so constructed, to support the primary research is quite fit and appropriate and supports our secondary data analysis
VARIABLES INCLUDED
% variance explaine d
FACTOR 1 FACTOR 2 FACTOR 3 FACTOR 4 FACTOR 5 FACTOR 6 FACTOR 7
Insurance coverage Flexible Withdrawals

Post Sales Services
Guarantee of min.return
Policy Term -
9.291
9.181
Policy Features
Riders & other benefits Lock in Period
8.942
Financial Health of the company Rate of Return Tax Savings
Investment Risk
8.816
Influence of Relatives/Friends in Various charges under ULIP Option of changing the underlying portfolio
Flexible premium payment
8.618
8.232
Market Scenario
6.618
94
CH.6-ULIP BUSINESS IN INDIA

Private life insurers in the country are lucky that the recent Sebi ban on unit-linked insurance plans (ULIPs) was cancelled. They would have lost almost half their businesses if the market regulators ban on 14 insurers from raising funds through the investmentcum-insurance product. That is because Ulips constitute 46% of the total business in the life insurance space. Ulip has taken a prominent place in the global insurance market and India is not far behind. It has become the growth engine over the years in the Indian insurance market. Of Rs 2,00,000 crore-plus life insurance premium collected in the first 11 months of 201213, a little over Rs 91,000 crore came from Ulips, according to the Life Insurance Council of India, an industry body representing 23 life insurers. Premium collection from renewal of Ulips registered a 33% year-on-year jump in the April- February period to Rs 46,927 crore, showing that majority of the consumers are banking on Ulips for better long-term return. The perception of Ulip has changed over the years.It was initially perceived as a shortterm product; now, people consider it more as a long-term investment tool. In 2006-07, the renewal premium collection of ULIPs was a mere Rs 8,800 crore. ULIPS, where the money in invested in equity and debt and the return is linked to the market, was the epicenter of a standoff between Sebi and insurance regulator IRDA after the stock market watchdog last month banned 14 life insurers from raising further money from these schemes.But IRDA asked insurers to ignore the directive. The finance ministry intervened and it was decided that the status quo will be maintained till a court verdict on the matter. Insurance firms also mopped up Rs 44,462 crore as new Ulip premium in the 11 months, up 17% from Rs 37,948 crore a year earlier. Ulips are the biggest products for private insurers who derive 70-80% of their premium collection from its sale. The countrys largest life insurer, the state-owned Life Insurance Corporation derives a little more than half of its total new premium collection from Ulips. The appetite for Ulip products is unlikely to go down even as the controversy erupted as people are bothered about their long-term returns.
95
6.1-The Battle Of Ulips

