PROJECT REPORT

ON
AWARENESS OF FINANCIAL PLANNING IN
EMERGING INDIAN MARKET

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD

OF

MASTER OF BUSINESS ADMINISTRATION

2008-2010
SUBMITTED BY:

PINKEE SARKAR
MBA IVth Sem.

SAI NATH COLLEGE, AGARA

Affiliated JRN RVP University,Udaipur(Raj.)

PREFACE
There are number forces that make marketing an endlessly changing
activity. The constantly activity sociological, psychological and political
environment may represent the uncontrollable marketing factors. To
understanding these factors in better way marketing research is of
utmost importance.
This Project Report has been completed in Partial fulfillment of my
Management Program, Post Graduate Diploma in Business Management
(PGDBM) in the company HDFC STANDARD LIFE INSURANCE. The
objective of my project was TO KNOW THE PUBLIC AWARENESS
OF FINANCIAL PLANNING IN EMERGING INDIAN MARKET.
HDFC STANDARD LIFE is the name which is working as one of the best
private insurance company in insurance sector.
With such large population and the untapped market of populations
insurance happens to be very big opportunity in India. Today it stands
as a business growing at the rate of 15-20 percent annually. Together
with banking services, It adds about 7 percent to the countrys GDP. In
spite of all this growth the statistics of the penetration of the insurance
in the country is very poor. Nearly 80% of Indian populations are
without Life Insurance cover and the Health Insurance. This is an
indicator that growth potential for the insurance sector is immense in
India.

ACKNOWLEDGEMENT
On the successful completion of this project I would like to express my
gratitude to all the people who have helped me throughout the project.
At first, I owe my debt of thanks to HDFC Standard Life, which gave
me an opportunity to do this project work.
I wish to extend my deep and sincere gratitude to Mr. Mukesh
Srivastava (SDM) who provided me with their guidance from day one
and also helped me whole heartedly to achieve the ultimate goal of the
project.
I am also indebted to the Institute, Dr. S.A. Malik (Director) of Sai
Nath College, Agra and its staff members for providing me with this
learning opportunity.

PINKEE SARKAR

CONTENTS
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
PROJECT OBJECTIVE
Section 1: INDUSTRY PROFILE
1) Overview & Historical Perspective
2) Insurance Sector Reforms
3) Nature of Industry
4) Indian Insurance Industry
Regulatory Body : IRDA
5) Importance of Liberalization
Market share of various players
6) Current Scenario
7) SWOT Analysis of Industry

Section 2: COMPANYS PROFILE

HDFC Ltd. : 1) Introduction
2) Subsidiary & Associate Companies
HDFC STANDARD LIFE
1) Introduction
2) Key Personnel
3) Knowledge Management
Life Stages
4) Product Mix

5) Current Sales

6) Future Plans

RESEARCH METHODOLOGY
a) Type of Research
b) Data Collection
c) Sampling Unit & Size
d) Limitations

Section 4: MAIN SECTION

1) Financial Planning
2) 360 Financial Planning
3) Consumption Pattern
4) Objective & Sales Procedure

Section 5: DATA ANALYSIS AND FINDINGS

Section 6: CONCLUSIONS & RECOMMENDATIONS

APPENDICES
1) Questionnaire
2) Tables
3) Glossary
4) Bibliography

EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes
and growth in the years ahead. Delivering service, building trust and
being innovative are key areas in which any company will have to excel
in order to do well in the long road ahead. Different companies will take
different approaches and it would be myriad of solutions that will be
found to delight the Indian customer.
During the first part, I was given complete classroom training about the
various unit linked as well as the traditional plans and solutions which
the company offers.
Later, Market Research was done through various activities and telecalling which are discussed further in the report. Activities led to
practical exposure and taught me the aspects of customer dealing.
Finally, interesting conclusions were drawn out of the data collected
regarding the Awareness of Financial Planning among the people in
todays environment.
It was great experience because selling an insurance product
demands a great deal of confidence and product knowledge.

PROJECT OBJECTIVES

To study the awareness of Financial Planning among the people.

To study the importance of Insurance in todays scenario.

Brand awareness of various private insurance companies.

Preference among different investment tools.

Purpose of buying insurance.

Preference in choosing channel for buying life insurance.

Quality of service provided by agents and clients satisfaction

level.

Customers perception of improvements brought in by entry

of
Private Insurance Companies.

To generate leads for Unit Linked Insurance and the Unit Linked
Pension Plans, by interacting with walking and existing customers
of the company.

SECTION 1

INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. Its a business
growing at the rate of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the countrys
GDP .In spite of all this growth the statistics of the penetration of the
insurance in the country is very poor. Nearly 80 per cent of Indian
population is without life insurance cover while health insurance and
non-life insurance continues to be below international standards. And
this part of the population is also subject to weak social security and
pension systems with hardly any old age income security. This it-self is
an indicator that growth potential for the insurance sector is immense.

Historical Perspective
The insurance came to India from UK; with the establishment of the
Oriental Life insurance Corporation in 1818.The Indian life insurance
company act 1912 was the first statutory body that started to regulate
the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms were been established in India. Then the
central government took over these companies and as a result the LIC
was formed. Since then LIC has worked towards spreading life
insurance and building a wide network across the length and the breath
of the country.
Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.

1956: 245 Indian and foreign insurers and provident societies were
taken over by the central government and nationalized. LIC formed by
an Act of Parliament- LIC Act 1956- with a capital contribution of Rs.5
cr. from the Government of India.
Important milestones in the general insurance business in India
are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company
to transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association
of India, frames a code of conduct for ensuring fair conduct and sound
business practices.
1972: The general insurance business in India nationalized through The
General Insurance Business (Nationalization) Act, 1972 with effect from
1st January 1973. 107 insurers amalgamated and grouped into four
companies- the National Insurance Company Limited, the New India
Assurance Company Limited, the Oriental Insurance Company Ltd. and
the United India Insurance Company Ltd. GIC incorporated as a
company.

Insurance Sector Reforms

Prior to liberalization of Insurance industry, Life insurance was
monopoly of LIC.

In 1993, Malhotra Committee- headed by former Finance Secretary and

RBI Governor R.N. Malhotra- was formed to evaluate the Indian
insurance industry and recommend its future direction. The Malhotra
committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at creating a
more efficient and competitive financial system suitable for the
requirements of the economy keeping in mind the structural changes
currently underway and recognizing that insurance is an important part
of the overall financial system where it was necessary to address the
need for similar reforms. In 1994, the committee submitted the report
and some of the key recommendations included:
Structure
Government stake in the insurance Companies to be brought down to
50%. Government should take over the holdings of GIC and its
subsidiaries

so

that

these

subsidiaries

can

act

as

independent

corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion
should be allowed to enter the sector. No Company should deal in both

Life and General Insurance through a single entity. Foreign companies

may be allowed to enter the industry in collaboration with the domestic
companies.
Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body

should be set up. Controller of Insurance- a part of the Finance
Ministry- should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%. GIC and its subsidiaries are not to hold
more than 5% in any company (there current holdings to be brought
down to this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension
plans. Computerization of operations and updating of technology is to
be carried out in the insurance industry.

