A PROJECT REPORT ON “A COMPARATIVE STUDY OF ULIP PLANS OFFERED BY

ICICI PRUDENTIAL COMPANIES” AND OTHER LIFE INSURANCE

Submitted To: PUNJAB TECHNICAL UNIVERSITY, JALANDHAR
FOR THE PARTIAL FULFILLMENT OF THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINIS
TRATION
(Session 2008-10)
UNDER GUIDANCE OF: SUBMITTED BY;
Mrs. Sukhmeet kaur
Dixit Kumar Roll No. : 80906317020 SVIET Contact no. - 09017076571
SWAMI VIVEKNAND INSTITUTE OF ENGINEERING AND TECHNOLOGY PUNJAB TECHNICAL UNIVERS
ITY, JALANDHAR
Preface
MBA is a stepping-stone to the Management carrier and to develop good Managers i
s necessary that the theoretical must be supplement with exposure to the real en
vironment. Theoretical knowledge just provides the base and it’s not sufficient
to produce a good Manager that’s why the practical knowledge is needed. Therefor
e the Research Project is an essential requirement for the student of MBA. This
research project not only helps the students to utilize his skills properly and
learn field realities but also provides a chance to the organization to find out
talent among the building Managers in the very beginning. In accordance with th
e requirement of MBA course I have done my research project on the topic “COMPAR
ATIVE STUDY OF ULIP PLANS OFFERED BY ICICI PUDENTIAL AND OTHER LIFE INSURANCE CO
MPANIES” with special reference to ICICI Prudential.
2
Certificate by the Faculty Guide
GUIDE’S CERTIFICATE
This is to certify that Mr. /Ms. __________________bearing the Reg. No. ________
____ currently undergoing IVth Semester MBA in Swami Vivekanand Institute of Eng
ineering and Technology affiliated to Punjab Technical University, Jalandhar he
carried out a project on “A
COMPARATIVE STUDY OF ULIP PLANS OFFERED BY ICICI PRUDENTIAL AND OTHER LIFE INSUR
ANCE COMPANIES” under my guidance and
supervision and the work done by her is original and outcome of her sincere effo
rts.
Mrs. Sukhmeet Kaur Date: ----------
(PROJECT GUIDE)
3
INDEX
I. PREFACE II. CERTIFICATE III. EXECUTIVE SUMMARY IV. LITERATURE REVIEW
Sr.no
Chapter-1
Title
INTRODUCTION Introduction - basics of insurance Need of life of insuranc
e Roles of insurance Types of life insurance
Chapter-2 Chapter-3 Chapter-4 Chapter-5 Chapter-6 Chapter-7 (i) (ii) (iii) (iv)
INDUSTY PROFILE COMPANY PROFILE RESEARCH METHODOLOGY COMPARATIVE STUDY DATA ANAL
YSIS & INTERPRETATIONS LIMITATIONS RECOMMENDATIONS CONCLUSION BIBLIOGRAPHY ANNEX
URE
4
5
Literature Review
How a company does announced a name change especially when the old name was well
known? How does the company explain itself to constituents who may have known t
he company quite well in an earlier incarnation but may be struggling to figure
out what the new organization stands for? How can the company create a new image
while retaining the strengths of the old one? And what role might corporate adv
ertising play in all this? Corporate advertising can tell a story about a compan
y as a whole, large organizations may need to use corporate ads to simplify thei
r image in the minds of key constituents and to show what unifies the company, d
espite the geographical spread and variety of its businesses. We can very well u
nderstand the concept of corporate advertising by taking the example of ICICI Pr
udential communication. When Company first began operations, the task was to pre
sent the visiting card of the company to the public at large and build credibili
ty and stature and to give the consumer the confidence that here is a company
that can be trusted to invest funds with. This required a corporate campaign -
to establish the brand, build awareness and give the brand a larger-than-life i
mage. The advertising idea, which was encapsulated in symbols of protection from
the initial print campaign, culminated in the corporate film where sindhoor was
used as an endearing and lasting symbol of protection. Once the corporate image
and brand identity were established, and as the company expanded and its produc
t range grew, the next phase of communication was to give the consumer a rationa
l and tangible reason to buy - first of all insurance and secondly from ICICI Pr
udential Life. This was tackled through product-specific advertising, such as fo
r ICICI Pru Smart Kid, retirement solutions or LifeTime.
Key Summery
Create a good citizen image through consistent & dedicated effort. Convey th
e organizations commitment to the concerned publics as well as to the masses & e
liminate prejudices, if any held by opinion leaders in particular & by the publi
c in general.
6
 Boost both employee management relation & employee morale enabling all Membe
rs of the internal public to discover a new vitality.
EXECUTIVE SUMMARY
Title of the project:
Study ULIP in current market scenario/ Study customer response towards ULIP
Objectives:
Working of the unit linked insurance plans Swot analysis of the product Co
mparative study of the competition Study tax planning solutions available in t
he market Study asset allocation through insurance plans Market interface
Comparative analysis done on:
Life insurance corporation HDFC Stan Life Birla Sun Life Bajaj Allianz
Research Methodology:
7
Primary data collected by personally visiting these leading insurance players. E
g: LIC, Max New York Life Insurance, Bajaj Alliance, Birla Sunlife, HDFC Stan li
fe.
Data Collection:
Primary data collected through direct intrection with customer. Sample size
100 people. Secondary database from different magazines. First and foremost,
accumulating information from newspapers , Journals, Magazines, and company web
side. Secondly, taking a sample size and doing a market survey by filling up q
uestionnaires from customers to find out what different companies are offering i
n the ULIP section and how are they similar/different from ICICI PRUDENTIAL prod
ucts. Also keeping a track and taking down the feedback regarding perception, at
titude, taste and preferences of the customer. Thirdly, analyzing the data col
lected. Comparing the ULIP products offered by other insurance players. Critic
al analysis of consumer perception; their choice and preferences. Eventually,
deciding on how to familiarize ULIP products in the market and what all safeguar
ds need to be taken while approaching the customers.
8
CHAPTER-1
9
INTRODUCTION TO INSURANCE
LIFE
INSURANCE
GENERAL
Insurance is a system to alleviate financial losses by transferring risk of loss
from one entity to another. ‘Insurance’ is basically a sharing device. The loss
es to assets resulting from natural calamities like fire, flood, earthquake, acc
idents, etc. are met out of the common pool contributed by large number of perso
ns who are exposed to similar risks. This contribution of many is used to pay th
e losses suffered by unfortunate few. However the basic principle is that loss s
hould occur as a result of natural calamities or unexpected events which are bey
ond the human control. Secondly insured person should not make any gains out of
insurance. It is natural to think of insurance of physical assets such as motor
car insurance or fire insurance but often we forget that creator of all these as
sets is the human being whose
efforts have gone a long way in building up the assets. In that sense, human lif
e is a unique income generating assets. Unlike the physical assets, which decrea
se in value with passage of time, the individual becomes more experienced and mo
re matured as he advances in age. This raises his earning capacity and the purpo
se of life insurance 10
is to protect the income in the event of his premature death. The individual him
self also needs financial security for the old age or on his becoming permanentl
y disabled when his income will stop. Insurance also has an element of savings i
n certain cases. How insurance works? Suppose there are 1000 persons all aged 35
years and healthy lives. They are insured for one year against the risk of deat
h. Each person is insured for Rs. 50,000. If the past experience indicated that
4 out of 1000 persons, at this age are expected to die during the year, expected
amount of death claim to be paid to the family of four persons would come to Rs
. 2,00,000. The contribution to be paid by each of the 1000 persons will come to
Rs. 200 per year. Thus, all the 1000 persons share loss caused to the 4 unfortu
nate families. 996 persons who survived till one year have not lost anything as
they secured peace of mind and a feeling of security of their family. While insu
rance cannot prevent accidents or premature death, it can help protect the famil
y of the decreased against the loss of income caused by the death of the main br
eadwinner. In return for specified payments, insurance will provide protection a
gainst the incidence of an uncertain event- such as premature death. The busines
s of insurance company called insurer is to bring together persons who are expos
ed to similar risks, collect contribution (premium) from them on some equitable
basis and pay the losses (claims) to the unfortunate few who suffer. Classificat
ion of Insurance Insurance business can be divided into two broad categories, li
fe and non-life. Life insurance is concerned with making provision for a specifi
c event happing to the individual, such as death whereas non life (or general in
surance) is more commonly concerned with the provision for a specific event whic
h affects a property, such as fire, flood, theft etc. In this course we will onl
y cover life insurance. So, let us now move on to the definition of life insuran
ce.
Definition of Life Insurance 11
According to the U.S. Life Office Management Association Inc. (LOMA), life insur
ance is defined as follows: ‘Life insurance provides a sum of money if the perso
n who is insured dies whilst the policy is in effect”.
