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A REPORT

ON

“A Comparative Study and Analysis


of Unit Linked
Insurance Plans (ULIPs)

B
Y
Vikas Gupta

Submitted to: Prof.Shekhar

Date of Submission: 3rd October 2010


TABLE OF
CONTENTS
AUTHORISATION

ACKNOWLEDGEMENTS
ABSRACT
LIST OF ILLUSTRATIONS
INTRODUCTION
PURPOSE
SCOPE OF THE STUDY
OBJECTIVES OF THE PROJECT
LIMITATIONS OF THE STUDY
METHODOLOGY
SOURCES OF DATA
LITERATURE STUDY
INSURANCE
CHARACTERISTICS OF INSURANCE
HISTORY OF INDIAN INSURANCE
INSURANCE MARKET – PRESENT
CAPITAL REQUIREMENTS AND FOREIGN PARTICIPATION
LIFE INSURANCE
UNIT LINKED INSURANCE PLANS

STRUCTURE OF ULIPs
TYPES OF FUNDS UNDER ULIPs

ADVANTAGES OF ULIPS

FACTORS INFLUENCING THE BUYING OF UNIT LINKEDINSURANCE PLAN


(ULIPs)

UNIT LINKED INSURANCE PLANS (ULIPs) OF DIFFERENT COMPANIES

COMPARITIVE SECONDARY DATA ANALYISIS


TATA AIG LIFE INSURANCE COMPANY
BAJAJ ALLIANZ LIFE INSURANCE COMPANY
LIFE INSURANCE CORPORTAION (LIC) OF INDIA
HDFC STANDARD LIFE INSURANCE COMPANY
ICICI PRUDENTIAL LIFE INSURANCE COMPANY
PERFORMANCE OF ULIPs OF THE SELECTED COMPANIES
PRIMARY DATA ANALYSIS
MERITS AND DE-MERITS OF IDBI FORTIS LIFE INSURANCE COMPANY
MERITS
DEMERITS
POSITIONING
POSITIONING STRATEGIES
POSITIONING STRATEGIES OF IDBI FORTIS
FINDINGS
RECOMMENDATIONS
MY EXPERINECES AND LEARNINGS
CONCLUSION
ANNEXURE - I (QUESTIONNAIRE)
ANNEXURE - II (FACTOR ANALYSIS OUTPUT [SPSS])
ANNEXURE - III (SCHEDULE OF THE PROJECT)
REFERENCES
ABSRA
CT

The project aims to make a detailed study of Unit Linked Insurance Plans
(ULIPs) in the Indian context, a comparative analysis of ULIPs of some well
known selected companies
The different selected companies on which the project is entirely
focused are
namely:
a. ICICI PRUDENTIAL
b. BAJAJ ALLIANZ
c. TATA AIG LIFE
d. LIFE INSURANCE CORPORATION OF INDIA
e. HDFC STANDARD LIFE

The comparative study is primarily based in terms of the various benefits


offered viz. Death Benefits, Health benefits, Maturity Benefits, financial
benefits & other benefits. The various parameters taken into consideration
were flexibility, transparency, liquidity and the number of funds options
available.

The project consists of a detailed analysis of the comparison of various


ULIPs in the market. The results of the project have been an outcome of a
detailed analysis of collected secondary data and well supported by
analysis of primary data collected through a survey. The project required
me to design a questionnaire and conduct a primary survey. The survey
was mainly conducted to study the consumer perception, opinion and
awareness of various insurance products. The number of respondents
targeted was 133.The sample of respondents included was carefully
selected targeting respondents from all age groups. Also the preferences
of the respondents towards these selected insurance companies have
been noted and the reasons analyzed. The data gathered from the
primary survey was coded in a statistical tool called as Statistical
Package for Social Science (SPSS) for analysis and to find various factors
that affect an investor decisions while choosing an investment option in this
vast market.
INTRODUCTI
ON

In the commercial arena, the choice of an effective strategy is perhaps the


most important and the toughest decision to take. The decision to select
among the grand strategies and deciding upon which strategy will best
meet the enterprise’s objectives is rendered complex by multiple
considerations. The same is also true with the insurance companies in India
who are constantly revamping their strategies and coming out with
innovative options to stay in the competition. There were days when Life
Insurance Corporation of India (LIC) was the only insurance company
available to people in India and where people synonymised Insurance to
LIC. Also since it was a Public Sector Undertaking (PSU) it has a great
support from people. But now times
have changed a lot of private players have entered into the fray. There
have been a lot of Indian companies collaborating with foreign insurance
giants like ICICI Prudential, Bajaj Allianz etc who have already made their
presence felt in the Indian Insurance industry.

Even though LIC is still the market leader with more than over 60% of the
market share, the private players are giving it a tough time. Since the last
decade the market share of LIC had fallen down by about more than 20%.

The new private players have started offering a variety of unlimited


schemes right from insurance plans for a 30 day old baby to that of a 70
year old senior citizen. Also the private companies have started creating
the importance and need of insurance in today’s life. They have started
positioning their brands and are marketing their products in such a way
the people have started feeling the need of security in their lives.

Taking into account the huge population and growing per capita income
besides several other driving factors, a huge opportunity is in store for the
insurance companies in India. According to the latest research findings,
nearly 80% of Indian population are 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 subjected to weak social
security and pension systems with hardly any old age income security. As
per our findings, insurance in India is primarily used as a means to improve
personal finances and for income tax planning; Indians have a tendency to
invest in properties and gold followed by bank deposits. They selectively
invest in shares also but the percentage is very small (4-5%). This in itself
is an indicator that growth potential for the insurance sector is immense.
It's a business growing at the rate of 15-20% per annum and presently is of
the order of around more than $55 billion.
India is a vast market for life insurance that is directly proportional to the
growth in premiums and an increase in life density. With the entry of
private sector players backed by foreign
expertise, Indian insurance market has become
more vibrant.
Competition in this market is increasing with companys’ continuous
effort to lure the customers with new product offerings. However, the
market share of private insurance companies remains low in the 25-35%
range. Even to this day, Life Insurance Corporation (LIC) of India dominates
Indian insurance sector. The heavy hand of government still dominates the
market, with price controls, limits on ownership, and other restraints. They
private players are still in their initial days and would take some more time
to capture a good market share. At present they are coming up with new
and innovative ideas.