14 December 2009 Sebi sends a show cause notice to HDFC Standard Life asking why Ulips launched by them should not be registered with Sebi 15 January 2009 Sebi sends the show cause notice to 13 more insurance companies 9 April 2010 Sebi issues an order banning 14 life insurance companies from raising new or additional funds from existing Ulips until they get their registration from Sebi 10 April 2011 Irda issues a notice with the words notwithstanding the Sebis circular; life insurers do business as usual 12 April 2011 Finance minister intervenes, maintains status quo and asks the two regulators to seek legal mandate from an appropriate court 13 April 2011 Sebi puts its Order in abeyance but puts ban on the launch of new Ulips by the insurance companies as mentioned in Order 15 April 2011 Sebi reportedly moves Supreme Court and High Court Mumbai, Delhi, Hyderabad 16 April 2012 MoF reportedly bans launch of new Ulips by all insurers Who will regulate unit-linked insurance plans (Ulips)? Securities and Exchange Board of India (Sebi) or Insurance Regulatory and Development Authority (IRDA), or both, or the two supervised by a super-regulatory body? This question would not have bothered many some months back. In the last 7-8 years in which Ulips have grown rapidly, they have been regulated by the insurance regulator IRDA. However, the exclusive regulatory guardianship suddenly came to occupy centrestage on 9 April when Sebi issued an order barring 14 life insurers from launching new Ulips without registering them with it, arguing that since the investment component of Ulips involves investments in the securities market, it requires a mandatory registration with it. In the ensuing week, marked by an intense tussle between the two watchdogs, the dispute over regulatory jurisdiction seems to be far from over and is now headed for courts on the advice of the finance ministry, the interceder in the dispute. The Ulip issue is no small question given the amount of public money involved: assets under management (AUM) are approximately Rs 1.77 lakh crore. Even the life insurers could be hit. Ulips constitute 80-90 per cent of their sales and have been growing at about 25 per cent annually over the last four years. To a great extent this justifies the Rs 16,281 crore these companies have invested in the life insurance
96
business. Then, there are around 2.5 million agents who make their living out of the business. Despite the high stakes involved, the regulatory spat in no way impacts the fortunes of Ulip investments. Regulations are in place that secure ones rights as an investor and make it incumbent for life insurers to discharge their liabilities in terms of providing the benefits of the plan provisions. However, in all probability, the current episode will unleash forces of change forcing regulators and the government to bring in new regulations that will change the very character of Ulips. Before we spell out the changes we see on the horizon, a brief background is necessary.
Bones of Contention What IRDA Says 1. Ulips have a mandatory insurance cover that is a vital and an inseparable part of each such product. 2. Unlike mutual funds, Ulips are linked with the policyholders life. 3. Unit Linked Life Insurance Business is dened in Irda (Investment) Regulations, 2000. What SEBI Says 1. Ulips are different from traditional insurance products, and they are a combination of insurance and investment. 2. The attributes of the investment component of Ulips are akin to the characteristics of mutual funds. 3. Investment component of Ulips carries equity market risks. So, Ulips need to be registered with and regulated by Sebi.
97
Life Insurers Stand A Ulip is a life insurance product not covered under the denition of securities under the Securities Contracts (Regulation) Act, 1956.
Sebis Contentions Units of mutual funds are securities as dened under Section 2 (h) of the Securities Contracts (Regulations) Act, 1956. Merely because they are named as units of Ulips, they cannot be ousted from the ambit of de nition of securities.
B The predominant feature of a Ulip is insurance cover, which is dependent on human life. The mere existence of an additional investment feature cannot convert a Ulip into a mutual fund.
If in a combination product there is an investment component, in any proportion, exposing investors to the risks of equity market, it can be issued only after obtaining registration from Sebi.
C Section 11AA (3) of the Sebi Act excludes contracts of insurance under the Insurance Act, 1938, from the purview of collective investment schemes. D The product was launched after following appropriate procedures and obtaining a unique identi cation number from IRDA, which is the regulator in case of life insurance products. Thus, there was no need to obtain a certicate of registration from Sebi.
ULIPs launched/offered by the said companies are not purely in the category of contracts of insurance but have components of investment products. Approval/registration from one regulatory authority does not exempt the company from complying with other applicable laws and being administered by other relevant regulators.
E Unlike a mutual fund, a Ulip is not
Section 12 (1B) of the Sebi Act says
98
established in the form of a trust. The fund is held by the insurance company itself as required under the Insurance Act. Additional features such as fund management and fund management charges are alone not sufcient to convert a life insurance product into a mutual fund.
no person can sponsor or cause to be sponsored a collective investment scheme including a mutual fund unless he has been registered with Sebi under the Sebi Act. An entity which is not established in the form of a trust cannot launch or offer an investment product in the nature of mutual fund without being registered with Sebi.
The current episode has served as an excuse for many Ulip-hating experts and vested interests to come to the fore giving the product some seriously bad press. At the same time, one needs to understand that Sebi has only sought the registration and regulation of Ulips. It hasnt banned the product as some think.During the initial spurt of launches, they appeared to be a much more transparent alternative in terms of disclosure and flexibility to investors, giving them a significant growth upside over the long term through exposure to equity markets (as compared to less flexible and low-return conventional life insurance products such as endowment and money-back plans). As they are market-linked, the investor, of course, will have to deal with the risk of market swings. Conventions might say that you shouldnt ideally be mixing insurance and investment, and that too in a combo, as the convenience comes at a cost, often a steep one. But not everyone is in an ideal situation. You might lack investment discipline which a regular contribution product with a lock-in would offer, or have much easier access to Ulips than other products or not mind the cost of convenience and so on. The problem lies in the deviation from the Ulip Guidelines (laid down by IRDA in December 2005) that has happened over time. Complicated product architecture, absence of universally accepted performance benchmarks that facilitate evaluation, inadequate insurance element, ill-trained sales personnel, Ulips rapid progress is a case study of deviation from the ideals it was supposed to follow. But perhaps the most outrageous aspect has been the high distribution commissions to illtrained, and many a time, ill-intentioned sales staff, be it agents, institutional distributors or banks. These costs make a serious dent on the final return from the investment. Equally bad was the rampant misselling that is still associated with Ulips. To be fair, IRDA tried to stem the rot by capping the reduction in yield to 3 percentage points for Ulips with tenure up to 10
99
years and 2.25 percentage points for Ulips with a term of more than 10 years. There were also moves such as protecting policyholders abandoned by agents. But all this is too little when you compare it with the changes Sebi brought in for mutual funds, especially the abolition of entry loads.
Rules Vs. Reality
Despite clear-cut Ulip guidelines by Irda in December 2005, insurers are not complying fully with most of the rules Objectives Provision of fair insurance coverage in the interest of policyholders Slip-Ups Coverage mostly at ve times the premium
Disclosures should facilitate an informed decision by policyholders
Disclosures are not standardised and often without benchmarks
Preserving
the
longterm
nature
of
Most Ulips sold as 3-5 year products Surrender charges made nil after 5 yrs by IRDA gives a shorterterm avour
insurance products to meet policyholders savings needs
100
Some other areas where compliance has been dismal: Irdas guidelines that every Ulip should comply with: No technical jargon Remain simple for the sake of understanding Transparency in all aspects of terms and conditions. Irdas guidelines for market conduct: Separate training to insurance agents before selling Ulips Documentation to support informed decision-making by the buyer while purchasing Ulips. Irdas guidelines for disclosures: Performance of various funds over 1-5 years, and since inception, and a comparison with the benchmark index Unit statement should be issued on every policy anniversary and also on each transaction. Advertisements should reveal that: The premiums and funds are subject to certain charges related to the fund or to the premium paidThe contingency on which the guarantee, if any, is payable and the exact quantum of such guarantee. While Ulip providers argue that it is a combination of insurance and investment, the truth is that advertisements harp on it only as an investment. In fact, many Ulip providers and their sales personnel successfully aped some of the worst practices of mutual funds and plumbed new depths of regressive business practices detrimental to customer interests. Much like new fund offers (in MFs), insurers kept launching new Ulips as a charade to raise money. Selfserving advertisements misled investors following the letter but violated the spirit of the code, accompanied by the expensive mollycoddling of successful agents. No one protested till Sebi clamped down on the rot in MFs. Despite IRDAs moves last year, Ulip providers could still do what they were doing while the MFs couldnt. As a result, they raised more money than MFs. Perhaps thats why the insurance industry smells a rat in the latest regulatory fracas.
How Ulips Will Change Whoever be the regulator, one can now be sure that a lot of action will follow to check the rot that has crept into the system (see Future of Ulips). Despite all the glib talk of customer satisfaction from financial services companies, the truth is that the customers investment is a
101
mere statistic in the quest for higher AUM. We have plenty of role models from abroad on the kind of body which should regulate, but the key would be figuring out what works best for Indian customers. Investor interest needs to be the pivot of future Ulip regulation. In times to come, expect lower distribution costs that will bump up ones returns, genuine product launches, restrained ads, frequent disclosures, establishment of universal benchmarks and, above all, better compliance.
Future Of Ulips Whoever be the regulator, Ulips are set to change after the current imbroglio. Heres a peek into their future. More Ulips will give both the sum assured and fund value Low or zero upfront charges Low, staggered or zero commissions Separate agent certi cation to sell Fewer charges across products No guarantee of any nature Even bene t illustrations showing indicative returns will not be allowed Better performance disclosures against benchmarks Surrender charges likely to go up to the 10th year, which will make Ulips truly longterm products
102
Ulip Strategy For Investors Be assured. The dispute is over regulatory jurisdiction only. It has not changed the character of Ulips; insurers are mandated by law to meet obligations to investors. Keep paying premiums. Gains from Ulips, especially investments in equity options, pay off only when one has invested in them for at least 10 years. Premium disruption will impact growth of corpus, especially for targets such as kids future and pension. Banish thoughts of exit. A premature exit will seriously hurt investors due to the high punitive charges associated. For exits before ve years, investors will have to pay back the tax breaks that they enjoyed. CHANGES IN ULIP GUIDELINES OVER THE YEARS
103
6.2 ULIPS vs MUTUAL FUNDS