NEED FOR LIFE INSURANCE
Risks and uncertainties are part of life s great adventure -- accident, illness,
theft, natural disaster - they re all built into the workings of the Universe,
waiting to happen. Insurance then is man s answer to the vagaries of life. If yo
u cannot beat man-made and natural calamities, well, at least be prepared for th
em and their aftermath. Insurance is a contract between two parties - the insure
r (the insurance company) and the insured (the person or entity seeking the cove
r) - wherein the insurer agrees to pay the insured for financial losses arising
out of any unforeseen events in return for a regular payment of "premium". These
unforeseen events are defined as "risk" and that is why insurance is called a r
isk cover. Hence, insurance is essentially the means to financially compensate f
or losses that life throws at people - corporate and otherwise. The principle of
insurance works on the concept of a large number of people exposed to a similar
risk making a contribution to a common fund. Those who suffer losses due to the
occurrence of these events are compensated for them from this fund.
12
ROLE OF LIFE INSURANCE
Life Insurance As An Investment: Insurance is an attractive option for investmen
t. While most people recognize the risk hedging and tax saving potential of insu
rance, many are not aware of its advantages as an investment option as well. Ins
urance products yield more compared to regular investment options, and this is b
esides the added incentives offered by insurers. You cannot compare an insurance
product with other investment schemes for the simple reason that it offers fina
ncial protection from risks, something that is missing in non-insurance products
. In fact, the premium you pay for an insurance policy is an investment against
risk. Thus, before comparing with other schemes, you must accept that a part of
the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings. In life insurance, unlike non-life pr
oducts, you get maturity benefits on survival at the end of the term. In other w
ords, if you take a life insurance policy for 20 years and survive the term, the
amount invested as premium in the policy will come back to you with added retur
ns. In the unfortunate event of death within the tenure of the policy, the famil
y of the deceased will receive the sum assured. Now, let us compare insurance as
an investment options. If you invest Rs 10,000 in PPF, your money grows to Rs 1
0,950 at 9.5 per cent interest over a year. But in this case, the access to your
funds will be limited. One can withdraw 50 per cent of the initial deposit only
after 4 years. The same amount of Rs 10,000 can give you an insurance cover of
up to approximately Rs 5-12 lakh (depending upon the plan, age and medical condi
tion of the life insured, etc) and this amount can become immediately available
to the nominee of the policyholder on death. Thus insurance is a unique investme
nt avenue that delivers sound returns in addition to protection.
TYPES OF LIFE INSURANCE PLANS
13
Life Insurance Plans: Under Life insurance plans, ICICI Prudential offers plans
under the following major need categories: Education Insurance Plans Wealth Crea
tion Plans Premium Guarantee plans Protection Plans
Education Insurance Plans
One of your most important responsibilities as a parent is to ensure that your c
hild gets the best possible education that can be provided. ICICI Prudential off
ers a wide portfolio of education insurance plans that are designed to provide p
eace of mind to you, as a parent, that your child s education will be secure. Th
ese plans ensure that money is made available at the crucial junctures in a chil
d s education - Class X, Class XII, graduation and post-graduation - to fund cru
cial commitments for the child s future. Importantly, education insurance plans
ensure that in the unfortunate event of the death of a parent, the child s educa
tion continues unhampered. Under the education insurance plans platform, ICICI P
rudential brings the following products to you. Please click on the product name
to know more about the plans.
Plan Name SmartKid New Unit-linked Regular Premium SmartKid New Unit-linked Sing
le Premium SmartKid Regular Premium
Plan Type Unit Linked Unit Linked Traditional
Wealth Creation Plans Wealth Creation Plans give the customer the dual benefit o
f protection along with the potentially higher returns of market-linked instrume
nts. The most important benefit of 14
ULIPs is the flexibility they give the customer in choosing the premium amount a
nd also choosing the underlying fund in which this money is to be invested. Weal
th creation plans also offer the customer more liquidity options as compared to
traditional plans. As such, ULIPs are ideal for customers who want the protectio
n of a life cover to be allied to the returns of market linked instrument – givi
ng them an unmatched combination of benefits. Under the wealth creation platform
, ICICI Prudential brings the following products to you. Please click on the pro
duct name to know more about the plans.
Plan Name
Plan Type
LifeTime Super LifeLink Super PremierLife Gold LifeTime Plus
Unit Unit Unit Unit
Linked Linked Linked Linked
Premium Guarantee Plans The latest addition to the life insurance product portfo
lio of ICICI Prudential is the Premium Guarantee plan - InvestShield Life New. P
remium Guarantee plans are the ideal insurance-cum-investment option for custome
rs who want to enjoy the potentially higher returns of a market linked instrumen
t, but without taking any market risk. Under the Premium Guarantee Plans platfor
m, ICICI Prudential brings to you the following products:
Plan Name
Plan Type
InvestShield Life New InvestShield CashBak
Unit Linked Unit Linked
15
Protection Plans The sole objective of these plans, as their name indicates, is
to serve the protection needs of the customer and by doing so, safeguard one’s f
amily from the financial implications of unfortunate circumstances than one cann
ot foresee. Under the Protection Plans platform, ICICI Prudential brings to you
the following products:
Plan Name
Plan Type
LifeGuard Save n Protect CashBak Home Assure
Traditional Traditional Traditional Traditional
THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA)
16
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 regulation
s and registering the private sector insurance companies. The other decision tak
en simultaneously to provide the supporting systems to the insurance sector and
in particular the life insurance companies was the launch of the IRDA’s online s
ervice for issue and renewal of licenses to agents. The approval of institutions
for imparting training to agents has also ensured that the insurance companies
would have a trained workforce of insurance agents in place to sell their produc
ts, which are expected to be introduced by early next year. Since being set up a
s an independent statutory body the IRDA has put in a framework of globally comp
atible regulations. In the private sector 12 life insurance and 6 general insura
nce companies have been registered.
17
WHY PRIVATE INSURANCE?
• • • • • • • • All the private companies have a lock in period of 3 yrs hence n
o Minimum net worth of 500 Cr required for acquiring license with a minimum Comm
itment to increase the paid up capital manifold in next five years. Re insurance
for all its policies worth more than 5 lakhs. Reinsurance partners, Audit of ac
counts by at least 2 independent approved auditors each year. Products and prici
ng are cleared by IRDA, which looks into the financial IRDA is now proposing a P
vt. Policy Protection fund. Funds to be invested in only regulated and controlle
d areas with close to
disinvestments possible. paid up capital of 100 Cr in their insurance venture.
best and the largest in the world – general cologne and Swiss reinsurance.
visibility of the product and the financial implication.
80%being pumped into only gilts thereby assuring safety of funds.
18
CHAPTER-2
19
INDUSTRY PROFILE
Background
In 1912, the Indian life insurance companies Act was passed . This was the first
comprehensive legislation in India to regulate the business of insurance. it ha
d been observed that the provisions of Indian Company’s Act did not meet the pur
pose. A further legislation was passed in 1928, But a comprehensive legislation
was passed in 1938. The amendments in the act were made in 1956 when insurance w
as nationalized and LIC and GIC were formed. Life insurance business was nationa
lized with effect from 19 January 1956 and 256 companies were merged. Insurance
Act was further amended in 1999 and IRDA was formed in view of the circumstances
arising out of opening up of insurance industry in 2000.IRDA authority to prote
ct the interest of the holders of insurance policies, to regulate , promote and
ensure the working of all companies. As we enter into the new millennium, econom
ies of the world over are getting redefined and remodeled with the new mindsets,
new technologies, new riles and new directions. Financial sector reforms receiv
ed top priority ever since the Govt. of India initiated the process of economic
liberalization. These reforms are extending the horizons of the financial servic
es sector and have been transforming our capital markets , banking and financial
services industries. In the last four decades , after nationalization of the in
surance industry , certain socio-economic objectives were achieved through publi
c ownership of the insurance business. Yet, market oriented dynamism was missing
as evidenced by the lack of product innovations, high premium rates and limited
use of information technology. 20
The insurance sector reforms have encouraged Blue-Bloods of Indian corporate sec
tor TATA,ICICI,HDFC,BIRLA,SBI,RELIANCE,KOTAK etc to tie up with world’s largest
insurance majors to capture slice of the country’s potential insurance market. T
his has brought abuzz activities in insurance business. New players are wooing t
he customer with promises of better services and customized products. The LIC an
d GIC are countering the competition on the strength of their track records, dis
tribution networks and so on. This new scenario will witness financially sound a
nd experienced players transforming the industry with best products in service a
nd product development , operational efficiency, marketing capability, service p
lus and tech-savvy orientation. As a result, the insurance business can become g
lobal with e-business applications. It is awkward business playing value figures
on people’s lives. It is almost as awkward as selling the likelihood of an even
t people do not want crossing their minds . in India, it is rather a shrub. For
this reason alone life insurance is no ordinary market. Under the pressure of co
mpetitors differentiate their offerings, insurers no longer sell life insurance
as a product that meets a basic need , many of them sell though the appeal of a
wide variety of add on benefits ranging from tax saving to investment return, so
metimes pitying more emphasis on these basic benefits. This assumes significance
because India is witnessing foreign competition in this sector after a long mon
opoly period. There is consensus on success becoming a function of market strate
gy. So far the market has been shaped by LIC . it is only recently that private
insurers with 74:26 joint ventures between Indian and foreign companies have bee
n formed under the watch of IRDA. ICICI prudential, HDFC slandered life and Max
New York Life were first off the block, followed by Kotak 21
Mahindra, Royal Sundram,TATA Aig,Birla Sunlife,SBI Life and ING Vyasa which were
started later. Sudden burst of competition itself is a unique occurrence. The I
ndian market distinguishes itself in other ways too, most notably in the areas o
f consumer perception and investment option. So it is worth which will the marke
t move and what could be the winning strategies. Basic premise is clear that “li
fe insurance is a specialized business”.