Since the last decade the life insurance industry in India has been growing
very fast and many new companies have entered this business insurance.
The Indian life insurance industry has recorded a robust growth of more
than 16 per cent for the nine-month period which ended on December 31,
2008.It is expected to grow at an amazing rate of 20 per cent this year
Also in the present scenario the most sought after insurance plans are the
Unit Linked insurance Plans (ULIPs).

A ULIP is a life insurance policy which provides a combination of risk cover


and investment. ULIPs have gained high acceptance due to attractive
features they offer like flexibility, transparency, liquidity and a vast
variety of fund option. Unit linked plans are suitable for all customer
profiles; however as a general belief the risk averse investors tend
to choose traditional plans and an informed customer prefers a ULIP.
ULIPs offer the kind of flexibility that no insurance product can. ULIPs
essentially combine the benefits of an insurance policy and a market-linked
investment. Investors can select a ULIP with an equity-debt combination
that is in line with their risk profile. A risk-taking investor would typically
select one with a high equity component, while a risk-averse investor
would opt for a debt-heavy one. Simply put, ULIPs are structured in
such a way that the protection element and the savings element are
distinguishable, and h e n c e managed according to your specific
needs. In t h i s way, the ULIP plan offers unprecedented flexibility and
transparency.

So with many players around for a company to really be successful it has


to really be very efficient on all fronts. It has to constantly adapt to the
changing consumer preferences with a lot of new innovations and
implementing new technology try to different from
the lot. Especially if it is a new player in the market the company has to
really work very hard to get
into the completion and stay
afloat.
PURPO
SE

The completion of the project is a submission requirement for 5th semester.

SCOPE OF THE
STUDY

This study aims to make a comparative study of the Unit Linked Insurance
Plans (ULIPs) in the Indian insurance market and study the consumer
perception towards various insurance products. The comparative analysis
is based on the empirical data collected.
METHODOLOGY

The techniques used for data

collection are: A. Internet

surveys and
B. Questionnaire method

The following methodology has been followed to achieve the objectives of


the project.

Step: 1
Developing a right research design and timeline
for the project.

Step: 2
Collecting Secondary data of the
insurance Industry

Step: 3
Designing of the
Questionnaire

Step: 4
Analysis of secondary
data

Step: 5
Pilot Study

Step: 6
Collection of primary data-Questionnaires and
internet surveys

Step: 7
Analysis of primary
data
SOURCES OF
DATA

In the data collection method, we have collected both primary and


secondary data to meet our objectives

Primary
Data

The primary data was collected by a survey based on the questionnaire. It


was formulated on the basis of information carefully gathered by me
about the various mindsets of the people. This questionnaire was mainly
formulated to target the common man to see his perception and awareness
of various investment options available. The number of respondents
targeted was around 150 and the survey was confined to Hyderabad city.

Secondary
Data

The secondary data was collected directly from the companies and their
websites and internet surveys. Also a lot of similar research studies and
journals have been referred to.

LITERATURE
STUDY

Till today a lot of research has been done on the Indian insurance industry
especially the life insurance sector. The material for this study was
collected from various internet sites, journals and books by various
authors. Similar research has been carried out by Sathak Mohanty who
worked on the risk profile of ULIPs and analyzed insurance as an
investment option. He says that Life Insurance Corporation of India (LIC) is
still the undisputed leader in the Indian context.

According to Anita Gupta-director, marketing and communication, ING


Vysa Life insurance ULIPs are suitable for all types of customers, right
from the lower class to the premium class.
During the course of the project some official studies on the products of
Tata-AIG and HDFC standard Life have been referred to. Also the books on
Marketing Management by Philip Kotler and that of Marketing Research by
Naresh Malhotra were referred to gain a deeper insight on positioning
strategies and marketing research techniques. A lot of groundwork has
also been
done by studying the vast range insurance products before taking
up this research.
INSURAN
CE

Insurance may be described as a social device to reduce or eliminate risk


of loss to life and property. Under the plan of insurance, a large number
of people associate themselves by sharing risks attached to individuals.
The risks which can be insured against include fire, the perils of sea, death
and accidents and burglary. Any risk contingent upon these, may be insured
against at a premium commensurate with the risk involved. Thus collective
bearing of risk is insurance.

CHARACTERISTICS OF
INSURANCE

1. Sharing of risks
2. Cooperative device
3. Evaluation of risk
4. Payment on happening of a special event
5. The amount of payment depends on the nature of losses incurred.

HISTORY OF INDIAN
INSURANCE

Insurance has a long history in India. Life Insurance in its current form was
introduced in 1818 when Oriental Life Insurance Company began its
operations in India. General Insurance was however a comparatively late
entrant in 1850 when Triton Insurance company set up its base in Kolkata.

History of Insurance in India can be broadly bifurcated


into three eras:

a. Pre
Nationalization b.
Nationalization and
c. Post
Nationalization

Life Insurance was the first to be nationalized in 1956. Consolidating the


operations of various insurance companies formed Life Insurance
Corporation of India. General Insurance followed suit and was nationalized
in 1973. General Insurance Corporation of India was set up as the
controlling body with New India, United India, National and Oriental as its
subsidiaries. The process of opening up the insurance sector was initiated
against the background of Economic Reform process, which commenced
from 1991. For this purpose Malhotra Committee was formed during this
year who submitted their report in 1994 and Insurance Regulatory
Development Act (IRDA) was passed in 1999. Resultantly Indian
Insurance was opened for private companies and Private Insurance
Company effectively started operations from 2001.
(Source:
www.irdaindia.org)
INSURANCE MARKET -
PRESENT

The insurance sector was opened up for private participation a decade back.
For years now, the private players are active in the liberalized
environment. The insurance market has witnessed dynamic changes, which
include presence of a fairly large number of insurers both life, and non-life
segment. Most of the private insurance companies have formed
joint venture partnering well-recognized foreign players across the globe.