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. Despite the seemingly comparable structures there are various factors wherein the two differ.
1. Mode of investment/ investment amounts Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their mutual fund counterparts.
104
2. Expenses In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated. ULIP-related expenses have been dealt with in detail in the article "Understanding ULIP expenses". 3. Portfolio disclosure Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions.
105
ULIPs vs Mutual Funds ULIPs Mutual Funds
Minimum investment Determined by the investoramounts are determined by the and can be modified as well fund house Investment amounts
No upper limits, expenses determined by the insurance company Expenses
Upper limits for expenses chargeable to investors have been set by the regulator
Portfolio disclosure Not mandatory*
Quarterly disclosures mandatory
are
Generally permitted for free or at a nominal cost Modifying asset allocation
Entry/exit loads had to be borne by the investor but recently abolished by SEBI
Section 80C benefits available on all ULIP investments Tax benefits
Section 80C benefits are available areonly on investments in tax- saving funds(ELSS)
* There is lack of consensus on whether ULIPs are required to disclose their portfolios. While some insurers claim that disclosing portfolios on a quarterly basis is mandatory, others state that there is no legal obligation to do so.
4. Flexibility in altering the asset allocation As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds.
106
If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan.
5. Tax benefits ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equitylinked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions.
107
6.3 EFFECT OF INTRODUCTION OF DIRECT TAX CODE(DTC) ON ULIPS