STATISTICS (INDIAN & GLOBAL)

This section gives the users important and detailed statistics of the
Indian as well as the Global insurance industry. These statistics would
give important insights of where the respective markets are headed for.

The global life insurance market stands at $1,521.2 billion while

the non-life insurance market is placed at $922.4 billion.

The United States itself accounts for about one-third of the

$2443.6 billion global insurance market and Japan stands next
with a 20.62% share.

India takes the 23rd position with US $9.933 billion annual

premium collections and a meager 0.41% share.

Out of one billion people in India, only 35 million people are

covered by insurance.

India's life insurance premium as a percentage of GDP is just 1.77

per cent.

The income derived by GIC and its subsidiary companies through

investment

was Rs.2491.76 crore and the investable fund

generated was Rs.2843 crore in 1999-2000.

Indian insurance market is set to touch $25 billion by 2010, on

the assumption of a 7 per cent real annual growth in GDP.

NATURE OF INDUSTRY
The insurance industry provides protection against financial losses
resulting from a variety of perils. By purchasing insurance policies,
individuals and businesses can receive reimbursement for losses due to
car accidents, theft of property, and fire and storm damage; medical
expenses; and loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or
insurers) and insurance agencies and brokerages. In general,
insurance carriers are large companies that provide insurance and

assume the risks covered by the policy. Insurance agencies and

brokerages sell insurance policies for the carriers.
Insurance companies assume the risk associated with annuities and
insurance policies and assign premiums to be paid for the policies. In
the policy, the companies states the length and conditions of the
agreement, exactly which losses it will provide compensation for, and
how much will be awarded.
The premium charged for the policy is based primarily on the amount to
be awarded in case of loss, as well as the likelihood that the insurance
carrier will actually have to pay. In order to be able to compensate
policyholders for their losses, insurance companies invest the money
they receive in premiums, building up a portfolio of financial assets and
income-producing real estate which can then be used to pay off any
future claims that may be brought.

There

are

two

basic

types

of

insurance

carriers:

Direct

and

Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance
policies and annuities, while Reinsurance carriers assume all or part
of the risk associated with the existing insurance policies originally
underwritten by other insurance carriers.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiariesusually
spouses and dependent childrenupon the death of the insured.

Disability insurance supplies a preset income to an insured person

who is unable to work due to injury or illness
Health insurance pays the expenses resulting from accidents and
illness.
An Annuity (a contract or a group of contracts that furnishes a periodic
income at regular intervals for a specified period) provides a steady
income during retirement for the remainder of ones life.
Property-casualty insurance protects against loss or damage to
property resulting from hazards such as fire, theft, and natural
disasters.
Liability insurance shields policyholders from financial responsibility

for injuries to others or for damage to other peoples property. Most

policies, such as automobile and homeowners insurance, combine both
property-casualty and liability coverage. Companies that underwrite this
kind of insurance are called property-casualty carriers.

What is Life Insurance?

Human life is subject to risks of death and disability due to natural and
accidental causes. When human life is lost or a person is disabled
permanently or temporarily, there is a loss of income to the household.
The family is put to hardship. Risks are unpredictable. Death/disability
may occur when one least expects it. There are a number of life
insurance products which offer protection and also coupled with savings.

A Term insurance product provides a fixed amount of money on death

during the period of contract.
A Whole Life insurance product provides a fixed amount of money on
death.
An Endowment Assurance product provided a fixed amount of money
either on death during the period of contract or at the expiry of contract
if life assured is alive.
A Money Back Assurance product provides not only fixed amounts
which are payable on specified dates during the period of contract, but

also the full amount of money assured on death during the period of
contract.
An Annuity product provides a series of monthly payments on
stipulated dates provided that the life assured is alive on the stipulated
dates.
A Linked product provides not only a fixed amount of money on death
but also sums of money which are linked with the underlying value of
assets on the desired dates.
There are a variety of life insurance products to suit to the needs of
various categories of peoplechildren, youth, women, middle-aged
persons, old people; and also rural people, film actors and unorganized
laborers.

Life insurance products could be purchased from registered life insurers

notified by the IRDA. Insurers appoint insurance agents to sell their
products.
As per regulations, insurers have to give the various features of the
products at the point of sale. The insured should also go through the
various terms and conditions of the products and understand what they
have bought and met their insurance needs. They ought to understand
the claim procedures so that they know what to do in the event of a
loss.

INDIAN INSURANCE SECTOR

REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals
with insurance business in India is: Insurance Act, 1938, and Insurance
Regulatory & Development Authority Act, 1999.
The Insurance Regulatory and Development
Authority (IRDA)
Reforms in the Insurance sector were initiated with the passage of the
IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously stuck to
its schedule of framing regulations and registering the private sector
insurance companies.

The other decision taken simultaneously to provide the supporting

systems to the insurance sector and in particular the life insurance
companies was the launch of the IRDAs online service for issue and
renewal of licenses to agents. Since being set up as an independent
statutory body the IRDA has put in a framework of globally compatible
regulations.

MISSION-IRDA
To protect the interests of the policyholders, to regulate, promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto.

IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the
colors in the dull 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 79% 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).

LIC has the current market share of 79%.

Among the private players ICICI Prudential has the maximum of appx
5.60%
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about
3.11%.
Below is the table that shows the market share of various players of the
industry.

The following companies have the rest of the market share of

the insurance industry.

COMPANY NAME

MARKET SHARE

LIC
ICICI PRUDENTIAL
BAJAJ ALLIANZ
HDFC STANDARD LIFE
BIRLA SUNLIFE
TATA AIG
SBI LIFE
MAX NEWYORK
AVIVA LIFE
ING VYSYA
OM KOTAK LIFE
AMP SANMAR
METLIFE
RELIANCE LIFE

79.30
5.63
3.27
3.11
2.32
1.45
1.24
0.90
0.82
0.66
0.54
0.38
0.33
0.05

The liberalization of the Indian insurance sector has opened new doors
to private competition and the new and improved insurance sector

today promises several new job opportunities. With private players

now in the field, there will be innovative products, better packaging,
improved customer service, and, most importantly, greater employment
opportunities.
There are a number of options to choose from for a career in Insurance.
Ideally an insurance company will have openings in the following fields:

Actuaries

Underwriter

Surveyor

Investment

Marketing & Distribution

Actuaries

Evaluates the risk for companies to be used for strategic

management decisions.

Actuaries use their analytical skills to predict the risk of writing

insurance policies through the use of mathematical, statistical and
economic models.

An actuary not only fixes the premium rates for new products, but
also revises both products and prices. They calculate costs to

assumerisk.