The Indian life insurance market generated total revenues of $41.36


billion in 2007, thus
Representing a compound annual growth rate (CAGR) of 11.84% for the
period spanning 2000-
2007. Life insurance market had a growth of $22.46 billion within a period
of 7 years with a growth rate of 118.24%. Estimated life premiums rose to
INR 1,470,800 million ($36.77 billion) in 2006 from INR 1,301,540 million
($32.54billion) in 2005. We envisage that life premiums in
2011 will be $65.96 billion, a growth larger than they were in 2007. The
performance of the
market is forecast to accelerate, with an anticipated CAGR of 9.78% for
the four-year period
2007-2011 expected to drive the market to a value of $65.96 billion by the
end of 2011. There would be a growth of $24.6 billion i.e. 59.48% in the
next 4 years.

Non-life premiums in India were $6.53 billion in 2007. Gross written


premium (GWP) in the Indian non-life insurance market reached a value of
$5.75 billion in 2006, this representing an annual growth of 13.55% for the
period spanning 2006-2007. Estimated non-life premiums rose from INR230
billion ($5.75 billion) in 2006 to INR261 billion ($6.53 billion) in 2007.
We anticipate that non-life premiums will grow by a CAGR of 9.40%
between 2007-2011. We are looking for non-life premiums to rise by $405
million over the five years to the end of 2011 with a growth rate of
62.02%. (Source: http://www.scribd.com/doc/4996143/OVERVIEW-OF-
INSURANCE-SECTOR-
INDIA,http://www.indiaprwire.com/pdf/pressrelease/200805079347.pdf)

With a huge population base and large untapped market, insurance


industry is a big opportunity area in India for national as well as foreign
investors. India is the fifth largest life insurance market in the emerging
insurance economies globally and is growing at 32-34% annually. This
impressive growth in the market has been driven by liberalization, with
new players significantly enhancing product awareness and promoting
consumer education and information. The strong growth potential of the
country has also made international players to look at the Indian insurance
market.

Moreover, saturation of insurance markets in many developed economies


has made the Indian market more attractive for international insurance
players, according to "Booming Insurance Market in India (2008-2011)”.
 Total life insurance premium in India is projected to grow Rs
1,230,000 crore by
2010-11.

 Total non-life insurance premium is expected to increase at a CAGR


of 25% for the period spanning from 2008-09 to 2010-11.

 With the entry of several low-cost airlines, along with fleet expansion
by existing ones and increasing corporate aircraft ownership, the
Indian aviation insurance market is all set to boom in a big way in
coming years.

 Home insurance segment is set to achieve a 100% growth as


financial institutions have made home insurance obligatory for
housing loan approvals.

 Health insurance is poised to become the second largest business


for non-life insurers after motor insurance in next three years.

 A booming life insurance market has propelled the Indian life


insurance agents into the
‘top 10 country list’ in terms of membership to the Million Dollar
Round Table (MDRT)
— an exclusive club for the highest performing life

insurance agents. (Source:

http://www.marketsmonitor.com/Report/IM588_related.ht

m)

CAPITAL REQUIREMENTS AND FOREIGN


PARTICIPATION

Minimum capital requirement for direct life and Non-life Insurance company
is INR1000 million and that for reinsurance company is INR2000 million.

(Source:
www.irdaindia.org)
LIFE
INSURANCE

As is evident from its very name, it deals with insurance of human


life. “Life insurance corporation of India”- a public sector undertaking has
the monopoly in this sector since its nationalization.

In our wordily life, whenever there is uncertainty, there is an involvement


of risk. The instinct for security against such risk is one of the basic
motivating forces determining human attitudes. As a squeal to this quest
for Security, the concept of insurance must have been born. The urge to
provide insurance or protection against the loss of life & property must
have prompted people to make some sort of sacrifice willingly in
order to achieve security through “COLLECTIVE CO-OPERATION”, in this
sense; story of insurance is probably as old as the story of mankind.
All life insurance companies in India have to comply with the strict
regulations laid out by Insurance Regulatory and Development Authority of
India (IRDA). Therefore there is no risk in going in for private insurance
players. In terms of being rated for financial strength like international
players, only ICICI Prudential is rated by Fitch India at National Insurer
Financial Strength Rating of AAA (Ind) with stable outlook indicating the
highest claims paying ability
ratin
g.

90.0
0
80.0
0
70.0
0 Life
60.0
Non-life
0
50.0
0
40.0
0
30.0 2000 2001 2002 2003 2004 2005 2006 2007 2008
0 2009 2010 2011
20.0
0
10.0
0
0.0
0
Figure 1: The trend of the Indian insurance
industry ($Bn) 2000-2011 (Source: The
knowledge Centre)

Life Insurance Corporation of India (LIC), the state owned behemoth,


remains by far the largest player in the market. Among the private
sector players, ICICI Prudential Life Insurance(JV between ICICI Bank and
Prudential PLC)is the largest followed by Bajaj Allianz Life Insurance
Company Limited (JV between Bajaj Group
and Allianz).
The private companies are coming out with better products which are
more beneficial to the customer. Among such products are the ULIPs or
the Unit Linked Insurance Plans which offer both life cover as well as
scope for savings or investment options as the customer desires. Further,
these types of plans are subject to a minimum lock-in period of three years
to prevent misuse of the significant tax benefits offered to such plans under
the Income Tax Act.
Unlike the mutual fund product that has a very simple cost structure,
ULIPs carry a greater
number of costs (administration and mortality), in addition to the others.
So comparing ULIPs with mutual funds is erroneous.