22
LIFE INSURERS
1. 2. 3. 4. 5. 6. 7. 8. 9. BAJAJ ALLIANZ LIFE INSURANCE CO.LTD. BIRLA SUNLIFE IN
SURANCE CO. LTD. HDFC STANDARD LIFE INSURANCE CO. LTD. ICICI PRUDENTIAL LIFE INS
URANCE CO. LTD. ING VYSYA LIFE INSURANCE CO.PVT.LTD. LIFE INSURANCE CORPORATION
OF INDIA. MAX NEWYORK LIFE INSURANCE CO. LTD. METLIFE INDIA INSURANCE CO. PVT.LT
D. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE CO. LTD. 10. 11. 12. 13. SBI LIFE IN
SURANCE CO.LTD. TATA AIG LIFE INSURANCE CO.LTD. AVIVA LIFE INSURANCE CO. LTD. SA
HARA LIFE INSURANCE CO. LTD.
23
Life Insurance Companies
ICICI Prudential Life Insurance Company Limited ICICI Prudential Life Insurance
Company Limited was incorporated on July 20,2000.The authorized capital of the c
ompany is Rs 2300 million and the paid up capital is Rs 1500 million. The Compan
y is joint of ICICI (74%) and Prudential plc UK (26%) The company was granted ce
rtificate of registration for carrying out life insurance business, by the insur
ance regulatory and development Authority on November 24,2000.it commenced comme
rcial operations on December 19, 2000,becoming one of the first few private sect
or players to enter the liberalized arena. ICICI Prudential collected Rs.1584 co
rers as their premium during 2004-05 & the market share of ICICI pru. as per the
ir premium is 5.63% as a whole but in the pvt .co .ICICI hold 40% of market shar
e. ING VYSYA LIFE INSURANCE COMPANY PVT. LTD. ING Vysya Life Insurance is a join
t venture between three pioneers, ING Insurance Vysya Bank.
ING Group: Over the last 150 years, ING Group has grown to become one of the
largest life insurance organizations in the world. Today it touches the lives of
over 50 millions people across 65 countries. It offers a range of financial ser
vices including insurance, pensions, banking and asset management. In the year 2
000,total assets of the group stood at over INR 28,42000 corers.
24
KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD. Kotak Mahindra life Insurance Company
Limited is a joint venture between Kotak Mahindra Finance Ltd and Old Mutual. K
otak Mahindra Finance Ltd. Kotak Mahindra is one of the India’s leading financia
l institutions, offering complete financial solution that encompasses every sphe
re of life. From Banking, to stock Broking, to Mutual Funds, to Life Insurance,
to Investment Banking, the company caters to the financial needs of individuals
and corporates. Old Mutual Old Mutual, a company with over 157 years of experien
ce in life insurance business, has the largest financial services business in So
uth Africa, through its life assurance, asset management, banking and general in
surance operations. Being listed in London Stock Exchange and included in FTSE 1
00 list of companies, old Mutual’s assets under management are worth $208 billio
n.
Tata AIG Life Insurance Company:
Tata AIG General Insurance Company Ltd and Tata AIG Life Insurance Company Ltd (
collectively “Tata AIG”) are joint venture companies between the Tata group Indi
a’s most trusted industrial house and American International grouping (AIG), the
leading U.S based international insurance and financial services organization.
Both promoters have a deep and abiding interest in India’s Insurance sector. Pri
or to nationalization, the Tanta’s pioneered private insurance in India when Sir
Dorab Tata set up new India assurance in 1919.By 1973,when General Insurance wa
s nationalized the Tata company had a global presence with 56 overseas offices.
Aig too has always 25
considered the Indian insurance sector to be of significance. The AIG companies
entered India in 1954 and had offices in several Indian cities prior to national
ization. HDFC –Standard Life: HDFC Standard Life Insurance company is a joint ve
nture between India’s largest housing finance provider, HDFC and Europe’s larges
t mutual life assurance company The Standard Life Assurance Company (UK). HDFC S
tandard Life Insurance Company Limited is the first private sector life insuranc
e company to be granted a license. Standard Life, UK, found in 1825. The UK insu
rance industry for 175 years by combining sound financial judgment with integrit
y and reliability. It is the largest mutual life company in Europe and has total
assets of Rs.5,50,000 crore sit is one of the very few insurance companies in t
he world to have ‘AAA’ rating from two of the leading international credit ratin
g agencies, Moody and Standard and Poor’s. Standard Life was recently voted ‘com
pany of the decade’ in UK by the independent Brokers called IFAs. LIFE INSURANCE
CORPORATION OF INDIA (LIC) The Life Insurance Corporation (LIC) was established
about 49 (in1956) years ago with a view to provide an insurance cover against v
arious risks in life .A monolith then, the corporation, enjoyed a monopoly statu
s and become synonymous with life insurance.Its main asset is its staff strength
of 1.24 lakhs employees and 2048 branches and over six-lakh agency force. LIC h
as hundred divisional offices and has established extensive training facilities
at all levels .At the apex, is the Management Development Institute, Seven Zonal
Training centers and 35 Sales Training Centers.
26
At the industry level, along with the Government and GIC, it has helped establis
hed the National Insurance Academy. It presently transacts individual life insur
ance businesses, group insurance businesses, social security schemes and pension
s, grants housing loans through its subsidiary; and markets saving and investmen
t products through its mutual fund. It payoff about Rs 6000 crore annually to 5.
6 million policyholders. Market share of LIC which is 82.3%.By the LIC 1.09 cror
es policies has been sold that was in the 2004-05 & the total premium that are c
ollected by LIC in 2004-05 was Rs.9007 crores.
ALLIANZ BAZAZ LIFE INSURANCE COMPANY Allianz AG with over 110 years of experienc
e in over 70 countries and Bajaj Auto, trusted for over 55 years in the Indian m
arket ,together are committed to offering financial solutions. Characterized by
global presence with a local focus and driven by customer orientation to establi
sh high earnings potential and financial strength, Allianz Bajaj Life Insurance
Co Ltd was incorporated on 12th March 2001.The company received the insurance re
gulatory and development Authority (IRDA) Certificate of Registration on 3rd Aug
ust 2001 to conduct Life Insurance business in India. The Market share of Bajaj
Allianz in 2003-04 was .95% which has been increases in 2004-05 and it is know 2
.03% which depicts the financial position of the co.
27
CHAPTER-3
28
COMPANY PROFILE
Overview India’s Number One private life insurer, ICICI Prudential Life Insuranc
e Company is a joint venture between ICICI Bank-one of India’s foremost financia
l services companies-and Prudential plc- a leading international financial servi
ces group headquartered in the United Kingdom. Total capital infusion stands at
Rs. 20.60 billion, with ICICI Bank holding a stake of 74% and Prudential plc hol
ding 26%. We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team
comprises of over 580 offices, over 234,000 advisors; and 22 bancassurance partn
ers. ICICI Prudential was the first life insurer in India to receive a National
Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three yea
rs in a row, ICICI Prudential has been voted as India’s Most Trusted Private Lif
e Insurer, by The Economic Times – AC Nielsen ORG Marg survey of ‘Most Trusted B
rands’. As we grow our distribution, product range and customer base, we continu
e to tirelessly uphold our commitment to deliver worldclass financial solutions
to customers all over India.