Underwriters

Insurance underwriters review insurance applications and decide

whether they should be accepted or rejected based on the degree
of risks involved in insuring the people or objects of concern.

In the life insurance business, an underwriter is expected to filter

the "bad or substandard lives". Whereas, in the general insurance
segment, he takes care of risk management.

Agents/Brokers:

Insurance agents may work for one insurance company or as

independent agents selling for several companies.

Insurance agents and brokers can find openings in the health

insurance sector, financial planning services, retirement planning
counseling or even provide other services, for e.g. sell mutual
funds, annuities etc.

Surveyor/Loss Assessor:

Surveyors are professionals who assess the loss or damage and

serve as a link between the insurer and the insured.

They usually function only in non life business.

Their job is to assess the actual loss and avoid false claims.

Sales/Marketing:
And who can forget the guys who make and break a brand. They
would be required in a large number in order to promote the number
of products that will be launched by numerous companies in the
insurance sector.

CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge
untapped potential for players in the insurance industry. Saturation of
markets in many developed economies has made the Indian market
even more attractive for global insurance majors. The insurance sector
in

India

has

come

to

position

of

very

high

potential

and

competitiveness in the market.

Innovative products and aggressive distribution have become the say of
the day. Indians, have always seen life insurance as a tax saving device,
are now suddenly turning to the private sector that are providing them
new products and variety for their choice. Life insurance industry is
waiting for a big growth as many Indian and foreign companies are
waiting in the line for the green signal to start their operations. The
Indian consumer should be ready now because the market is going to
give them an array of products, different in price, features and benefits.
How the customer is going to make his choice will determine the future
of the industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector.
After the entry of the foreign players the industry is seeing a lot of
competition and thus improvement of the customer service in the
industry. Computerization of operations and updating of technology has
become imperative in the current scenario. Foreign players are bringing
in international best practices in service through use of latest
technologies. The one time monopoly of the LIC and its agents are now
going through a through revision and training programs to catch up with
the other private players. Though lot is being done for the increased
customer service and adding technology to it but there is a long way to

go and various customer surveys indicate that the standards are still
below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the
country like India but still the increasing use of other sources is
imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
LIC has already well established and have an extensive distribution
channel and presence. New players may find it expensive and time
consuming to bring up a distribution network to such standards.
Therefore they are looking to the diverse areas of distribution channel
to have an advantage. At present the distribution channels that are
available in the market are:
Direct selling/Retail
Corporate agents
Group selling
Brokers and cooperative societies
Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the
company. This

is

the

main

distribution

channel

due

to

the

complexity of most insurance products (Endowment, Whole of Life,

Unit Linked). This tends to be the focus of most companies due to its
past success as well as its ability to deliver the right advice. However,
this channel can be expensive and it is a time consuming sales process.
An agent is the public face of an Insurance company. Hence it is
important that this face is always smiling and presentable and the facts
and figures at his/ her command are updated and correct.

An agent should be a pleasing personality with complete knowledge

about the various plans and solutions which the company has to offer
and must also understand the customers psychology well to deal in an
efficient manner.

BANCASSURANCE
Bancassurance is the distribution of insurance products through the
bank's distribution channel. It is a phenomenon wherein insurance
products are offered through the distribution channels of the banking
services along with a complete range of banking and investment
products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
Advantages to banks
Productivity of the employees increases.

By providing customers with both the services under one roof, they

can
improve overall customer satisfaction resulting in higher customer
retention
levels.

Increase in return on assets by building fee income through the sale of

insurance products.

Can leverage on face-to-face contacts and awareness about the

financial
conditions of customers to sell insurance products.

Banks can cross sell insurance products e.g.: Term insurance products

with loans.
Advantages to insurers

Insurers can exploit the banks' wide network of branches for

distribution of products. The penetration of banks' branches into
the rural areas can be utilized to sell products in those areas.

Customer database like customers' financial standing, spending

habits, investment and purchase capability can be used to
customize products and sell accordingly.

Since banks have already established relationship with customers,

conversion ratio of leads to sales is likely to be high. Further
service aspect can also be tackled easily.

Advantages to consumers

Comprehensive financial advisory services under one roof. i.e.,

insurance services along with other financial services such as
banking, mutual funds, personal loans etc.

Enhanced convenience on the part of the insured

Easy accesses for claims, as banks are a regular go.

Innovative and better product ranges

WHAT DOES LIFE INSURANCE HAVE TO OFFER?

Life insurance is many different things to many different people. For

some, it is a premium to be paid on time. For others it offers liquidity
since cash can be borrowed when needed. For the investment-minded,
it denotes a constantly growing capital account and numerous other
benefits.
The contractual guarantee is the promise to pay, backed by one of the
oldest and most stably regulated financial industry operating in the
Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being
that life insurance proceeds are paid to the insured's beneficiaries in
case of death. The money proffered by life insurance helps buy time to
adjust to the change of circumstances. Insurance provides large
amounts of cash that will keep the lifestyle for the survivors the way it
was before the insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and
complete peace of mind. He or she knows that the decision made by
him will provide sound benefits in the future, whether or not the
individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long
he or she will live. The investment benefit is paid to the insured's
beneficiaries after his death or it can be used during the life as well. Life
insurance policy owners can turn to the cash value of the policy in case
of a financial emergency when all avenues are either blocked or denied.
4) Enduring Elasticity

Since life insurance is flexible enough to serve several needs, the

insured can keep several long-term goals in mind once he or she invests
in the insurance plan. The cash value of the policy can be allocated
towards augmenting the monthly income during the retirement years.
Leisure years should be turned into pleasure years. Permanent life
insurance is designed on the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for
peace of mind when they buy life insurance. Life insurance offers
complete financial security. The purchase of life insurance demonstrates
concern for a family's future financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the
people the policy owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can
back its products with reserves and surplus as sound as those of the
insurance industry.
The proof of strength and safety that insurance companies have
ensured even under the most adverse of conditions is a matter of pride
for the entire insurance industry. For generation after generation, life
insurance has been acclaimed as the very benchmark of security
against which the other industries are measured.

OPPORTUNITIES FOR INSURANCE COMPANIES

In the now open sector on insurance, the following is what I feel will
determine the success of the company in particular and the industry in
general:

A change in the attitude of the population

Indians have always been wary of employing their hard-earned money

in a venture that will pay them on their death. Insurance has always
been used as a Tax saving tool. No more, no less. It is upon the insurers
to educate the people to secure/insure their future against any
unknown calamity and make a shield around their families and
businesses.

An open and transparent environment created under the IRDA.

The reason for this being on the top of our understanding is that when
ever we have seen any sector open up in India there are always grey
areas and unsure policies. These are not exactly what any player, be it
Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process. Insurance as a sector requires players who are
strong financially and are willing to wait for returns. Their confidence
can be bolstered only if there is an open and a transparent policy
guidelines. This will also help the consumers feel safe that the
regulatory is an active one and cares to do everything possible to keep
things under control and help the insurance environment grow
maturely.