(Source: http://www.scribd.com/doc/136703/Indian-Insurance-Changing-
Trends-and-a-Fresh- Perspective)

Right now there are a total twenty two life insurance companies operating
in India, of which one (Life Insurance Corporation) is a Public Sector
Undertaking and the remaining twenty are
all private sector enterprises. (Source:
www.irdaindia.org)

List of life insurance companies in India


1. AEGON RELIGARE
2. AVIVA
3. BAJAJ ALLIAZ
4. BHARATHI AXA
5. BIRLA SUN LIFE
6. FUTURE GENERALI
7. HDFC STANDARD LIFE
8. HSBC
9. ICICI PRUDENTIAL
10. IDBI FORTIS
11. ING VYSYA
12. KOTAK LIFE INSURANCE
13. LIC
14. MAX NEWYORK LIFE
15. MET LIFE
16. RELIANCE LIFE
17. SAHARA INDIA
18. SBI LIFE
19. SHRIRAM LIFE
20. TATA AIG LIFE
21. DLF PRAMERICA
22. CANARA HSBC OBC

Table 1: The list of life insurance companies in India


MARKET
2% SHARE LIC
1% ICICI Prudential
3% 2%
6% Bajaj
3%
Allianz
3 SBI Life
%
Reliance
7% HDFC Standard Life
Birla Sun Life
9% 64% Max
Newyork
Kotak
Mahindra
Others

Figure 2: The market share of the Indian Life Insurance industry


(figures are approximate) (Source: As per a report published
in 2008 by Ms Pinky Walia-Financial Advisor)
UNIT LINKED INSURANCE
PLANS

Unit linked insurance plan (ULIP) is a life insurance solution that provides
the client with the benefits of protection and flexibility in investment. It
is a solution which provides for life insurance where the policy value at
any time varies according to the value of the underlying assets at the time.
The investment is denoted as unit and is represented by the value that it
has attained called as Net Asset Value (NAV).

ULIPs are a category of goal-based financial solutions that combine the


safety of insurance protection with wealth creation opportunities. In ULIPs,
a part of the investment goes towards providing a life cover. The residual
portion of the ULIP is invested in a fund which in turn invests in stocks or
bonds; the value of investments alters with the performance of the
underlying fund opted by the customer.

Simply put, ULIPs are structured in such that the protection element and
the savings element are distinguishable, and hence managed according
to your specific needs. In this way, the ULIP plan offers unprecedented
flexibility and transparency.

ULIPs came into play in 1960s and became very popular in Western
Europe and America. The reason that is attributed to the wide spread
popularity of ULIP is because of the transparency and the flexibility which it
offers to the clients.

As time progressed the plans were also successfully mapped along with life
insurance needs to retirement planning .In today’s times ULIP provides
solution for all the needs of a client like insurance planning, financial
needs, financial planning for children’s future and retirement planning.
( Source:http://www.scribd.com/doc/7216240/Understand-ULIP-Insurance)

STRUCTURE OF
ULIPs

ULIPs offered by different insurers have varying charge structures. Broadly


the different types
of fees and charges are given below. However the insurers have the right to
revise or cancel the fees and charges over a period of time
( Source:
http://www.scribd.com/doc/7044410/ULIPs)

Premium Allocation
charges
This is a percentage of the premium appropriated towards charges before
allocating the units under the policy. This charge normally includes
initial and renewal expenses apart from
commission
expenses.
Mortality Charges
These are charges to provide for the cost of insurance coverage under
the plan. Mortality charges depend on number of factors such as age,
amount of coverage, state of health etc.
Fund Management Charges
These are fees levied for management of the fund(s) and are deducted
before arriving at the
Net Asset Value (NAV) .
Policy/ Administration Charges
These are the fees for administration of the plan and levied by cancellation
of units. This could be flat throughout the policy term or vary at a pre-
determined rate

PREMIU
M

LESS
CHARGES

INVESTME LIFE COVER


NT
REPRESENTED AS
UNITS

Fund
ULIPs Manageme
Mortalit Structure nt Charges
y
Administrati
Charg
on
es
Charges

Premiu
m
Allocati
on Invested
Charges Amount
Figure 3 : Premium break -up under ULIPs
Surrender
Charges
A surrender charge may be deducted for premature partial or full
encashment of units wherever applicable, as mentioned in the policy
conditions.
Fund Switching
Charge
Generally a limited number of fund switches may be allowed each year
without charge, with subsequent switches, subject to a charge. But now a
days many insurers offer fund switching free of cost.
Service Tax
Deductions
Before allotment of the units the applicable service tax is deducted from
the risk portion of the premium.
TYPES OF FUNDS
UNDER ULIPs

Most insurers offer a wide range of funds to suit one’s investment


objectives, risk profile and time horizons. Different funds have different risk
profiles. The potential for returns also varies from fund to fund. The
following are some of the common types of funds available along with an
indication of their risk characteristics.

(Source:
www.irdaindia.org)

General description Nature of investments Risk


category
Equity Funds Primarily invested in Medium to High
company stocks with the
general aim of capital
appreciation.

Income, Fixed Invested in corporate Medium


Interest and bonds, government
Bond Funds securities and other fixed
income instruments.

Cash Funds Sometimes known as Low


Money Market Funds —
invested in cash, bank
deposits and money
market instruments

Balanced Funds Combining equity Medium


investment with fixed
interest instruments

Table 2: Types of funds


under ULIPs
ADVANTAGES OF
ULIPS

ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one stop solution for everything the customers
want. Unit Linked Insurance Plans (ULIPs) are different from traditional
plans purely because, they are much more transparent, various charges
are shared with the customer before the sale of the product, so as to
enable the customer to make an informed decision.
(Source:www.scribd.com/doc/7044410/ULIPs)

Customers have the flexibility to choose their life cover. Also the customers
have the choice of multiple fund options based on their risk appetite,
thereby enabling an investor to make the desired returns from the
investment.