29
Vision & Values Our vision: To make ICICI Prudential the dominant Life and Pensi
ons player built on trust by world-class people and service. This we hope to ach
ieve by: Understanding the needs of customers and offering them superior product
s and service Leveraging technology to service customers quickly, efficiently an
d conveniently Developing and implementing superior risk management and investme
nt strategies to offer sustainable and stable returns to our policyholders Provi
ding an enabling environment to foster growth and learning for our employees And
above all, building transparency in all our dealings. The success of the compan
y will be founded in its unflinching commitment to 5 core values – Integrity, Cu
stomer First, Boundary less, Ownership and Passion. Each of the values describe
what the company stands for, the qualities of our people and the way we work. We
do believe that we are on the threshold of an exciting new opportunity, where w
e can play a significant role in redefining and reshaping the sector. Given the
quality of our parentage and the commitment of our team, there are no limits to
our growth. Our values : Every member of the ICICI Prudential team is committed
to 5 core values: Integrity, Customer First, Boundary less, Ownership, and Passi
on. These values shine forth in all we do, and have become the keystones of our
success.
The ICICI Prudential edge comes from our commitment to our customers, in all tha
t we do – be it product development, distribution, the sales process or servicin
g. Here’s a peek into what makes us leaders. 30
1. Our products have been developed after a clear and thorough understanding of
customers’ needs. It is this research that helps us develop Education plans that
offer the ideal way to truly guarantee your child’s education, Retirement solut
ions that are a hedge against inflation and yet promise a fixed income after you
retire, or Health insurance that arms you with the funds you might need to reco
ver from a dreaded disease. 2. Having the right products is the first step, but
it’s equally important to ensure that our customers can access them easily and q
uickly. To this end, ICICI Prudential has an advisor base across the length and
breadth of the country, and also partners with leading banks, corporate agents a
nd brokers to distribute our products 3. Robust risk management and underwriting
practices form the core of our business. With clear guidelines in place, we ens
ure equitable costing of risks, and thereby ensure a smooth and hassle-free clai
ms process. 4. Entrusted with helping our customers meet their long-term goals,
we adopt an investment philosophy that aims to achieve risk adjusted returns ove
r the long-term. 5. Last but definitely not the least, our 16,000 plus strong te
am is given the opportunity to learn and grow, every day in a multitude of ways.
We believe this keeps them engaged and enthusiastic, so that they can deliver o
n our promise to cover you, at every step in life.
Promoters ICICI Bank
ICICI Bank (NYSE:IBN) is India’s second largest bank and largest private sector
bank with over 50 years presence in financial services and with assets of over R
s 3446.58 bn (USD 79 billion) as on March 31, 2007. The Bank offers a wide range
of banking products and financial services to corporate and retail customers th
rough a variety of delivery channels and through its 31pecialized subsidiaries i
n the areas of investment banking, life and non-life insurance, private equity a
nd asset management. ICICI Bank is a leading player in the retail banking market
and services its large customer base through a network of over 950 branches and
extension counters, 3300 ATMs, call centers and internet banking (www.icicibank
.com) 31
to ensure that customers have access to its services at all times. Prudential Pl
c Established in London in 1848, Prudential plc, through its businesses in the U
K and Europe, the US and Asia, provides retail financial services products and s
ervices to more than 20 million customers, policyholder and unit holders and man
ages over £251 billion of funds worldwide (as of 31 December 2006). In Asia, Pru
dential is the leading European life insurance company with life operations in C
hina, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Sing
apore, Taiwan, Thailand, Vietnam. Prudential is the second largest retail fund m
anager for Asian sourced assets ex-Japan as at June 2006. Its fund management bu
siness has expanded into a total of ten markets : China, Hong Kong, India, Japan
, Korea, Malaysia, Singapore, Taiwan, Vietnam and United Arab Emirates.
Sheet
THE Company ICICI Prudential Life Insurance Company is a joint venture between I
CICI Bank, a premier financial powerhouse, and Prudential plc, a leading interna
tional financial services group headquartered in the United Kingdom. ICICI Prude
ntial was amongst the first private sector insurance companies to begin operatio
ns in December 2000 after receiving approval from Insurance Regulatory Developme
nt Authority (IRDA). ICICI Prudential s capital stands at Rs. 20.60 billion with
ICICI Bank and Prudential plc holding 74% and 26% stake respectively. As of Mar
ch 31, 2007, the company garnered Rs. 4,843 crore of weighted retail + group new
business premiums and wrote over 1.96 million retail policies. The company has
assets held to the tune of over Rs. 15,000 crore. ICICI Prudential is also the o
nly private life insurer in India to receive a National 32
Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind)
rating is the highest rating, and is a clear assurance of ICICI Prudential s ab
ility to meet its obligations to customers at the time of maturity or claims. Fo
r the past six years, ICICI Prudential has retained its position as the No. 1 pr
ivate life insurer in the country, with a wide range of flexible products that m
eet the needs of the Indian customer at every step in life. To know more about t
he company, please visit Distribution ICICI Prudential has one of the largest di
stribution networks amongst private life insurers in India. As of March 31, 2007
the company has over 580 offices across the country and over 234,000 advisors.
The company has over 22 bancassurnace partners, having tie-ups with ICICI Bank,
Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank, Idukki Distri
ct Co-operative Bank, Jalgaon Peoples Co-operative Bank, Shamrao Vithal Co-op Ba
nk, Ernakulam Bank, 9 Bank of India sponsored Regional Rural Banks (RRBs), Sangl
i Urban Co-operative Bank, Baramati Co-operative Bank, Ballia Kshetriya Gramin B
ank, The Haryana State Co-operative Bank. Flexible Rider Options ICICI Pru Life
offers flexible riders, which can be added to the basic policy at a marginal cos
t, depending on the specific needs of the customer.
1. Accident & disability benefit: If death occurs as the result of an accident d
uring the term of the policy, the beneficiary receives an additional amount equa
l to the rider sum assured under the policy. If an accident results in total and
permanent disability, 10% of rider sum assured will be paid each year, from the
end of the 1st year after the disability date for the remainder of the base pol
icy term or 10 years, whichever is lesser. If the death occurs while traveling i
n an authorized mass transport vehicle, the beneficiary will be entitled to twic
e the sum assured as additional benefit. 2. Critical Illness Benefit: protects t
he insured against financial loss in the event of 9 specified critical illnesses
. Benefits are 33
payable to the insured for medical expenses prior to death. 3. Waiver of Premium
: In case of total and permanent disability due to an accident, the future premi
ums continue to be paid by the company till the time of maturity. This rider is
available with LifeTime Super, LifeTime Super Pension and CashPlus. About the Pr
omoters ICICI Bank (NYSE:IBN) is India s second largest bank and largest private
sector bank with over 50 years presence in financial services and with assets o
f over Rs 3446.58 bn (USD 79 billion) as on March 31, 2007. The Bank offers a wi
de range of banking products and financial services to corporate and retail cust
omers through a variety of delivery channels and through its specialised subsidi
aries in the areas of investment banking, life and non-life insurance, private e
quity and asset management. ICICI Bank is a leading player in the retail banking
market and services its large customer base through a network of over 950 branc
hes and extension counters, 3300 ATMs, call centers and internet banking www.ici
ciprulife.com to ensure that customers have access to its services at all times.
Established in London in 1848, Prudential plc, through its businesses in the UK
and Europe, the US and Asia, provides retail financial services products and se
rvices to more than 20 million customers, policyholder and unit holders and mana
ges over £251 billion of funds worldwide (as of 31 December 2006). In Asia, Prud
ential is the leading
European life insurance company with life operations in China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand
, Vietnam. Prudential is the second largest retail fund manager for Asian source
d assets ex-Japan as at June 2006. Its fund management business has expanded int
o a total of ten markets : China, Hong Kong, India, Japan, Korea, Malaysia, Sing
apore, Taiwan, Vietnam and United Arab Emirates. The ICICI Prudential Life Insur
ance Company Limited Management team comprises reputed people from the finance i
ndustry both from India and abroad. 34
Ms. Shikha Sharma, Managing Director & CEO Mr. N. S. Kannan, Executive Director
Mr. Bhargav Dasgupta, Executive Director Ms. Anita Pai, EVP – Customer Service &
Technology Mr. Azim Mithani, Chief Actuary Mr. Puneet Nanda, Chief Investments
Officer Mr. Binayak Dutta, Chief – Sales and distribution
Mr. N. S. Kannan Executive Director ICICI Prudential Life Insurance Company Limi
ted
N. S. Kannan joined ICICI Prudential Life Insurance Company Ltd as Executive Dir
ector in August 2005, where he has overall responsibility for sales, marketing,
investments, group business and business intelligence. Prior to joining ICICI Pr
udential, Kannan was the Chief Financial Officer and Treasurer of ICICI Bank Lim
ited where he was responsible for investor relations and for the finance, perfor
mance management, accounts, taxation, risk management, secretarial and credit mi
ddle office functions. The treasury operations of ICICI Bank include Balance She
et Management and Asset and Liability Management. ICICI Bank is the second large
st bank in India with an asset base of about US$ 55 billion. The bank is listed
on Indian national stock exchanges and the New York stock exchange. Kannan joine
d ICICI group in 1991 as a project officer. During his tenure at ICICI group, he
has handled project finance operations, infrastructure financing, structured fi
nance and treasury operations. Prior to his current assignment, he has headed th
e Telecom & Transportation group and Structured Finance group of the bank.Kannan
is a postgraduate in management from the Indian Institute of Management, Bangal
ore with a gold medal for best all-round performance. He is also a Chartered Fin
ancial Analyst from the Institute of Chartered Financial Analysts of India and a
n Honours graduate in Mechanical Engineering. His work experience includes 3 yea
rs of industrial experience with a large engineering group in India. 35
SWOT ANALYSIS OF ICICI PRUDENTIAL
STRENGTHS • • ICICI PRUDENTIAL is the largest private player in the insurance in
dustry in India, with a market share of around 36% amongst the private players.