Holders of unit-linked policies (Ulips) are a troubled bunch these days. If the muchpublicised spat between Irda and Sebi caused distress and left millions of Ulip holders dazed and confused, the worst may be yet to come, courtesy the revised direct tax code, which is due to be out in a month or two. The insurance grapevine has it that there may be changes in the tax treatment of Ulips. For instance, if the sum assured for a Ulip is less than 20-times the premium paid for such policies, chances are one may end up paying taxes on the returns from April 2011 onwards. It is exempt now but that could change once the revised direct tax guidelines come. Ulip holders will need to modify their plans accordingly to ease the tax burden. But in case the sum assured isnt 20 times the premium a Ulip holder pays, returns on Ulips may decline if one has to adjust it to make it tax exempt by increasing the sum assured value. More sum assured means an increased portion of premium going into paying mortality charges which will leave less money to be invested into units the portion of the money that goes into either equity or debt to earn returns. The draft Direct Tax Code submitted last August proposed a tax on returns for insurance policies where the premium paid is less than 20 times the sum assured. A final version is expected in the next couple of months which will lay down the fineprint on the issue. Nearly all Ulips have a premium to sum assured ratio of 1:5. All such policies under the direct tax code are expected to be taxed at the time of maturity or withdrawal. There isnt much worry about traditional policies since most of them adhere to the 1:20 criteria. A host of unit-linked policies also have the option of converting the sum assured component to higher values. However, in case a policy holder opts for increasing the insurance component, a greater portion of his total premium paid will now go into paying mortality charges the pure insurance component of a unit-linked policy. This means, less money will get invested into the units be it bond or equity as per the schemes The direct tax code will replace the Income Tax Act, and will be available for comments soon before it is finalised and placed before Parliament for its approval, possibly in the winter session. The initial draft of the DTC was submitted in August last year. There were some issues with the industry and it went for redrafting and tweaks. According to senior officials from the Central Board for Direct Taxes, all these industry issues have been are under consideration and addressed in the revised draft.
108
7. FINDINGS & CONCLUSION