The following are some of the advantages of Unit


linked plans:

a. Life protection
b. Investment and Savings
 Market linked fund based on risk profile
 Switch option
 Premium redirection
 Automatic Transfer Plan(ATP)
c. Tax Planning
d. Flexibility of cover
continuance e.
Transparency
f. Extra protection with riders
 Death due to accident
 Disability
 Critical
illness g.
Liquidity
 Partial withdrawals during the term
 At maturity
h. Variable investment
options i. Premium
holiday
j. Allow Top-ups
Insuranc
e+
Long Allow Top Ups
Term Investm
Wealth ent
Creation

Tax Riders
Benefits
ADVANTAGE
S OF
ULIPS

Guarante Transparency
ed
Capital
Returns

Flexibility Invest as
per your risk
appetite
Premiu
m
Holid
ay

Figure 4: Advantages of Unit Linked Insurance Plans

FACTORS INFLUENCING THE BUYING OF UNIT


LINKEDINSURANCE PLAN (ULIPs)

The degree of buying of ULIPs insurance varies from person to person. It


depends upon many factors. The factors can be classified into
personal, social, economic, psychological and company related variables.
Age and experience of policyholder are personal factors, while the co-
education is a social factor. Economic factors include occupation, income
and wealth, and the psychological factors consist of perception,
satisfaction about the services rendered by insurance companies, the
impact of advertisement and personal selling made by insurance
companies on policyholders. The company related variables are the
promotional efforts to sell
the policies to prospective buyers. These include advertisement and
personal selling too.
UNIT LINKED INSURANCE PLANS (ULIPs) OF
DIFFERENT COMPANIES

IDBI FORTIS LIFE INSURANCE


COMPANY

IDBI FORTIS different variety of schemes


and a good
range of ULIPs under the flagship banner Wealthsurance. There are a lot of
other ULIPs under Bondsurance, Homesurance and Retiresurance but as
our study is only confined to the study and comparative analysis of ULIPs
under Wealthsurance we would just be discussing about the various plans
under Wealthsurance. As discussed earlier the Wealthsurance Foundation
Plan enables the customer to save and build wealth to meet your financial
goals. However, unlike other investment alternatives, it also enables him to
achieve his wealth goals even in the event of unexpected death, accidents,
disablement or serious illness.

The Wealthsurance Foundation Plan can ensure that his plans for wealth
creation are achieved by protecting that plan with insurance benefits.
Wealthsurance is one of its kind in India. The company offer 11 investment
options and 8 protection benefits under the plan apart from tax benefits
(Source: www.idbifortis.com)
Under Wealthsurance there are a lot of different funds available which
are explained below:

WEALTHSUR
ANCE Min entry age 30 dys
Max entry age 65
yrs
Min premium

10000
Max maturity age 75
yrs
Riders ADBR,ADB,WOPR,MAJOR DISEASES
BENIFIT,HOSPITAL CASH BENEFIT,TERMINAL
ILLNESS BENEFIT
Min premium payment term
3
yrs
Types of funds EQUITY,NIFTY,Capital Guarantee,
Asset Allocator, GRF,MONTHLY INT
A/C,INCOME,LIQUID
As discussed earlier we would be comparing the Unit Linked Insurance
Plans (ULIPs) of the companies selected initially with those of IDBI FORTIS
and then make a detailed analysis. This analysis would be well supported
by the primary data analysis and then the final results would be interpreted
.So here first we would be listing out various ULIPs of the selected
companies and their details. After that we make a detailed comparison
with that of the plans under Wealthsurance of IDBI FORTIS and explain it.

So following are the details of ULIPs of various companies and the


comparative analyses.
COMPARITIVE SECONDARY DATA ANALYISIS

TATA AIG LIFE INSURANCE COMPANY

TATA AIG OFFERS FOUR DIFFERENT

TYES OF ULIPs a. INVEST ASSURE

CARE
b. INVEST ASSURE FLEXI
c. INVEST ASSURE II
d. INVEST ASSURE EXTRA

INVEST ASSURE CARE INVEST ASSURE


Min entry age 30 FLEXI
dys Max entry age 45 Min entry age 30
yrs Max Maturity age 65 dys Max entry age 70
Min premium yrs Max Maturity age 80
Min premium
12000
No of funds 5 15000
Riders No of funds 7
Riders
ADBR,CIBR Min premium payment
term NM ADBR,CIBR Min premium payment
term NM

INVEST ASSURE II INVEST ASSURE


Min entry age EXTRA
Min entry age
15,20,
30 yrs 15,20,
Max entry age 45 yrs 30 yrs
Max Maturity age 60 Max entry age 45 yrs
Min premium 12000 Max Maturity age 60
No of funds 5 Min premium 12000
Riders No of funds 4
Riders
ADBR,CI
BR, WOP ADBR,CIBR
Min premium payment term NM
Min premium payment term NM

ADBR-Accidental Death Benefit Rider, CIBR-Critical Illness Benefit Rider, NM-


Not Mentioned
(Source: www.tata-aig-life.com)
COMPARITIVE ANALYSIS

I. Through Wealthsurance a customer can


even invest
at the age of 65 where as in this
product if the customer is beyond 45
INVEST ASSURE years he will not be allowed to invest.
CARE II. Customer can keep his money invested till
the age of
75 years and take benefit of the market
performance whereas here the plan
matures at the age of 65.
III. In Wealthsurance Free partial withdrawal
starts after completion of 3 years where
IV. Wealthsurance has a Premium allocation
charge of
only 4% as against 50% allocation in this
product
INVEST ASSURE II V. Through Wealthsurance a customer can
even invest at the age of 65 where as
in this product if the customer is beyond
45 years he will not be allowed to invest.
VI. Customer can keep his money invested till
the age of
I. Wealthsurance has a Premium allocation
charge of only 4% as against 40%
allocation in this product
II. Through Wealthsurance a customer can
INVEST ASSURE even invest at the age of 65 where as
EXTRA in this product if the customer is beyond
45 years he will not be allowed to invest.
III. Customer can keep his money invested till
the age of
75 years and take benefit of the market
performance whereas here the plan
matures at the age of 60.
I. In Wealthsurance the Min Premium
amount is only Ten Thousand Rupees
in comparison to Fifteen Thousand
Rupees in this Product.
INVEST ASSURE II. Wealthsurance has a 4% allocation charge
FLEXI where as in this product the allocation
charge is 16%
III. Wealthsurance has different
riders/protection Basket to choose from
including Hospital cash benefit which gives
BAJAJ ALLIANZ LIFE INSURANCE COMPANY