ICICI PRUDENTIAL has deposited a paid up capital of Rs. 925 crores with IRDA as
a caution deposit, the highest amongst all the life insurance companies in India
whereas LIC has deposited only 60 crores so far. • • ICICI PRUDENTIAL is the fi
rst life insurance company to offer ECS debit facility. ICICI PRUDENTIAL is the
first company to introduce unit linked life insurance and pension products. Pres
ently the maximum numbers of ranges are under ULIP like life insurance, investme
nt as well as pension plans. • • Its Venture funds management co. Ltd is India’s
largest venture capital company. PRODUCTS:

Flexibility to switch your fund value at your own discretion 4 times a year Viz
Maximiser, Protector, Balancer, Preserver. Greater transparency- policyholder
knows what is happening to his money and where the company has invested the mone
y. Liquidity option: you can make partial or complete withdrawals anytime afte
r 3 years. Life insurance plans are eligible for deduction under Sec. 80C. T
he proceeds or withdrawals of life insurance policies are exempt under Sec 10(10
D), subject to norms prescribed in that section. Riders are provided to give t
he policyholder the additional protection at marginal cost- Accident and Disabil
ity rider, Critical Illness Rider, Accidental benefit rider. 36
 Loan against the policy : After the policy has acquired a surrender value one
can avail loan against the policy. WEAKNESSES • • • • • • • Industry in nascent
stage. Rural areas still not covered. Not very well known among the Indian popul
ation. Lack of credibility in the public because ICICI being a private player. P
remiums are high as compared to its competitors. Very few branches in the countr
y. PRODUCTS: The policy doesn’t have the surrender option before the 3rd year.
Plan do not offer any guarantee or assured return The product profile is no
t very comprehensive. Mortality, management and administrative charges are sky
-scraping as compared to its competitors.
OPPORTUNITIES • • • • • Liberalization of Indian economy. As the industry is gro
wing the whole market is virgin. The whole private sector is open to be tapped e
ven though the competition is fierce from government owned insurance companies.
It’s a volume business that is even if the company has few good corporates the t
urnover ceases to increase by manifold. PRODUCTS: Preserver fund looks good du
e to comfortable liquidity in the economy and there is little chance of any hike
in short-term rates by RBI.
37
 Finance minister unveiled a budget-favoring consumer spending, boosting demand
and therefore higher economic growth THREATS • • • • The Govt. players will bec
ome aggressive thus growth is going to be tough. Entry of other new players is n
ot ruled out Apprehension towards ICICI PRUDENTIAL being a private life insuranc
e company. We expect the industry to rationalize in future that is mergers and a
cquisitions will happen which will impact the industry and ICICI PRUDENTIAL fort
unes. • PRODUCTS: Past performance of these plans is not indicative of the fut
ure performance of the plan The sum invested in the funds is subject to market
risks and there can be no assurance that the objective of the plans will be ach
ieved. All benefits payable under the policy are subject to the tax laws and o
ther financial enactment, as they exist from time to time
38
MEANING OF ULIP
A policy, which provides for life insurance where the policy value at any time v
aries according to the value of the underlying assets at the time. ULIP is life
insurance solution that provides for the benefits of protection and flexibility
in investment. The investment is denoted as units and is represented by the valu
e that it has attained called as Net Asset Value (NAV).
Unit linked insurance plans
Units in funds
Underlying investment
Contribution A ULIP structure looks like as follows:
Less charge
Investment represented as units
Life cover
39
FEATURES OF ULIP
ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one-stop solution providing:
Life protection
Investm
ent and Savings
Flexibility - Adjustable Life Cover - Investment Options
Tra
nsparency
Options to take additional cover against - Death due to accident - D
isability - Critical Illness - Surgeries
Liquidity
Tax planning The two stro
ng arguments in favour of unit-linked plans are: • • Firstly, the investor knows
exactly what is happening to his money Secondly it allows the investor to choos
e the assets into which he wants his funds invested. An investor in a ULIP knows
how much he is paying towards mortality, management and administration charges.
He also knows where the insurance company has invested his money. The investor
gets exactly the same returns that the fund earns but he also bears the investme
nt risk. The transparency makes the product more competitive. So if you are will
ing to bear the investment risks in order to generate a higher return on your re
tirement funds ULIPs are for you. Traditional ‘with profits’ policies too invest
in the market and generate the same returns prevailing in the market. But here
the insurance company evens out returns to ensure that policyholders do not hold
money in a bad year. In that sense they are safer. ULIPs also offer flexibility
. For instance a policyholder can ask 40
the insurance company to liquidate units in his account to meet to mortality cha
rges if he is unable to pay any premium installment. This eats into savings but
ensures that the policy will continue to cover his life. ULIP came into play in
the 1960s and became very popular in Western Europe and Americas. The reason tha
t is attributed to the wide spread popularity of ULIP is because of the transpar
ency and the flexibility which it offers. Unit- linked plans are a contemporary
product: transparent and flexible. Individuals have greater control over their i
nvestments. The popularity of ULIPS stems from the fact that they offer customer
s “integrated financial solutions with a transparent charge structure”. In today
’s times, ULIP provides solutions for insurance planning, financial needs, finan
cial planning for children’s future and retirement planning. Unit-linked insuran
ce plans (ULIPs) have become something of a rage with their promise of market-
linked returns combined with the dual benefit of insuring your life from eventua
lities. Why do insurers prefer ULIPs? Insurers love ULIPs for several reasons. M
ost important of all, insurers can sell these policies with lesser capital of th
eir own than what would be required if they sold traditional policies. In tradit
ional ‘with profits’ policies the insurance company bears the investment risk to
the extent of insured amount. In ULIPs the policyholder bears most of the inves
tment risk. Since ULIPs are designed to mobilize savings, they give insurance co
mpanies an opportunity to get a large chunk of asset management business which h
as been traditionally dominated by mutual funds. ULIPs are suitable for individu
als who are already adequately insured and are reasonably
 well-informed and savv
y to take active investment decisions by using the switch option that is provi
ded to a ULIP policyholder. Also policyholders with regular endowment plans who
are not satisfied with the 4-6% returns can consider taking a ULIP with a lower
equity component. It is best if insurance-seekers tread the middle path and choo
se balanced plans (with about 50-60% equity component). Ideally they need to avo
id taking the aggressive 100% equity ULIP, which could needlessly expose their a
ssets to market volatility. So if insurancesseekers/investors play their cards r
ight, they can make this marriage work.
41
WORKING OF UNIT LINKED INSURANCE PLANS UNIT LINKED PLANS
SUPER SMART KID
SmartKid offers an exclusive choice of 3 education insurance plans: SmartKid New
Unit-linked Regular Premium, SmartKid New Unit-linked Single Premium and SmartK
id Regular Premium. Take a look at the features and benefits of each plan: 1. Sm
artKid New Unit-linked Regular Premium SmartKid New Unit-linked Regular Premium
is a unit-linked plan, which enables you and your child to accumulate wealth by
virtue of the performance of the underlying market-linked instrument. Take a loo
k at the features of the plan: Premium: The minimum premium to be invested is Rs
. 10,000 per annum. After deducting premium allocation charges from the premium,
the remaining amount will be invested in a fund of your choice. Sum Assured: Th
e minimum Sum Assured that the policyholder can opt for is Term * Annual Premium
/2, subject to a minimum of Rs 1 Lac Policy term: The term of the policy will be
calculated as the difference between your child s current age and the age of yo
ur child when the policy matures. Mortality, Policy Administration charges: Thes
e and other charges will be deducted from the units in the fund. 2. SmartKid New
Unit-linked Single Premium SmartKid New Unit-linked Single Premium works in muc
h the same way as SmartKid New Unit-linked Regular Premium policy mentioned abov
e. The only different feature is the premium amount-you will be required to pay
only a single premium, which starts at as low as Rs. 50,000. Additional Features
and Benefits Common to All 3 Plans
Regular payouts: As your child approaches key educational milestones such as 12t
h standard or graduation exams, he or she will receive regular payouts, guarante
eing he or she continues to study, no matter what the circumstance. Death Benefi
t: Your child will receive the Sum Assured immediately, should something happen
to you. ICICI Prudential will pay the remaining premiums, ensuring your child co
ntinues to receive policy benefits, as always. Income Benefit Rider: You can cho
ose to add the benefits of this rider to your child s education plan. Should you
depart before your son s or daughter s education is 42
complete, you child will receive 10% of Rider Sum Assured, for the balance term
of the policy. Add-on riders: Accidental Death and Disability Rider and Waive
r of Premium Rider ensure your child stays doubly protected, at all times. You
can choose to add these to your child s education policy. Tax benefits: Premiums
you pay for a SmartKid policy are eligible for tax savings [u/s 80(C)]. Maturit
y and death benefits are eligible for tax exemptions [u/s 10(10D)]. 3. SmartKid
Regular Premium Flexible investment option: Choose the amount of premium with wh
ich you wish to safeguard your child s education. Flexible policy tenure: The te
nure of the plan will be calculated as the difference between your child s curre
nt age and his or her age at which the policy matures. Flexible premium options:
The premium will be calculated based on 3 factors: Sum Assured, policy tenure a
nd your age. Guaranteed bonus: A guaranteed bonus of 3.5% per annum is declared
for the first 4 premium paying years plus an annual vested bonus declared in sub
sequent years.