A well-established distribution network.

To cater to the largest democracy in the world is by no means a

cakewalk. Insurance profits are directly related to number of insured
and this is in turn related to the reach.

Trained professionals to build and sell the product.

It is said that the insurance agent is the best salesman in the world. He
makes you pay, regularly, an amount promising to pay back only on
your death. Thus the players will require an excellent sales team to sell
their products in the now competitive environment.

Encouragement of new and better products and letting the

hackneyed ones die out.

This will itself ensure the market grows. And that every class/society
gets a product that best suits them.

SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies

Under Section 10(10D), any sum received under a Life Insurance

policy (not being a Key Man policy) is also exempt from taxation.
But it is wise to remember that Pensions received from Annuity
plans are not exempted from Income Tax.

Section 80C provides a deduction up to Rs.1,00,000/-

to an

individual assessee for any amount paid as a premium.

POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of
their policies or their claims. As per Regulations for Protection of
policyholders interests, 2002, every insurer should have in place, a
grievance redressal system to address the complaints of policyholders.
The IRDA has a Grievance Redressal Cell which plays a facilitative role
by taking up complaints against insurers with the respective companies
for speedy resolution. The IRDA however does not adjudicate on
complaints.

SWOT ANALYSIS OF INSURANCE INDUSTRY

STRENGTH
1. Best returns with the added advantage of 100% life insurance
coverage.
2. Good option for new investors into the market as all the money is
invested
by best fund managers so with less knowledge also they can earn
good
returns.
3. Best commission charges paid to the agents which vary from 12% to
35%
which is much higher as compared to mutual funds i.e. , only 22.5%.

WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.

OPPORTUNITY
1.

80 percent of Indian population is still under insured.

So there is a big opportunity for insurance companies.

2. As the stock market can be under the mark any time so it can bring
loss to
the investors but as in ULIPs there is proper mixture of debt
securities and

equity so the loss is incurred during dark trading days also.

3. Unit-linked products are exempted from tax and they provide life
insurance.
4. Increasing consumer awareness about Insurance and its use.

THREAT
1. Cannibalism within the industry by providing misleading figures to
the

investors.

2. Govt.s instability has a long term repercussions affecting companys

policies and its growth.

CONCLUSION

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

Insurance happens to be a mega opportunity in India, which is growing
at the rate of 15-20 per cent annually.
Nearly 80 per cent of Indian population is without life insurance cover
while health insurance and non-life insurance continues to be below
international standards. And this part of the population is also subject to
weak social security and pension systems with hardly any old age
income security.
And also the changing attitude and increasing awareness level of the
population is an indicator that growth potential for the insurance sector
is immense.

SECTION 2

COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has
since emerged as the largest residential mortgage finance institution in
the country. The corporation has had a series of share issues raising its
capital to Rs. 119 crores. HDFC operates through 75 locations
throughout the country with its Corporate Headquarters in Mumbai,
India.

OBJECTIVES AND BACKGROUND

Background
HDFC was incorporated in 1977 with the primary objective of meeting a
social need that of promoting home ownership by providing long-term
finance to households for their housing needs. HDFC was promoted with
an initial share capital of Rs. 100 million.

Business Objectives
The primary objective of HDFC is to enhance residential housing stock in
the country through the provision of housing finance in a systematic
and professional manner, and to promote home ownership. Another
objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector with the overall domestic financial
markets.

ORGANIZATION AND MANAGEMENT

HDFC is a professionally managed organization with a board of directors
consisting of eminent persons who represent various fields including
finance, taxation, construction and urban policy & development. The
board primarily focuses on strategy formulation, policy and control,
designed to deliver increasing value to shareholders .
FOUNDER Mr. Hasmukhbhai Parekh
BOARD OF DIRECTORS
Mr. D S Parekh Chairman
Mr. Keshub Mahindra Vice Chairman
Ms. Rene S. Karnad Executive Director
Mr. K M Mistry Managing Director
Mr. Shirish B. Patel
Mr. B S Mehta
Mr. D M Sukthankar
Mr. D N Ghosh
Dr. S A Dave
Mr. S Venketaraman
Dr. Ram S. Tarneja
Mr. N M Munjee
Mr. D M Satwalekar

SUBSIDIARY & ASSOCIATE COMPANIES

HDFC Bank

HDFC Mutual Fund

HDFC Standard Life

Intelenet Global Services Ltd.

HDFC Chubb General Insurance Company Ltd.

HDFC Reality

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.
HDFC Developers Ltd.
HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd

HDFC STANDARD LIFE INSURANCE

HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance
sector. Each of the JV player is highly rated and been conferred with
many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,
Standard Life is rated 'AAA' both by Moody's and Standard and Poors.
These reflect the efficiency with which HDFC and Standard Life manage
their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th
August 2000. HDFC is the majority stakeholder in the insurance JV with
81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak
Satwalekar is the MD and CEO of the venture.

THE PARTNERSHIP :

HDFC and Standard Life first came together for a possible joint venture,
to enter the Life Insurance market, in January 1995. It was clear from
the outset that both companies shared similar values and beliefs and a
strong relationship quickly formed. In October 1995 the companies
signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further
strengthening the relationship.
In October 1998, the joint venture agreement was renewed and
additional resource made available. Around this time Standard Life
purchased 2% of Infrastructure Development Finance Company Ltd.
(IDFC). Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very
promising and both companies agreed the time was right to move the
operation to the next level. Therefore, in January 2000 an expert team
from the UK joined a hand picked team from HDFC to form the core
project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC
and a 5% stake in HDFC Bank.

COMPANYS MISSION:

To be the top life insurance company in the market.

This not only means being the largest or the most productive company
in the market, but a combination of several things like

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different

customers

Use of technology to improve service standards

Increasing market share

COMPANYS VALUES:

SECURITY: Providing long term financial security to our policy

holders will be our constant endeavor. This is done by offering life
insurance and pension products.

TRUST: Company appreciates the trust placed by our policy

holders in us. Hence, company will aim to manage their
investments very carefully and live up to this trust.

INNOVATION: Recognizing the different needs of our customers,

company will be offering a range of innovative products to meet
these needs.

Companys mission is to be the best new life insurance company in

India and these are the values that will guide us in this.

KEY MANAGEMENT PERSONNEL

Chairman
Mr. Deepak S. Parekh
Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain

Managing Director & CEO

Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants

Bankers

HDFC Bank Ltd.

Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank

KNOWLEDGE MANAGEMENT

When Should One Go For Insurance?

Your insurance need will change as your life does, from starting to work
to enjoying your golden years and all the stages in between. Each one
of these stages may pose a different insurance need/cover for you. In
this section, we have drawn up the basic life stages and help you
analyze various insurance needs accordingly.