After having discussed the advantages of Wealthsurance product compared to the products of the other selected companies and comparison of equity funds along with secondary and primary data analysis, where in we conducted a thorough and an extensive primary research to capture the consumers perception towards various investment alternatives and their attitude towards Insurance and its various offerings based on different parameters, we can list down merits and de-merits, which are as follows.
MERITS: 1. The returns given by the Equity fund was the highest amongst the other players compared and one of the highest in the industry.This despite the fact that it is only in its 3 rd year of operation.It was also able to outperform the Nifty in terms of returns in the last financial year.Therefore we can say that the portfolio allocation of its Equity funds are top notch. 2. The Fund allocation charges and fund management charges are very low when compared to most of the other companies in the market. 3. The growth of the company has been tremendous in terms of the premiums collected and there are variety of fund. All this has been done in a very short span of time which indicates that there is a great future for IDBI LIFE. 4. IDBI LIFE offers funds almost to everyone right from a 3 month child to a 70 year old elderly person. 5. The tie-up of the well known IDBI bank with LIFE International and Federal bank both of which are well established and good rated gives the company a greater scope for good growth in the future. In Kerela ,particularly the Federal Bank has a very big loyalty towards it and that has helped the IDBI LIFE in a big way 6. All the plans offered by the company especially under ULIPs are really flexible as there are no charges charged for switching and a customer can make use of the switching facility any number of times he wants to free of charge. Also the premiums payable can be decided by the customers themselves according to their feasibility and capacity.
109
DE-MERITS: 1. IDBI LIFE has a limited presence right now so most of the people are not aware about its existence 2. With already around more than 23 private companies in the market it is really a mammoth task for IDBI LIFE to establish itself and move forward successfully as it is always difficult for any new company to capture the market very quickly. 3. Also with LIC still at the helm as the market leader it is really difficult for the company to move anywhere closer to it because LIC is the only public sector life insurance company and generally people prefer a public company rather than a private company. 4. The company has to improve its distribution network as its reach to a common man is very limited .Also the number of agents working for the company is very less right now when compared to the other companies. 5. It is very difficult to convince the customers first because this is a new unknown company and secondly there are no part records which normally the customers consider to show the companys performance. 7. The variety of funds under IDBI LIFE has to increase as competitors like ICICI Prudential have a larger and better variety of the same. Having discussed the merits and de-merits, we can talk about the key findings of this study , which are as follows:
KEY POINTS: There is a great future of the life insurance sector in India as 80% of the Indian population is still without life cover and people are just now coming in response to the awareness campaigns being carried out by almost all the insurance companies.
All the products of
IDBI LIFE under Wealthsurance are really good and have an edge over most of the products of other major life insurance companies as the plans offered by the company are really very flexible.
110
8. RECOMMENDATION AND SUGGESTIONS