LifeLink Super
Well-deserved financial incentives, rewarding business profits and even ancestra
l money are precious amounts that you should invest immediately so they earn you
potentially higher returns in the long run. Invest in ICICI Prudential s LifeLi
nk Super policy-a single-premium unit-linked policy
that works best for investors who have in mind long-term financial goals, such a
s the education of a child or the purchase of a larger home. Apart from the pote
ntially higher returns that you can earn, LifeLink Super insures your family aga
inst misfortunes with its protective insurance cover. Read more about the featur
es and benefits of this plan, right away.
43
LifeLink Super at a glance
Minimum/Maximum Entry Age Minimum Policy Term Minimum Single Premium Minimum Sum
Assured Tax Benefit 0 years to 65 years 5 years Up to age 44: Rs. 25,000, age 4
5 and above: Rs. 50,000 Annual Premium x Term/2. Subject to a minimum of Rs. 1,0
0,000 Premium payment up to 20% of the Sum Assured is eligible for benefit under
Sec. 80C. Any amount paid to you will be eligible for tax benefits under Sec. 1
0 (10D) exemption, if premium paid in any year does not exceed 20% of the Sum As
sured.
Maximum Age at Policy Maturity 70 years
Features and benefits of LifeLink Super
2 options of Sum Assured: Choose to receive either 125% or 500% of the single pr
emium amount. Flexible policy term: Decide how long you wish to invest in this p
olicy. You can invest for a minimum of 5 years and keep your investment growing
for as long as you wish after that. Partial withdrawal of money: Withdraw funds
in installments from the 4th year onwards.
Attractive premium allocation rates: Enjoy 100% allocation for premium amounts e
qual to or greater than Rs. 5 lacs. 6 investment funds: Select among Flexi-Growt
h, Maximiser, Flexi-Balanced, Balancer, Protector, and Preserver, based on your
financial goals and risk profile. Switch benefit: Switch between funds anytime t
o maximize on market movements. You can switch funds 4 times a year, at no cost.
For subsequent switches, you will be required to pay a switch fee of Rs. 100. 4
4
Maturity benefit: Receive the Fund Value when your policy matures. Choose to tak
e this value as a single lump-sum amount or in monthly, bi-annual or annual inst
allments spread over 1 to 5 years. Death benefit: Your family receives the highe
r of Fund Value or Sum Assured should something happen to you.
Why LifeTime Super
As an individual who desires a lot from life-a car, a beautiful home and of cour
se, the comfort and contentment of your family-you would undoubtedly want to pla
n your finances such that you can take care of all your requirements. Invest in
ICICI Prudential s LifeTime Super policy-a regular-premium unit-linked policy, w
hich offers potentially higher returns that systematically enable you to meet yo
ur long-term financial objectives. In addition, LifeTime Super also provides the
protective benefit of an insurance cover, which keeps your family secure, alway
s. Read more about the features and benefits of this plan.
LifeTime Super at a glance
45
Minimum/Maximum Entry Age Maximum Age at Policy Maturity Minimum/Maximum Policy
Term Premium Payment Frequency Minimum Premium Minimum Sum Assured Tax Benefit (
8)
0 years to 65 years 75 years 10 years to 75 years Monthly, half-yearly, yearly R
s. 18,000 per annum Annual Premium x Term/2. Subject to a minimum of Rs. 1,00,00
0 Premium paid for the policy and critical illness benefit rider will be eligibl
e for tax benefit under Sec. 80C and 80D respectively. Any amount paid to you wi
ll be eligible for tax benefits under Sec. 10 (10D) as per prevailing Income Tax
laws.
Features and benefits of LifeTime Super
Flexible policy term: Decide for how long you want your policy. You can invest f
or a minimum of 10 years and a maximum of 75 years. 3 choices of premium payment
: Opt to pay the premium on a monthly, bi-annual or an annual basis. 6 investmen
t funds: Select among Flexi-Growth, Maximiser, Flexi-Balanced, Balancer, Protect
or, and Preserver, based on your financial goals and risk profile. Systematic wi
thdrawal of money: Withdraw money in installments from the 4th year onwards. Mat
urity benefit: Receive the Fund Value when your policy matures. Choose to take t
his value as a single lump-sum amount or in monthly, bi-annual or annual install
ments. Death benefit: Your family receives the higher of Fund Value or Sum Assur
ed should something happen to you. Switch benefit: Switch between funds anytime
to adjust your portfolio, based on your goals and risk profiles. You can switch
funds 4 times a year, at no cost. For subsequent switches, you will be required
to pay a switch fee of Rs. 100.
ROLE OF AN ADVISOR IN UNIT LINKED INVESTMENT PLANS
46
It is important for us to know that what is the role that an advisor will play.
At ICICI Prudential, you are an advisor is to 1. Provide ongoing financial advic
e for his/her clients: You are an advisor and just like a lawyer or a doctor you
advice the client about insurance and finance. 2. Identify future clients: Life
insurance is a business of contacts an the advisor constantly need to know peop
le so that his business expands. 3. Constantly make appointments: Just making co
ntacts will not be enough to develop a good life insurance business. 4. Advisor
needs to meet these contacts and thus should make appointments on constantly. 5.
Conduct financial review meetings with prospects/ clients: As an advisor it is
necessary to meet with client not only for the purpose of selling but also to re
view the need of the client and prospects. Many people would not be in for life
insurance today but as time moves they can be requiring one. Similarly an existi
ng client may also be in need of more insurance as responsibilities and liabilit
ies increase. Close sale: Ultimately success is defined as sales. The advisor sh
ould lead each appointment towards a sale and close it effectively where in the
client is happy on purchasing the insurance solution and feels satisfied with it
.
CHAPTER-4
47
RESEARCH METHODOLOGY
Research Methodology has many dimensions, it include not only research methods b
ut also considers the logic behind the methods used in the context of the study
and explains why only a particular method of technique had been used so that res
earch lend themselves to p[roper evaluations. Thus in a way it is a written game
plan for concluding research therefore in order to solve research problem it is
necessary to design a research methodology for the problem as the same may diff
er from problem to problem. Research design is the conceptual structure within w
hich the research is conducted. Its functions are to provide for the collection
of relevant evidence with minimum expenditure of effort, time and money. But, ho
w this can be achieved depends on the research purpose. In my study the research
purpose is
48
exploratory study i.e. to gain familiarity with phenomena or to achieve new insi
ghts in it. MARKET RESEARCH DESIGN : Descriptive type DATA SOURCES RESEARCH APPR
OACH RESEARCH INSTRUMENT TYPE OF QUESTIONS SAMPLE SIZE : Primary source : Survey
method : Questionnaire : Close-ended : 100 samples
MODE OF COLLECTING DATA: Respondents to be chosen randomly. SAMPLE DESIGN: Socia
l phenomenon being very vast, it becomes impossible to contact each and every in
dividual of population due to limitation of essential resources like time and mo
ney. Therefore, the study is preferably narrowed down to a representative sample
to make the study more manageable. Quota sampling is adopted in the exploratory
study. It is a non-probability study in which various insurance players are tak
en. SAMPLING UNIT: The data can be collected from primary sources. The basic pre
mises of my study are primary data but at the same time it is supplemented with
the secondary data. Sampling unit is a unit which would be considered for the pu
rpose of study to conduct the comparative study of the ICICI Prudential and othe
r insurance companies with special reference to Unit Link Plans. SAMPLING SIZE:
It refers to the number of items to be selected from the universal, to constitut
e a sample. To commence the study various insurance players are taken. HOW DID I
GO ABOUT THE PROJECT:SAMPLE SIZE A sample size of 100 customers was selected to
do this project, which was random sampling keeping in mind the basic criteria.