BAJAJ ALLAINZ OFFERS FIVE TYES

OF ULIPs a. UNIT GAIN PLUS

GOLD
b. UNIT GAIN PREMIER
c. CENTURY PLUS
d. NEW UNIT GAIN PLUS
e. PENSION GUARANTEE

UNIT GAIN PLUS GOLD UNIT GAIN PREMIER


Min entry age 0 yrs Min entry age 0 yrs
Max entry age 60 Max entry age 60
yrs Max Maturity age 70 yrs Max Maturity age 70
yrs Min premium yrs Min premium

12000 50000
No of funds 6 No of funds 3
Riders 6(after Riders NM
18) Min premium payment term Min premium payment term
3 yrs 3
yrs

CENTURY PLUS NEW UNIT GAIN


Min entry age 8 yrs PLUS
Max entry age 60 Min entry age 0 yrs
yrs Max Maturity age 70 Max entry age 60
yrs Min premium yrs Max Maturity age 70
yrs Min premium
25000
No of funds 7 10000
Riders No of funds 7
Riders ADBR,WOP
ADBR CIBR,FIB,H
CB PDB
Min premium payment term 3 yrs
Min premium payment term 3
yrs

PENSION GUARANTEE se price


Min entry age 45 No of funds NM
yrs Max entry age 80 Riders NM Min
yrs Max Maturity age NA premium payment term NM
Min premium 25000-
purcha
ADBR-Accidental Death Family Income
Benefit Rider, CIBR- Benefit, HCB-Hospital
Critical Illness Benefit Cash Benefit,
Rider, PDB-Permanent Disability Benefit
NM-Not Mentioned,
WOP-Waiver of (Source: www.bajajallianz.com)
Premium, FIB-
COMPARITIVE ANALYSIS

I. Wealthsurance only has a allocation


charge of only
UNIT GAIN PLUS 4% in comparison to 15% in this product
GOLD II. Max Entry age in Wealthsurance is 65 as
against 60 of Unit Gain Gold Plus
III. Wealthsurance has an Min Entry Age of
0 Years
against this product where the entry age is
CENTURY 8 Years.
PLUS IV. Min Premium in Wealthsurance is only Ten
Thousand Rupees in comparison to
Twenty Five Thousand Rupees of this
product.
V. In Wealthsurance
I. Wealthsurance there
only has isa aallocation
choice of 5
NEW UNIT GAIN charge of only
PLUS 4% in comparison to 55% in this product
II. Max Entry age in Wealthsurance is 65 as
against 60 of Unit Gain Gold Plus
I. Min Premium in Wealthsurance is only Ten
Thousand
UNIT GAIN Rupees in comparison to Fifty Thousand
PREMIUM Rupees of this product.
II. Max Entry age in Wealthsurance is 65 as
against this product which has a cut of 60
years.
I. Wealthsurance can be customized for
retirement planning.
II. Customers can opt for a partial withdrawal
PENSION without any charges post 3 years from his
GUARANTEE fund value and use the money as pension.
There is no Tax/Charges on the money
withdrawn/taken as pension
LIFE INSURANCE CORPORTAION (LIC) OF INDIA

LIC OFFERS THREE DIFFERENT TYPES OF ULIPS

a. MARKET PLUS
b. PROFIT PLUS (RP & SP)
c. FORTUNE PLUS

MARKET PLUS PROFIT PLUS(RP&SP)


Min entry age 18 yrs Min entry age 0 yrs
Max entry age 70 yrs Max entry age 65 yrs
Max Maturity age 75 yrs Max Maturity age 70,75
Min premium 5000 yrs Min premium 1000
RP RP
10000 SP 20000 SP
No of funds 4 No of funds 4
Riders Riders

ADBR Min premium payment ADBR,CIBR Min premium payment


term 5 term 3 yrs
yrs

FORTUNE
PLUS
Min entry age 12
yrs Max entry age 60
yrs Max Maturity age 65
yrs Min premium

20000
No of funds 4
Riders

ADBR Min premium payment


term 5 yrs

ADBR-Accidental Death Benefit Rider, CIBR-Critical


Illness Benefit Rider

(Source:
www.licindia.com)
COMPARITIVE ANALYSIS

I. Premium allocation charge is 16.5% in


this product
where as Wealthsurance has a charge of
Max 4%.
MARKET PLUS II. In Wealthsurance there is unlimited
switching redirection and partial
withdrawal allowed absolutely free of
charge.
III. There are no riders available in this
product as against Wealthsurance has a
host of riders to choose from.
IV. After 3 years we can go for
I. Premium allocation charge is 15% min in
this product
PROFIT PLUS (RP & where as Wealthsurance has a charge of
SP) Max 4%.
II. In Wealthsurance there is
unlimited switching redirection and
partial withdrawal allowed absolutely free
of charge.
III. There are no riders available in this
product as against Wealthsurance has a
I. Min Entry age in Wealthsurance is 0 years
as against in this product it is 12 years
FORTUNE PLUS II. Max entry age in Wealthsurance is 65
years as
against in this product it is 60 years only.
HDFC STANDARD LIFE INSURANCE COMPANY