When it comes to Ulip plans the company should try and encourage its customers or even potential ones to invest in the long term as it will insure stability and also very good returns i.e the benefits of long term investments should be spelt out to the customer by the agents.Obviously if a customer has short term needs then its a different case altogether IDBI LIFE has to improve its distribution network as its reach to a common man is very limited .Also the number of agents working for the company is very less right now when compared to the other companies.The company should constantly come out with innovative products as the competition is very tough with around 22 companies fighting hard for the market share. Some new innovative ideas have been suggested below. An insurance plan for the unborn babies. The premium payment term could be for 6 months and it could start once the foetus is 3 months old inside the mothers womb. There could be various benefits under this plan for the customers like in case of a premature or a complicated birth the company would bear the expenses till the baby is healthy again through the insurance policy. Also there could be death benefits in case of the death of the baby inside the womb or at the time of delivery. This plan could really be successful as in India there are lot of premature child deaths and if the company comes out with a plan like this very tactfully with some implied conditions it would be the first Indian company to offer insurance to unborn babies. An insurance plan for mentally retarded and physically handicapped people. This might be hard to digest but if at all plans like these are possible and really come out then a good amount of Indian population would really be interested. The company could also come out with a plan for both the husband and wife where automatically the wife gets insured along with her husband when her husband purchases the policy. This could also be the other way round. This could be called the combo family plan. In simple words it means buy one policy and get another free. No other company has done something like this till now. As the company is a new company it has to really work hard to get itself promoted. The company could start sponsoring major events and conduct talk shows and seminars to get noticed. It has just sponsored one major event which was a cricket series between India and Srilanka. We find that companies like HDFC Standard despite being a fairly major player in the market are still spending heavily on advertisement and its paying off. Even LIC which has
111
more than 60% of the market share is spending heavily and we find its hoardings, advertisements all over. IDBI LIFE is new and it has no option but to spend heavily in the initial years to create brand awareness. This is important as a good product might be available in the market, but if people are not aware of its existence it cannot hope to increase business. There are many people in India who still do not know about the concept of insurance. The company could take this as an opportunity by trying to create awareness. The company could use celebrities for their advertisement and promotional campaign to cash in on the benefit and reach the mass quickly. In short heavy expenditure on promotional campaign and advertisements are required to build a strong brand in the market.
112
ANNEXURE 1
QUESTIONNAIRE (This questionnaire is only of the sake of Research work being done on IDBI LIFE. Confidentiality would be maintained.)
Name :
Gender : Male
Female
Contact no :
Age Group: 18-30 Qualification: Post Graduate Occupation: Government Service Self Employed
31-40
41-50
>50
Graduate
12th
< 12th
Businessman Private Company Any Other (Please specify)
Your income range (per annum): Below 150000 150000-250000 450000 More than 450000 250000-350000 350000-
Your savings per year: Below 10000 50000-100000 10000-25000 More than 100000 25000-50000
You would prefer savings in which form? Bank deposits Post Office schemes Fixed deposits Any other (please specify) Investments
What do you consider while making an investment decision? Familys opinion Friends advice Your own decision Any other (please specify) Brokers advice
113
Your opinion about investment:

Tax Saving Wealth creation Good returns Better future after retirement Any other (please specify)
Preferably you would like to invest in: Mutual funds Stocks and shares Govt. Bonds & securities Any other (please specify) How frequently do you invest? Once a year 2-3 times a year Not investing (no idea) More than 3 times a year Not interested Insurance products
Name three insurance companies that come to your mind: 1. 2. 3. Do you own an insurance policy? Yes No If yes in which company?
Have your heard about or invested in ULIP plans Yes no
According to you what is the amount of risk involved in (ULIPs) Unit Linked Investment Plans? High risk Moderate risk Low risk They are Safe No Idea What is/would be your time horizon when investing in ULIP? a) Up to 3 yrs b) Between 4-7yrs c) 7-10 yrs yrs e) Over 15 yrs
d) 10-15
Rate how the following factors would affect you while buying an Insurance Policy, on a scale of 1-5(1-no affect 2-slight affect 3-affects 4-strongly affect 5-decisive factor) Return on Investment 1 1 2 2 3 4 3 4 5 5 114
Market scenario
Post Sales Services support Influence of Relatives/Friends in investment decision making Interpersonal Skills (Sales Staff) Financial Health (Company) Goodwill of the company Ease in procedures Tax Savings Duration of Investment
1 1 1 1 1 1 1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2 2 2 2 2 2 2
3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4 3 4
5 5 5 5 5 5 5 5 5 5 5 5 5 5
Can give huge returns but high risk ( no guarantee of even min returns) Investment Risk Lock in period (Money cannot be withdrawn before a specific period) Policy Features Returns constant in all conditions
Comparison with other Financial products
115