49
FIELD WORK The research was done for a period of 2 months in (students, governme
nt employee & other) ambala. I started with MY MARKET 100 and thereafter I used
to give cold calls from the company’s database and if seemed interested I take a
long with me the representatives of the company for further information gatherin
g. 1) Study of Secondary Data: The quickest and the most economical way for rese
archers to find possible hypothesis is to take the advantage of the work done ea
rlier and thus utilize their efforts. 2) In-depth Interviews: I used in-depth in
terviews because it attempts to influence respondents to talk freely about their
subject of interest .A formal questionnaire was made and according to which the
questions were asked to the respondents. Basic methods of collecting Primary Da
ta: 1) Questionnaire Method: The questionnaire used by me for the purpose of dat
a collection were of structured type (Non-disguised). 2) Contact Method: In orde
r to derive information from the intended organization, it was elementary for me
to search for a link which could enable me to conduct a research in that organi
zation.
OBJECTIVE OF THE STUDY The project undertaken by me as a part of my Summar Train
ing of M.B.A.course is an effort made to study the ULIP policies and activities
in ICICI PRUDENTIAL with special emphasis on unit linked products of the company
. In this era of cut throat competition, any organization needs to select and re
tain the best talent. People selected should have positive attitude, ability to
inspire others and must be dynamic.
50
The main objectives of this study are: • • • • • • Working of Unit linked Insura
nce Plans SWOT analysis of the product sold Comparative study with the competito
r. Study tax planning solutions available in the market. Study asset allocation
through insurance plans. Market interphase.
CHAPTER-5
51
COMPARATIVE STUDY WITH THE COMPETITORS
LIST:
• LifeTime Super Vs LIC BimaPlus 52
• • •
LifeTime Super Vs Birla SunLife Classic Life LifeTime Super Vs HDFC Linked Premi
erLife Vs Bajaj Allianz Unitgain Plus
LIFETIME SUPER VS LIC BIMAPLUS
Features Age Term Sum Assured
LifeTime Super LIC BimaPlus 0 – 60 years 12 - 55 years Minimum premium payment t
erm of 3years 10 years Choose your sum assured, subject to Maximum limit upto Rs
. 2 lakhs a minimum sum assured of Rs. 1 lakh Value of units (3rd year onwards)
Survival benefit
Bid Value of the fund units 53
along with maturity bonus at 5% Death benefit of the Sum Assured Higher of Sum A
ssured or value of Death during the first 6 months units. 30% of SA + value of u
nits, next 6 months - 60% of SA + value of units. Death after 1st year SA + valu
e of units. Death during the 10th year - 105% of SA + value of units. Withdrawal
benefit Partial or complete withdrawals are Premature withdrawal allowed availa
ble from the 3rd year onwards Contribution Flexible contribution Investment opti
ons Minimum: Rs. 18,000 p.a. Flexibility to increase or decrease in after one ye
ar (after applying bid-offer spread. Not specified
contribution Not available Maximiser, Balancer, Protector & Balanced, Secured &
Risk Not available
Preserver. Increase / Decrease Available. of death benefit Bonus units Top-up
Available Not Available. Available. Minimum top-up of Rs. Available (Charges: 1.
5% of the 5000. Charges - 1% of top-up. top-up) 4 free switches a year, with the
No free switches. Cost of
minimum switch amount being Rs. switching is 2% of the fund Switch Surrender val
ue 2000. value. The policy will acquire a surrender Partial surrender up to 50%
of value after 3 complete premium- bid value of units allowed after 3 paying yea
rs. The surrender value is years Initial Charge from date of 100% of the value o
f investments. commencement % Allocation of the premium Not Disclosed 18000- 49,
999: 1st year - 80%; 2nd year - 92.5% ; 3rd year onwards 96%. 50000 and above: 1
st year - 82%; 2nd year - 92.5%; 3rd year onwards Admin Charge 96%. None Not app
licable 54
Other Charges
Not applicable Not applicable The annual administrative and fund management char
ge is 2.25% for Maximiser, 2.25% for Balancer,
Fund Management 1.50% for Protector & 0.75% for Charges Preserver. 1% of the fun
d per annum
IFETIME SUPER VS HDFC LINKED Features Age Term Sum Assured LifeTime Super HDFC L
inked 0 - 60 years 18 - 60 years Minimum premium payment term of 10 - 30 years 3
years Choose your sum assured, subject to Only 5,10, 20 (age-based)
a minimum sum assured of Rs. 1 multiples are allowed as Sum Survival benefit Dea
th benefit lakh Assured. Value of units (3rd year onwards) Value of units Higher
of Sum Assured or value of Higher of Sum Assured or value available
units. of units. Withdrawal benefit Partial or complete withdrawals are Partial
withdrawal available from the 3rd year onwards
from the 3rd year onwards, provided that the Value of Units does not go below th
e Sum
Contribution Flexible contribution Investment options
Assured. Minimum: Rs. 18,000 p.a. Minimum: Rs. 10,000 p.a. Flexibility to increa
se or decrease in Available contribution. Maximiser, Balancer, Protector & 5 Pre
server. Fund OptionsBalancer, Safe
Defensive
Managed, 55
Increase / Decrease Available. of death benefit Bonus units Top-up Switch
Managed, Liquid & Growth Not available
Available Not available Available. Minimum top-up of Rs. Available 5000. Charges
- 1% of top-up. 4 free switches a year, with the Switches are free as of now. B
ut minimum switch amount being Rs. the company reserves the right 2000. to put a
charge on the switches. The policy will acquire a surrender The surrender charg
e is 25% of value after 3 complete premium- 3 paying years. years outstanding re
gular premium. No charges after 3
Surrender value
Initial Charge
years % Allocation of the premium Charges 18000- 49,999: 1st year - 80%; 2nd 1st
yr-27%, 2nd yr- 27%, 3rd yr year - 92.5%; 3rd year onwards - onwards- 1% 96%. 5
0000 and above: 1st year - 82%; 2nd year - 92.5%; 3rd year onwards 96%. None
Admin Charge
Admin charges of Rs.180 fixed
charge per annum. Other Charges Not applicable Not applicable Fund Management Th
e annual administrative and fund Investment charge of 0.80% of Charges managemen
t charge is 2.25% for the Fund Value across all the Maximiser, 2.25% for Balance
r, funds. 1.50% for Protector & 0.75% for Rider Preserver. ADBR, CIBR & MSAR ABR
& CIBR
56
SUPER PREMIER LIFE VS BAJAJ ALLIANZ UNITGAIN PLUS Features Age Term Sum Assured
Survival benefit Death benefit Super Premier Life Bajaj Allianz Unitgain Plus 18
- 60 years 0 - 60 years Premium paying term of 3 years, 5 Minimum premium payme
nt years, 7 years or 10 years. term of 3 years Sum Assured multiple is 1 - 25 ti
mes Minimum Sum Assured is 5 the annual premium Value of units Higher of Sum Ass
ured decreased by the amount of withdrawals made or Higher of Sum Assured or val
ue of units. value of units Withdrawal benefit Partial withdrawals are available
after Partial or of 3 years premiums. complete times the premium paid. Anytime
after payment of 3 full year s premiums.
the 3rd policy year and after payment withdrawals are available after Complete t
he 3rd years contribution withdrawals are available after the 1st year premium.
Contribution Flexible contribution Investment options However surrender Minimum:
Rs. 10,000 p.a. Available & Equity Index Fund, Equity Plus Fund, Debt Fund, Bal
anced Fund, Cash Fund Available penalties will apply. Minimum: Rs. 60,000 p.a. A
vailable Maximiser, Preserver. Decrease in death Available. benefit Bonus units
Top-up Switch Surrender value Balancer, Protector
Available. Not available Available. Minimum top-up of Rs. Available. Charge are
2% of 5000. Charges - 1% of top-up. the top-up amount 4 free switches a year. Th
ree free switches every year. The policy will acquire a surrender Withdrawals ar
e only allowed value from the 1st year onwards. after payment of 3 full year s 5
7
Initial Charges
% Allocation of the premium 3 year premium paying term Rs. 60.000 - Rs. 4,99,999
: 1st year: 87%; 2nd and 3rd year: 96% Rs. 5,00,000 and above: 1st year: 89%; 2n
d and 3rd year: 96% 5, 7 and 10 year premium paying term Rs. 60.000 - Rs. 4,99,9
99: 1st year: 88%; 2nd and 3rd year: 97%; 4th and 5th year: 98%;6th year onwards
: 100% Rs. 5,00,000 and above: 1st year: 90%; 2nd and 3rd year: 97%; 4th and 5th
year: 98%; 6th year onwards: 100% Admin charge of Rs. 60 / month
premiums % Allocation of the premium 1st year - 76%; 97% from year 2 onwards
Admin Charge
Annual admin charges of Rs.