Stage 1 : Young and Single

This is an important stage where one lays down the foundation of a

successful life ahead. Take advantage of the time and power of
compounding to ensure that you build up your dreams, so start saving
early.
Your needs:
o Save for a home and wedding
o Tax Planning
o Save for Golden years

Stage 2 - Just Married

Marriage brings about a significant change. New dreams and new

opportunities also bring in additional responsibilities. While both of you
look forward to a happy and secure life , it is equally important to
ensure that eventualities dont come in the way of shaping your
dreams.

Your needs:
o Planning for home / securing your home loan
liability
o Save for vacation
o Save for your first child
Stage 3 - Proud Parents
Once you have children, your need for life insurance is even more. You
need to protect your family from an untoward incident. Ensure your
protection umbrella takes into account the future cost of securing your
childs dream. You will want life to go on for your loved ones, and
having enough life insurance is a way to help ensure that.
Your needs:
o Provide for childrens education
o Safeguarding family against loan liabilities
o Savings for post-retirement

Stage 4 - Planning for Retirement

While you are busy climbing the ladder of success today, it is important
for you to take time and plan for your life after retirement. Having an
early start for retirement planning can make a significant difference to
your savings. Think about your golden years even before you have
reached them. The key is to think ahead and plan well using your time
and money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
life style after retirement

PRODUCT MIX

At HDFC Standard Life, there is a bouquet of insurance solutions to

meet every need. They cater to both, individuals as well as to
companies looking to provide benefits to their employees.
For individuals, they have a range of protection, investment, pension
and savings plans that assist and nurture dreams apart from providing
protection. One can choose from a range of products to suit ones lifestage and needs.
For organizations they have customized solutions that range from Group
Term Insurance, Gratuity, Leave Encashment and Superannuation
Products.

PRODUCTS FOR INDIVIDUALS

PROTECTION - You can protect your family against the loss of your

income or the burden of a loan in the event of your unfortunate demise,

disability or sickness. These plans offer valuable peace of mind at a
small price.
Plans :

Term Assurance Plan

Loan Cover Term Assurance Plan.

INVESTMENT - This includes a plan that is well suited to meet your long

term investment needs. We provide you with attractive long term

returns through regular bonuses.
Plan :

Single Premium Whole Of Life

PENSION - Our Pension Plans help you secure your financial

independence even after retirement and live a relaxed retired life.

Plans :

Personal Pension Plan

Unit Linked Pension
Unit Linked Pension Plus

SAVING - Our Savings Plans offer you flexible options to build savings
for your future needs such as buying a dream home or fulfilling your
childrens immediate and future needs.
Plans :

Endowment Assurance Plan,

Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Childrens Plan,
Unit Linked Youngstar,
Unit Linked Youngstar Plus .

GROUP PLANS

HDFC Standard Life has the most comprehensive list of products for
progressive employers who wish to provide the best and most
innovative employee benefit solutions to their employees. They offer
different products for different needs of employers ranging from term
insurance plans for pure protection to voluntary plans such as
superannuation and leave encashment.
Plans:

Group Term Insurance with Riders

Group Term Insurance with Profit-Share
Group Unit-Linked Plan

For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan
RURAL CUSTOMER - According to research findings, there is keenness
among rural customers to invest in savings cum protection plan with a
term of five years, especially, if the premium amount is low and
affordable. Keeping this in view, HDFC STD> LIFE has plans like:
Plans :

Bima Bachat Yojana.

Super Bachat Yojana

DISTRIBUTION OFFICES

In addition to the corporate office at Mumbai, your Company had 169

offices in over 135 cities/towns in the country. It has a widespread
network of Financial Consultants, Corporate Agents and Brokers
servicing customers in these cities and towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your
Company increased from over 23,000 in the previous year to over
33,000 in the current year. During the year, the Company continued its.

CURRENT SALES- HDFC Standard Life

HDFC STANDARD LIFE PACING AHEAD
The Financial Express

15th May 2006

HDFC Standard Life has recorded a strong year-on-year growth of

112% for the period April-March 2005-06, in comparison to the same
period 2004-05, with a new business first year premium of Rs 1,029
crore.
In terms of effective premium income (EPI), which gives a 10% value to
a Single Premium policy and is an internationally-accepted indicator of
an insurance company's performance, the EPI grew by 103% to Rs 887
cr from Rs 436 crore.
HDFC Standard Life's growth in new business is a manifestation of the
number of lives insured as well as an increase in the average premium.
For the individual business, volume measured by the number of lives
insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2005-06 from
Rs 17,000 in 2004-05.
During the year the company issued over 3,97,000 policies and has
covered more than 5,80,000 lives

Table Showcasing Financial Results:

AprilParameters

March
2004-05

April-March
2005-06

Growth

(Rs. Cr)

(%)

(Rs. Cr)
Total received premium

668.40

1532.21

129.23

i. New Business

486.15

1028.94

111.65

ii. Renewal

182.25

503.27

176.14

436.08

887.30

103.47

49.40

135.15

173.58

Effective Premium
Income (Total)
Group Business
Premium (EPI)

FUTURE PLANS

HDFC has always been market-oriented and dynamic with respect to

resource mobilization as well as its lending program. This renders it
more than capable to meet the new challenges that have emerged.
Over the years, HDFC has developed a vast client base of borrowers,
depositors, shareholders and agents, and it hopes to capitalize on this
loyal and satisfied client base for future growth. Internal systems have
been developed to be robust and agile, to take into account changes in
the volatile external environment.
HDFC has developed a network of institutions through partnerships with
some of the best institutions in the world, for providing specialized
financial services. Each institution is being fine-tuned for a specific
market, while offering the entire HDFC customer base the highest
standards of quality in product design, facilities and service.

RESEARCH MEHODOLOGY

The study of awareness about Financial Planning among the people and
particularly

the

insurance

sector

covers

data

collection

through

observation, questionnaire and interview of consumers.

Type of research:
EXPLORATORY :
Type of research carried out was EXPLORATORY in nature; the objective
of such research is to determine the approximate area where the
drawback of the company lies and also to identify the course of action
to solve it. For this purpose the information proved useful for giving
right suggestion to the company.

Data Collection:
Primary data
Secondary data

Data used for the research work was primary in nature.

Sample unit: The research process was done by interacting with number of customers
during the activities performed, which included, markets, cold calling,
canopies, etc.

Sample Design consists of Random Sampling.

Sample size: - 100 people

Method of collection: -

Field procedure for gathering primary data included observation and

interview schedule in which the questionnaires were filed by the
interviewer.
Personal interviews through self administered survey was done to
collect

the

data,

market

research

was

undertaken,

that

was

accomplished by performing various activities designed.

Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following
Points:

Giving the respondents clear comprehension of the question.

Inducing the respondents to co-operate.

Giving instructions as to what is wanted.

Identifying the needs to be known.

Limitations:
The following were the limitations that were there during the course of
the study:
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.

SECTION 4

FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies,
tax, corporate/trust structures, estate planning, legal issues, family law,
asset allocation, asset protection and investment advice.