Rohit Report....

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Rohit Report....

Загружено:

Авторское право:

Доступные форматы

summer training project

BY ROHIT SINGH BORA

IDBI LIFE INSURANCE COMPANY LIMITED.

SUBMITTED TO: PROF. AKHILESH SHARMA BORA Date of Submission:

SUBMITTED BY: ROHIT SINGH

DECLARATION BY THE CANDIDATE

Name of the Candidate:

Signature: Name of the Guide

Rohit singh bora Gehu , Dehradun

4. IDBI LIFE LIFE INSURANCE COMPANY..................................................................51

Capital Structure and Operations

1.1-IDBI Federal Life Insurance

1.2- Federal Bank

Public NSE:FEDERALBANK BSE: 500469 LSE: FEDS

Industry Founded Headquarters

Key people Products

Shyam Srinivasan (CEO) Loans, Savings, etc.

Acquisitions and Mergers

IDBI Federal Life eyes 70% growth in total premium income

IDBI Federal Life Insurance launches operations in Madurai

CH.2-IDBI Federal Life Insurance Company Profile

IDBI Federal Life Insurance Product Table:

Naamloze vennootschap / Socit anonyme

Euronext: AGS Financial services

Jozef De Mey (Chairman), Bart de Smet (CEO)

Products Revenue Profit Total assets Total equity Employees Website

2007 March 2007 May 2008 January

IDBI Capital ties up with Union Bank of India

2.1-INSURANCE MARKET PRESENT

LIFE INSURANCE COMPANIES

TOP 10 LIFE INSURANCE COMPANIES IN INDIA

MARKET SHARE OF VARIOUS LIFE INSURANCE COMPANIES IN INDIA

AEGON RELIGARE Tata AIG

BOOMING INSURANCE MARKET IN INDIA

PRODUCTS OFFERED BY IDBI FEDERAL LIFE INSURANCE CO. LTD.

Termsurance Loansurance Retiresuran

Unit Linked Plan

Strong tie up Brand Equity Strong Network Huge customer Database

Low customer Awareness

Uninsured Population Network Building

LIC Aggressive new Entrants

ERVIW ON CONSUMER PERCEPTION TOWARDS LIFE INSURANCE

2.4- History of Insurance

Introduction of life insurance industry in India

Current scenario of life insurance sector:

State Insurers Continue To Dominate

Market Share of Indian life Insurance Industry

2.5-Role of IRDA in Insurance Sector

2.6-Role of Private Insurance Companies in Insurance Sector

CH.3-UNIT LINKED INSURANCE POLICY (ULIP)

Fund Management C harges

Charges Premium Allocation Charges Invested Amount

3.2-EXAMPLE TO ELABORATE HOW ULIPS WORK

CH.4- IDBI LIFE INSURANCE COMPANY

FEATURE Min/Max Entry Age Min/Max Maturity Age Min Premium

Fund Management Charges

Increase of sum assured on top -ups

Premium allocation charges Additional allocation on premium

Policy Administration charges

Free switching b/w Funds, Plan flexibility.

Additional allocation Premium (IDBI LIFE)

Policy Administration Charges (IDBI LIFE) 50

Mortality Charges (IDBI LIFE)

Surrender Charges (IDBI LIFE)