20 Fund Management The annual investment charge is 1.50% 1.5% p.a. for a Equity
Plus Charges for Maximiser, 1.00% for Balancer, Fund, 1% p.a. for Equity Index 0
.75% for Protector & Preserver. Fund, No specific charges in case of Balanced Fu
nd, 0.7% p.a. for Debt Plus Fund and 0.7% in case of Cash Plus Rider ADBR & CIBR
Fund. ABR, ADBR, CI & Hospital Cash Benefit
STUDY TAX PLANNING SOLUTIONS AVAILABLE IN THE MARKET
TAX BENEFITS ON INSURANCE AND PENSION 58
Life insurance and retirement plans are effective ways of saving taxes. The tax
breaks that are available under various insurance and pension policies are descr
ibed below: • • • • Life insurance plans are eligible for deduction under Sec. 8
0C Pension plans are eligible for a deduction under Sec. 80CCC Health riders are
eligible for deduction under Sec. 80D The proceeds or withdrawals of life insur
ance policies are exempt under Sec 10(10D), subject to norms prescribed in that
section. Tax Rates for Individuals The rates of income tax for FY 2007-08 are as
follows:
Total Income (Rs.)
Rate of tax Senior citizen Women below 65 Nil Nil Nil Nil 20% 30% years Nil Nil
10% 20% 20% 30%
Others Nil 10% 10% 20% 20% 30%
Upto Rs 1,00,000/Above Rs 100,000/- to 145,000/Above Rs 145,000/- to 150,000/Abo
ve Rs 150,000/- to 195,000/Above Rs 195,000/- to 250,000/Above Rs 250,000/-
Surcharge on Income Tax: In case where the Total Income exceeds Rs 10,00,000, th
ere would be a surcharge @ 10%. Education Cess on Income Tax: Education Cess @2%
will be payable on the amount of income tax (including surcharge). Benefits und
er insurance policy - Section 10(10D) As per Section 10(10D) of Income tax Act,
1961, any sum received under a life insurance policy, including the sum allocate
d by way of bonus on such policy is exempt from tax. However, this rule does not
apply to following amounts: Sum received under Section 80DD (3), or 59
Any sum received under a Keyman Insurance Policy, or Any sum received other than
as death benefit under an insurance policy which has been issued on or after Ap
ril 1 2003 and if the premium paid in any of the years during the term of the po
licy is more than 20% of the sum assured.
60
CHAPTER-6
61
DATA ANALYSIS & FINDINGS
1). Are you interested in products offered by the ICICI PRUDENTIAL? Yes No Will
think 61% 22% 17%
17%
Yes No
22% 61%
Will think
INTERPRETATION The good thing is that atleast the corporates were quite eager to
find out what ICICI PRUDENTIAL has to offer whereas the major 39 % of the corpo
rates were not even interested in the products as they are quite satisfied by th
e LIC and they are not in breaking their long relationship with them. The privat
e players will have to play a long battle in order to ensure that they are serio
us player in the market. Basically corporates think that its too early to invest
in private companies as they have just entered the scene and they are unsure of
the security they will have about their investment.
62
2). Are you satisfied with your present insurer?
YES No
65% 35%
35%
Yes No
65%
INTERPRETATION
Here is where the challenge is. Inevitably most of the players are very satisfie
d with their present insurer which makes it more tough for the private players t
o attract the corporates. The remaining 35 % are also not very dissatisfied by t
he services but they are just open to new avenues and are looking forward that p
rivate companies come with good offers so that they may shift to them. Thus priv
ate players will have to be very proactive and in this regard since LIC is the l
eader and ICICI PRUDENTIAL is lagging behind its competitors in terms of competi
tion.
3). Where would you like to insure if given chance? 63
LIC ICICI BAJAJ ALLIANZ TATA AIG SBI KOTAK MAHINDRA
60 50
60
-
60 10 5 15 8 2
NO OF PEOPLE
40 30 20 10 0
LIC SBI TATA AIG ICICI
15 8 10 5 2
BAJAJ
KOTAK MAHINDRA
COMPANIES INTERPRETATION
Thus we see that the companies are comfortable in having business with govt. own
ed companies as they feel its safe & secure to have business with them which is
followed by SBI as it is the biggest bank and then followed by TATA AIG as the n
ame TATA is associated with it which commands huge premium in the market . Where
as in the case of ICICI PRUDENTIAL the figures represent mediocre performance af
ter compelling and coxing the corporates and creating a strong impression whethe
r they feel interested in doing business with the company.
4). What is people’s main concern while taking a insurance policy (ULIP)? 64
A) Security B) Returns C) Tax rebate
40% 28% 32%
50% 40% 30% 20% 10% 0% SECURITY RETURNS FACTOR TAX REBATE
%AGE
Series1
INTERPRETATION People invest in insurance mainly because of security concern.
5). Are you aware of LifetimeSuper introduced by ICICI Prudential limited?
65
Yes No
58% 42%
%AGE OF PEOPLE
80% 60% 40% 20% 0% YES RESPONSE NO Series1
INTERPRETATION
The awareness level among the corporate about ICICI PRUDENTIAL offering services
is very low and the company needs to work on it. Today is the world of marketin
g thus it is recommended that company should become more media friendly by adver
tising more through television channels, radio, newspapers, magazines, journals
&editorials.
66
CHAPTER-7
67
LIMITATIONS
• The geographical area was very much limited to residential area & so the resul
ts are not particularly reflection of the current behavior. • • Biases and non-c
ooperation of the respondents. Due to limited time period and constrained workin
g hours for most of the respondents, the answers at times were vague enough to b
e ignored. • Most of the people in India take their policies in the period prece
eding March(for tax saving purposes) & so the response to initial contacts were
not all encouraging and that has been the primary reason in the inability to qua
ntify the results large enough so as to reduce any relevant outcomes. • • Most o
f the results that are spelt out have been of qualitative aspects. People are no
t interested in giving personal opinion.
68
69
RECOMMENDATIONS
• • More emphasis should be on promotional activities. Plenty of advertisement s
hould be done through T.V, Newspaper and Radio as these media’s are having maxim
um recall value. • • Total financial planning and advice should be given to ever
y customer. More business opportunity seminars should be conducted to make peopl
e aware of the offer given. • The company should quite frequently send their age
nt to the customer so that they should be aware of the latest offer. • The compa
ny should attempt to open more and more of its branches in the country so as to
promote their product publicity.
70
71
CONCLUSION
LIC enjoys credibility over other private players in the industry People look fo
r security over returns in market linked plans .Lifetime is the most popular pro
duct among the people who are aware about ICICI Prudential’s products. People ar
e now showing more interest in ULIP as compared to some of the traditional plans
. ICICI PRUDENTIAL has to counter the distribution network of LIC .The product p
rofile of ICICI PRUDENTIAL is not very comprehensive
72
73
BIBLOGRAPHY
• • • •
www.iciciresearchcenter.org www.tata-aig.com www.iciciprulife.com www.personalfn
.com
74
75
ANNEXURE
Do you have any life insurance policies? Yes No
If Yes: Name of the Company Name of the plan Term of plan ________________ _____
____________ _________________
Annual Amount of premium _________________
1. Are you satisfied with present insurer? A) YES 2. A) Security B) Returns C) T
ax saving D) Others please specify_________ 3. Are you aware of Unit Linked Insu
rance Plans offered by various companies in India? A) ICICI C) TATA AIG E) LIC G
) MAX NEW YORK B) OM KOTAK MAHINDRA D) BAJAJ ALLIANZ F) SBI H) BIRLA SUNLIFE B)
NO Which are the main issues that you take into consideration while purchasing a
ny life insurance policy?
76
4. Do you know how a Unit Linked Insurance Plan works? A) YES B) NO
5. Can you please highlight risk attached with them? A) HIGH B) MODERATE C) LOW
6. What is your perception about the Unit link insurance plans, are they give yo
u a sense of security? A) YES B) NO 7. Are you aware of Lifetime pension plan in
troduced by ICICI Prudential limited? A) YES B) NO 8. If you are given a choice,
which one you take: A) ICICI C) TATA AIG E) LIC A) Fewer premiums B) More retur
ns C) Complementary gifts 10. Are you interested in buying products of ICICI Pru
dential? A) YES B) NO B) OM KOTAK MAHINDRA D) BAJAJ ALLIANZ F) SBI
9. What other plans or flexibility you expect from Insurance companies?
77