Financial Planning takes into account:

Desired asset allocation, risk profile and return expectations.

Building cash flows correlating all expenses and income. Inflation and
outflows due to loans are considering in building the financial plan.

Future goals like retirement, housing and children's education /

marriage or other needs.

Why do you need Financial Planning?

You may have many dreams, needs and desires. For example, you could
be dreaming of:

Owning a new car,

Buying a dream house,

Providing your children with the best education,

Planning a grand wedding for your children

Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how

many of these dreams can you hope to turn into reality? By planning
well, you can utilize your limited resources to the fullest.

EXPERIENCE THE POWER 360 FINANCIAL PLANNING

The only thing permanent in life is change. Times change. People
change. So does life. You expect life to be much better tomorrow than it
is today. Tomorrow, you hope to fulfill all your dreams and aspirations.
But what happens if things take an untoward turn? Or, if there is an
eventuality? Perhaps it's time for you to change the way you plan your
investments...

How will 360

help?

Financial Planning

Instead of investing in an ad-hoc manner, 360 Financial Planning helps

you take a holistic, all-round view. Briefly, 360 Financial Planning
comprises:

Investment Planning

Cash Flow Planning

Tax Planning

Insurance Planning

Children Future Planning

Retirement Planning

INVESTMENT PLANNING: To make your wealth grow

Everyone needs to save for a rainy day. Once you have saved enough to
take care of emergencies, you should start thinking about investing and
to make your money grow.
Investment Planning Service includes:

Risk Profiling

Asset Allocation and Portfolio Construction

Creation

and

Accumulation

of

Wealth

through

Systematic

Investment Plans (SIP)

Regular review of progress and Portfolio Rebalancing

CASH FLOW PLANNING: To provide for assets and meet the periodic
cash requirements
In simple terms, cash flow refers to the inflow and outflow of money. It
is a record of your income and expenses.
Cash flow planning refers to the process of identifying the major
expenditures in future (both short-term and long-term) and making
planned investments so that the required amount is accumulated within
the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should
be carried out religiously.
According to the Income Tax Act, 1961, One will be eligible for Tax
Benefits under Section 80C and Section 10(10D) of the act.

One has to compare the advantages of several tax saving schemes and
depending upon your age, social liabilities, tax slabs and personal
preferences, decide upon a right mix of investments, which shall reduce
your tax liability to zero or the minimum possible.
INSURANCE PLANNING: To protect yourself, your family and your
Assets.
"Insurance is not for the person who passes away, it for those
who survive," goes a popular saying that explains the importance of
InsurancePlanning.
It is extremely important that every person, especially the breadwinner,
covers the risks to his life, so that his family's quality of life does not
undergo any drastic change in case of an unfortunate eventuality.
Insurance Planning is concerned with ensuring adequate coverage
against

insurable

risks.

CHILDREN'S FUTURE PLANNING: To give your children a financially

secure future
Like every parent, you too must be overjoyed to watch your child grow.
All parents want to give the best possible upbringing to their children.
This includes good education and security, in case of any eventuality.
Soon, your little bundle of joy will grow up, and it will be time to provide
for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for
foreseeable expenditures such as those on higher education and
wedding, and to provide for an adequate security cover during their
growing years.
RETIREMENT PLANNING: Because retirement is a time to relax, not
to get worried

Some like it. Some dont. But retirement is a reality for every working
person. Most young people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish
to retain your financial independence and maintain a comfortable
standard of living even when you are no longer earning. This is
extremely important, because, unlike developed nations, India does not
have a social security net.

CONSUMPTION PATTERN

Food & Grocery

Home Textiles

1.60%
0.80% 4.60%
2.10%

Personal Care

7.60%

Saving & Investment

2.30%

40.10%

10.80%

Clothing
Consumer Durable
Vacation
Eating out
Footwear

3.90%

Movies & Theater

6.60%
8.80%

Entertainment

4.10%

Accessories
Books & Music

6.90%

*Source-Business world magazine 2nd week April 2006

The consumption pattern is determined by the income so more would

be the income more would be the consumption. The consumption
though can differ in terms of areas where the money is actually spent.
The above representation tells us the consumption pattern of the
consumer in India i.e. where do they actually invest their money and in
what proportion do they spend in various areas. The chart shows that
people

are

spending

6.9%

of

their

savings

into

savings

and

investments.

OBJECTIVE:

To generate leads for various Unit Linked Plansoffered

by the company,by interacting with walk in existing
customers and to know the awareness level of
Financial Planning among them.

SALES PROCEDURE :
FIRST
CONVERSATION

Follow Up

APPOINTMENT
Follow Up

FILLING THE
PROPOSAL FORM

COLLECT THE
REQUIRED
DOCUMENTS AND
THE FIRST
PREMIUM

STEP 1:

FIRST CONVERSATION WITH A KNOWN OR

AN UNKNOWN CUSTOMER

This is the first time, when you interact with a person and try to get the
information from him about the industry or the company and
understand the customers insight i.e. what actually does a customer
expects from the companies.

The objective was to know the awareness about Financial Planning

among the customers and this was done by getting a questionnaire
filled by the people. The various activities performed were:

1) DELHI METRO : Here we interacted with the commuters &

collected the data.
2) MARKETS : (Cannaught Place & Karol Bagh) During this
activity, we interacted with the shopkeepers as well as the
walking
people regarding their views about the industry.
3) CANOPY AT NOIDA : This activity was designed to target the
people working in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base
provided

by

the

company

and

the

aim

was

to

collect

information from them.

5) CORPORATE PRESENTATION: A presentation was
for

the

arranged

employees of VED RAM AND SONS (Paras), to make

them aware about the importance of Financial Planning in

todays

unpredictable environment.

STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed
are then followed up and an appointment is fixed for further details.

The motive is to explain the customer in detail, about the various plans
offered by the company. The customer is informed about the procedure
and the options he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half
yearly
mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he
desires.
4) With Maturity Benefit, choose the additional benefits like:
a) Life option Death Benefit
b) Life & Health option Death Benefit + Accidental Death
Benefit
c) Extra Life & Health option Death Benefit + Critical Illness
Benefit + Accidental Death Benefit

5) Choose the Investment funds or funds one desires.

The various funds available are:

Liquid Fund

Secure Managed Fund

Defensive Managed Fund

Balanced Managed Fund

Equity Managed Fund

Growth Fund

6) Other information like:

a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.

STEP 3: FILLING THE PROPOSAL FORM

After the second step, the interested customers are required to fill the
proposal form which requires the following information:
a) Personal details of the policy holder,
b) Personal details of Beneficiary or Nominee
c) The Premium amount selected
d) The Term of the policy
e) The Fund choice for investment

STEP 4 : COLLECTING THE DOCUMENTS

SECTION 5

Once the form is filled all the necessary documents are collected like :
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is
collected.
Within 15 days, the policy documents reach the customers place, and
the customer is required to read the documents carefully.