HDFC STANDARD LIFE OFEERS FOUR DIFFERENT

TYPES OF ULIPs a. ENDOWMENT PLUS II


b. ENHANCED LIFE PROTECTION II
c. UNIT LINKED PENSION RP
d. UNIT LINKED PENSION SP

ENDOWMENT ENHANCED
PLUS II LIFE
PROTECTIO
Min entry age 18 N II
Max entry age 65 Min entry age 18
Max Maturity age 75 Max entry age 45
Min premium 12000 Max Maturity age 75
No of funds 7 Min premium 12000
Riders No of funds 7
Riders NO
ADBR,CIBR Min premium payment Min premium payment term
term TERM
TERM

UNIT LINKED UNIT LINKED


PENSION RP PENSION SP
Min entry age 18 Min entry age 18
Max entry age 65 Max entry age 70
Max Maturity age 75 Max Maturity age 75
Min premium Min premium NM
No of funds 7
12000 Riders NO
No of funds 7 Min premium payment term
Riders NO
Min premium payment term TERM

TERM

ADBR-Accidental Death Benefit Rider, CIBR-Critical


Illness Benefit Rider

(www.hdfcstandardlife.
co m )
COMPARATIVE ANALYSIS

I. Min Entry age in Wealthsurance is 0


years as
against in this product it is 18 years
ENOWMENT PLUS II II. Premium allocation charge is 40% in
this product where as Wealthsurance has
a charge of Max 4%.
III.
IV. Min Premium
Min Entry age in Wealthsurance isis 0
in Wealthsurance
years as
against in this product it is 18 years
V. Premium allocation charge is 40% in
ENHANCED LIFE this product where as Wealthsurance has
PROTECTION a charge of Max 4%.
II VI. Min Premium in Wealthsurance is
10000 as against this product.
Max entry age in this product is
only 45 yearswhere as in
Wealthsurance it is 65 years
VII. In Wealthsurance after 3 years
I. There are no rider available in this
product as
against Wealthsurance has a host of
riders to choose from.
II. Allocation charge of 25% on this
UNIT LINKED PENSION product and
RP Wealthsurance has a 4% charge.
III. Annuity is taxable where as all the
funds in Wealthsurance is tax free.
Wealthsurance can be customized to be
a tax free retirement plan.
IV. Post 3 years customers can also do
unlimited partial withdrawal whenever
there is a need for money without being
I. There is no rider available in this
product as against Wealthsurance has
UNIT LINKED PENSION a host of riders to choose from.
SP II. Allocation charge of 6% on this
product and
Wealthsurance has a 4% charge.
III. Post 3 years customers can also do
unlimited partial withdrawal whenever
there is a need for money without being
charged or taxed.
IV. Min Premium in Wealthsurance is
ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI PRUDENTIAL OFFERS ELEVEN DIFFERENT

TYPES OF ULIPs a. LIFE TIME GOLD


b. LIFE LINK SUPER
c. PREMIER LIFE GOLD
d. LIFE TIME PLUS
e. LIFE STAGE
f. SMART KID CHILD PLAN
g. LIFE TIME SUPER PENSION
h. LIFE STAGE RP PRNSION
i. LIFE STAGE RP
j. LIFE STAGE ASSURE
k. INVEST SHEILD LIFE NEW

LIFE TIME GOLD LIFE LINK SUPER


Min entry age 0 Min entry age 0
Max entry age 65 Max entry age 65
Max Maturity age 75 Max Maturity age 70
Min premium 20000 Min premium 50000
No of funds 7 No of funds 7
Riders Riders NO

ADBR,CI Min premium payment term SP


BR, WOP
Min premium payment term 3 yrs

PREMIER LIFE LIFE TIME


GOLD PLUS
Min entry age 0 Min entry age 0
Max entry age 65,69 Max entry age 65
Max Maturity age 75 Max Maturity age 75
Min premium 10000 Min premium 20000
No of funds 7 No of funds 7
Riders Riders
ADBR,CI ADBR,CIBR
BR
WORP Min premium payment term 3 yrs
Min premium payment term 3,5
yrs
LIFE SMART KID CHILD
STAGE PLAN
Min entry age 0 Min entry age 0
Max entry age 65 Max entry age 15
Max Maturity age 75 Max Maturity age 25
Min premium 15000 Min premium 12000
No of funds 7 No of funds 7
Riders Riders

ADBR,CIBR ADBR,CI
BR WOP
Min premium payment term LIFE Min premium payment term 3 yrs
BASED

LIFE TIME SUPER PENSION LIFE STAGE RP


Min entry age 18 PENSION
Max entry age 65 Min entry age 18
Max Maturity age 45 yrs Max entry age 70
vesting Max Maturity age 50-80 yrs
age Vesting age
Min premium 15000 Min premium 15000
No of funds 7 No of funds 6
Riders Riders NO
Min premium payment term
ADBR,CIBR Min premium payment 3
term 3 yrs yrs

LIFE STAGE LIFE STAGE


RP ASSURE
Min entry age 0 Min entry age 0
Max entry age MAX Max entry age 65
TERM
75 Max Maturity age 75
Max Maturity age 75 Min premium 10000
Min premium 15000 No of funds 7
No of funds 6 Riders
Riders
ADBR,CIBR Min premium payment
ADBR,CIBR Min premium payment term 3 yrs
term 3 yrs

INVEST SHIELD LIFE Max entry age 65


NEW Max Maturity age 75
Min entry age 0 Min premium 12000
No of funds 6
Riders NM
Min premium payment term ADBR-Accidental Death
3 Benefit Rider, CIBR-Critical
yrs Illness Benefit Rider,
NM-Not Mentioned,
WOP-Waiver of Premium
SP-Single Premium