SAMPLE SIZE: 100

Sample was collected on Random Basis

AGE DISTRIBUTION

 Highest number of Respondents (41%) from Age group 31

to 45 yrs.
35%

respondents

are

of

age

percentage of which is unemployed.

MARITAL STATUS

below

30

yrs,

small

 Total number of single respondents 23

Total number of married respondents 77

INCOME DISTRIBUTION

 Highest, 16 respondents in income bracket below 1.5 lacs,

which mainly comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the
income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs,
which are in age group of above 45 years.

ARE YOU AWARE ABOUT FINANCIAL PLANNING ?

 98% of the respondents were aware about Financial

Planning.

BRAND RECALL

100 % respondents mentioned first name to be LIC

Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%

INVESTMENT PREFERENCE

21% respondents prefer banks and post office schemes as an

investment tool preference.
Respondents of age group below 30 years prefer Mutual Funds, as
they provide higher returns than banking investment tools.
Insurance ranks 2nd as an investment tool choice, which itself
includes various protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people of higher
age group rather than young generation.

Property as an investment option is most lucrative choice. However

it is important to mention that majority of respondents are in age
group of above 30 years and people with high income bracket
prefers to invest in Real Estate.

INSURED PERCENTAGE

87 % of respondents were insured on own life and on life of their

family members.

So we had 13 % of potential customers to approach.

COMPANY PREFERENCE

55% of respondents have insurance cover provided by LIC only

15% of respondents have insurance cover provided by Private Cos.

only

Whereas 30% have got insurance from both LIC and Private
Companies.

Total number of LIC policies sums up to 85% and total number of

Pvt. Companies policies sold sums up to 45%.

Data provides that though LIC is still got a maximum market share
but Private Companies are making a fast move in the market.

TYPE OF PLAN BOUGHT

Money

back Policies have

been most popular

and also the

endowment plans.
As people today are more aware about financial planning, so people
of the age 30 years have planned for their Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.

PURPOSE OF BUYING INSURANCE

Risk

cover

remains

the

most

important

purpose

for

buying

insurance followed by option as Tax saving tools.

Retirement Planning in a early period is also gaining the market
share.
ULIPs are responsible for increasing popularity of insurance as an
investment tool

DISTRIBUTION CHANNEL PREFERENCE

According to the data, known/current Advisors remains the

1st choice for buying Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying life
Insurance.
Group insurance is a channel which customers expect but it is
not so popular because only few employers have taken the
initiative.
Buying insurance from a unknown person or getting a phone
call is still not preferred by most of the people.

THE BARRIERS FACED DURING THE PROCESS:

The Attitudinal Barriers To Purchasing ..
Death - a taboo topic for discussion
Its quite ashubh talking about death
The belief in karma destiny
Jo kismet me likha hai wohi hoga, hum kya kar sakte hai
The Product/ Service Barriers
Liquidity
What if I need my money urgently for some medical illness?
Service quality of the Agent
He disappears after he takes the first premium
Sanctity of the contract
What if my dependents do not get the money once I die?

Charges
Its better to invest in Mutual Funds, the charges there are very

less
The Other Barriers.

Unsure about Pvt. Companies

Low rate of return

Better to put my money in PPF, at least I get fixed returns

Money gets tied up

High premiums

SECTION 6

CONCLUSION
The various conclusions drawn from the project are:
There has been a tremendous change in the insurance industry. And
with it there has been continuous growth in this sector both in Indian as
well as world context.
The opening up of the insurance sector has changed the whole look of
the industry. While the LIC, in order to face the competition is coming
up with new strategies. New private players are leading the sector due
to their strategic management and tailored made projects.
From the research, we also conclude that though the awareness and
people opting for LIC plans are more as compared to other private
players but the latter are gaining momentum in the market day by day.
The demand for insurance is likely to increase with rising per-capita
income, rising literacy rates, and growth of service sector. In-fact
opening up of the insurance sector is an integral part of the
liberalization process being persued by many developing countries.
Life insurance as a form of protection is the single-most important
financial product any earning member of a family must have. Having
said this, a well-diversified portfolio is one of the first rules of financial
planning, and as such one should consider different instruments as the
ability to save increases.
Possible investment options range from bank deposits and government
small saving schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need
of protection, with savings, and hence are an excellent addition to your
portfolio.

All financial products have a certain amount of risk and charges, be it a

mutual fund, property, or even a bank deposit. It would be unrealistic to
assume that the features and benefits of a ULIP come at no cost,
though the charges are considerably lower than that of a traditional
product.
In fact, the very reason the product is transparent is because the
customer knows the charges and risks.
There is no right or wrong in this. The success of marketing insurance
depends on understanding the social and cultural needs of the target
population, and matching the market segment with the suitable
intermediary segment.
All intermediaries cant sell all lines of business profitably in all markets.
There should be clear demarcation in the marketing strategies of the
company from this perspective. Clients should also receive price
differentials for using different channels.
The intermediaries need to be empowered with the right learning,
training and sales tools and technology enablers. Coupled with the right
product mix, this
will help the insurers to survive and flourish in this competitive market
scenario.
So lets conduct this business with utmost economy with the
spirit of trusteeship; thereby making insurance widely popular.

RECOMMENDATION

Positioning insurance as a means to fulfilling ones duties during ones

lifetime.

Fears relating to thefts, ailments, death could be addressed through

sensitive communication

Fears relating to claims:

Need to promote trust. Demonstrating claim

testimonials, positioning as worry free.

Low returns: Reposition insurance as a risk cover, security instrument

rather than a financial investment.

Lack of understanding: Training of Channels

To provide quality advice on products best suited

Lack of Knowledge: Ease of Process,

simplifying the product and the

procedure

Need to promote the quality of awareness

The benefits: Leverage on

Risk Protection or

Returns oriented or

both

The product: catering to life stages

Need for Branding in Insurance: Branding is more relevant in the

Insurance market which not only faces the problem of securing and
retaining customers in an increasingly competitive marketplace but also
experiences the need for heightened relevance of the brand proposition in a
world where brand has been termed the new religion.
In rural India, the LIC is especially synonymous with insurance. But in the
wake of competition insurance companies have to do a considerable brand
building exercise at least in urban India. Adequate time, investment and
longer-term management of the brand are essential, not only for success
but also survival. All brands need to be built around well-differentiated and
credible positioning that springs from the organizations history. The brand
must not only be believed but lived by management and employees.

Focus on different segments to survive and thrive in a competitive

environment. Each company has to choose its own unique positioning
based on its unique strengths. Below-mentioned positioning alternatives
can be worth considering.

VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services
rather than customer segments. It is a sensible strategy for those
companies who have distinctive advantages or strengths in offering certain
products and services. In the insurance industry too, it is possible to
achieve a unique position by focusing on certain category of products.

NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the
differing needs of different groups of consumers. This can be done
successfully if a company has unique strengths to service a group of
customer needs better than others.
The insurance needs of customers vary significantly for different groups of
customers. The insurance needs of young family with small children will be
quite different from that of a family in which the income-earner is close
to retirement. However, in India most of the life insurance companies have
a wide variety of products tailored for different customer needs and there is
no company focusing on a particular customer need.

ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible.
That is different groups of customers may be accessible in different ways
even though they may have similar needs. Access is typically a function of
customer geography or customer scale. There is excellent opportunity in
the insurance industry to employ access-based positioning by targeting the
rural insurance sector.

The rural market for life insurance is very different from the urban market
in terms of needs, income levels and distribution (seasonality, for
example), penetration of media and so on. Rural market can be a highly
profitable position if one is able to carefully plan and tailor an entire set of
low-cost activities of advertising, distribution, and product design etc. to
successfully exploit the potential.

 Questionnaire
Glossary
Bibliography

QUESTIONNAIRE
Awareness of Financial Planning and Consumers Perception about
Insurance Industry
Name:________________________
Age:______
Gender:

Marital Status: Married

Single

Occupation: ___________________
Contact No: __________________
Annual Income (appx. in Rs.)
Upto 1.50 lacs

1.50 lacs-3 lacs

3 lacs-5 lacs

Above 5 lacs

Q1) Are you aware about what is financial planning?

YES

NO

Q2) Mention the names of Life insurance companies you have heard of:
1) ________________
2) ________________
3) ________________

4) ________________
5) ________________
6) ________________

Q3) How much do you save approximately of your annual income?

Q4) Where do you invest/would like to invest your savings?
(Rank in order of preference, 1 being most preferable)
Banks

Share Market

Insurance

Bonds & Securities

Mutual Funds

Real Estate/Property

Q5) Have you taken any life insurance policy on your own life or on life of any
of your family member?
YES

NO

(If no, switch to Q 9 )

Q6) Which company(s) policy(s) you have?
LIC

ICICI PRUDENTIAL

BIRLA SUNLIFE

ING VYSYA

BAJAJ ALLIANZ

SBI LIFE

HDFC STD. LIFE

TATA AIG

MAX NEW YORK LIFE

AVIVA

RELIANCE

KOTAK MAHINDRA

MET LIFE
(specify)

OTHER ____________

Q7) Which type of plan did you buy?

Money Back Plan
Endowment Plan
Pension Plan

ULIP
Q8) What was your purpose/will be your likely purpose of taking insurance?
RANK THEM (1 being most ideal)
a) PROTECTION
OF FAMILY
b) TAX BENEFIT

c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of the following
(please ), also Rank according to your preference from whom you are
most
likely to buy insurance?
( here) (Rank)
1) Known/Current Advisor
2) Advisors referred by friends/family
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Bancassurance)
5) Group Insurance Policies offered by your employer
Q10) Do you feel opening up of the sector has created more insurance
awareness
among the public?
YES

NO

Q11) How many dependents do you have?

<2

2-4

4-6

>6

Q12) Do you really think insurance cover in todays scenario is not

essential?
_____________________________________________________
_____________________________________________________
THANK YOU FOR YOUR CONTRIBUTION

GLOSSARY
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event of
death or injury by accident

Annuity
An investment option that makes a series of regular payments to an individual
in exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
Bonus
The amount paid as return in a with-profit policy. The bonus, expressed as a
percentage of the sum assured, is generally declared every year. The amount
is linked to the profits earned by the insurer. Depending on the time of
withdrawal, there are two kinds of bonuses reversionary and cash. A
reversionary bonus can be encashed only on maturity of the policy; a cash
bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate. Longterm capital gains arise from assets owned for more than a year while shortterm capital gains are made from assets owned for less than a year.
Corpus
The amount of money available with a scheme for investing. If already
invested, the corpus is the current value of the schemes portfolio.

Cover
Another word for insurance; it also refers to the amount of insurance.
Critical illness rider
A rider that provides a policyholder financial protection in the event of a
critical illness
Death benefit

The amount payable to the nominee on death of the policyholder. The amount
paid is the sum assured plus benefits applicable (if any) less outstanding
loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some return on
investment. Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)
Diversified equity funds that additionally offer a tax deduction under Section
80C on investments up to Rs.1 lakh.
Financial planning
It covers the essential elements of a persons financial affairs and is aimed at
achieving a persons financial goals.
Group Insurance
An insurance policy taken out by employers to provide life cover to their
employees. Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy

Insurer
The insurance company
Investments
Assets like fixed deposits, post office savings, bonds and stocks that are
acquired for the purpose of earning a return
Liquidity
The quality of assets that can be easily and quickly converted into cash
without any, or significant, loss in value.

Lock-in period
The period of time for which investments made in an investment option cannot
be withdrawn.
Maturity date
The date on which a policy term or fixed-income investment like fixed deposit
or bond comes to an end.

Money-back plans
A variant of endowment plans in which survival benefits are disbursed through
the policy term, rather than in a lump sum at the end.
Net asset value (NAV)
The simplest measure of how a scheme is performing, it tells how much each
unit of it is worth at any point in time. A schemes NAV is its net assets (the
market value of the financial securities it owns minus whatever it owes)
divided by the number of units it has issued.

Nominee
The person(s) nominated by the policyholder to receive the policy benefits in
the event of his death.
Pension Plan
Investment products offered by insurance companies and mutual funds that
required the investor to make defined contributions over regular periods,
mostly every year. The contributions are invested according to a pre-decided
investment plan. At retirement, the accumulation is paid out through regular
pay-out options.
Policy

The legal document issued by an insurance company to a policyholder that

states the terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover
Post office schemes
Also known as Small Savings schemes, they are offered at post offices and
carry the highest returns among fixed income instruments. Government
backing makes these instruments like Public Provident Fund (PPF), National
Savings Certificate (NSC), Kisan Vikas Patra (KVP) and Post Office Monthly
Income Scheme (POMIS) risk-free
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost

Sum assured
The amount of cover taken under a life insurance policy, it is the minimum
amount that will be paid on death of the policyholder during the policy term.
Surrender value
The amount payable by the insurer to the owner of an investment-based plan
in case he opts to terminate the policy after three years (the mandatory lockin period) but before its maturity date. The surrender value will be the premia
paid till date minus surrender charges and any outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no return on
the premium paid

Vesting date
In pension plans, it is the date from which the policyholder starts receiving
pension. In childrens plans, it is the date from which a child becomes the
owner of a policy taken out in his name (generally, around his 18th birthday).
Waiver of premium rider
A rider that waives the premia payable on the base policy and other riders in
certain circumstances mostly related to death, disability or injury. An
important feature especially for investment products such as childrens
policies.
Will
A document that designates the assets of a person-both financial and physicalto various family members and other heirs.
Whole-life plans
Class of life insurance policies that provide cover through your lifetime.

BIBLIOGRAPHY
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
www.google.com (search engine)

Other References:
Brochures of various plans