(Source: www.iciciprulife.com)
COMPARATIVE ANALYSIS

I. Premium allocation charge is premium


based in this product where as
Wealthsurance has a charge of Max
LIFE TIME GOLD 4% and with higher premium the
allocation charge decreases.
II. Min Premium in Wealthsurance is only
Rs.10000 as against in this product it is
20000
III. In Wealthsurance there is unlimited
switching redirection and partial
I. Premium allocation charge is 20% in
this product
where as Wealthsurance has a charge of
LIFE LINK SUPER Max 4%.
II. Min Premium in Wealthsurance is only
Rs.10000 as against in this product it is
20000
III. I. InPremium
Wealthsurance there is 12%
allocation charge is in
this product
where as Wealthsurance has a charge
PREMIER LIFE of Max 4%
GOLD II. There are no riders available in this
product as against Wealthsurance has a
host of riders to choose from.
III. In Wealthsurance there is
unlimited switching redirection
I. Premium allocation charge is 25% in and
this product
where as Wealthsurance has a charge of
LIFE TIME PLUS Max 4%.
II. Min Premium in Wealthsurance is only
Rs.10000 as against in this product it is
20000
III.
I. In Wealthsurance
Premium there is 25%
allocation charge is in
this product where as Wealthsurance has
a charge of Max 4%.
II. Min Premium in Wealthsurance is only
Rs.10000 as
LIFE STAGE RP against in this product it is 20000
III. In Wealthsurance there is
unlimited switching redirection and
partial withdrawal allowed absolutely free
of charge.
IV. There are only 2 riders available in this
I. Premium allocation charge is 25% in
this product
where as Wealthsurance has a charge of
Max 4%.
LIFE STAGE II. Min Premium in Wealthsurance is only
Rs.10000 as against in this product it is
20000
III. In Wealthsurance there is
unlimited switching
redirection and partial withdrawal allowed
I. absolutely
Premium free of charge.
allocation charge is 20% in
this product
where as Wealthsurance has a charge of
SMART KID CHILD Max 4%.
PLAN II. Min Premium in Wealthsurance is only
Rs.10000 as against in this product it is
12000
I. III. Wealthsurance
Premium payable can
in be beautifully
this product is
Rs.75000 as against in Wealthsurance it is
only Rs.10000
II. There are only two rider available in this
product as against Wealthsurance has a
host of riders to choose from.
LIFE TIME III. Allocation charge of 20% on this
SUPER product and
PENSION Wealthsurance has a 4% charge.
IV. Annuity is taxable where as all the
funds in Wealthsurance is tax free.
Wealthsurance can be customized to be a
tax free retirement plan. 4. Post 3 years
customers can also do unlimited
partial withdrawal whenever there is a
I. Premium payable in this product is
Rs.15000 as
against in Wealthsurance it is only
Rs.10000
II. There are only two rider available in this
LIFE STAGE PR product as against Wealthsurance has a
PENSION host of riders to choose from.
III. Annuity is taxable where as all the
funds in Wealthsurance is tax free.
Wealthsurance can be customized to be a
tax free retirement plan.
IV. Post 3 years customers can also do
unlimited partial
I. In Wealthsurance partial withdrawals are
allowed
right after 3 years where as in this
product the customer cannot touch his
funds till 7th year.
LIFE STAGE II. First year premium is utilized towards
ASSURE Guaranteed additions and returned on
maturity as a Guarantee.
III. If you surrender the policy the GA
component is not given to the customer
and only the FV which gets accumulated
from 2nd premium is returned after
deducting surrender charges, where as in
IV. Premium allocation charge is 20% in
this product
where as Wealthsurance has a charge of
Max 4%.
V. Min Premium in Wealthsurance is only
INVEST SHEILD Rs.10000 as against in this product it is
LIFE NEW 20000
VI. In Wealthsurance there is
unlimited switching redirection and
partial withdrawal allowed absolutely free
of charge.
VII. There are only 2 riders available in this
product as against Wealthsurance has a
host of riders to choose from.

IDBI FORTIS is a new company with over just over one year of operations
and so we have very less information about its past performance.
Therefore not many negatives can be found with the company in regard to
the Unit Linked Insurance Plans. Some general demerits with regard to the
distribution network and marketing strategies have been mentioned after
the analysis of the primary data.

As a part of this comparative analysis we have also compared the


performance of ULIPs of a selected fund since the last one year (as the
data of IDBI FORTIS is limited only to the last one year). The comparison
has been carried out in the next page.
PERFORMANCE OF ULIPs OF THE SELECTED
COMPANIES

Here in order to compare the performances of the ULIPs of the selected


five companies with that of IDBI FORTIS we have selected a particular type
of fund called equity growth funds. The reason for selecting equity growth
fund is that we would be very clearly able to understand the effect of
market slowdown on these companies. Here we have considered the Net
st
asset Values (NAV) of the equity growth funds from April 1 2008 to April
th
30 2009.We have then compared the compared the maximum and
minimum NAVs during the period and found out the percentage
change for the NAVs observed for the equity funds of the respective
selected companies selected companies.
st
We have calculated the average NAV for every month (from April 1 2008 to
th
April 30 2009) for all the companies and then plotted them on graphs. We
have then found out the extent to which each company was affected due
to the market slowdown. We have also taken into consideration the latest
NAVs of these companies to see the pattern of growth of these funds post
recession. The percentage change (negative) in the Net Asset value for all
the companies has been calculated below and we observe that LIC was the
least affected among the selected companies with only a percentage
change of only -23.38% which is quite low compared to
-43.84% of that of Bajaj
Allianz.

IDBI Fortis has shown a percentage change of -38.95%.But since IDBI Fortis
is a new company which was started just a year back we can say that it
has managed quite well and right now it
is showing a quite good and positive growth as we can see from
its present NAV.

Month NA
Apr- V8.409
08
May- 9
7.712
HDFC STANDARD LIFE
08
Jun- 4
7.537 9
08Jul- 4
8.179 8
08 7 7
Aug- 7.963 6
08
Sep- 2
5.974 5
NA

08 0 4
V

Oct- 5.796
3
08
Nov- 8
5.670 2
08
Dec- 6
5.510 1
0
08
Jan- 0
5.447
Aug-
May-

Nov-

Mar-
Jul-

09 9
Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
Jun-

Feb- 5.151
08

08

09
08

09
08

08
08

09
08

09
08

09
Mar- 6
6.159
09
Apr- 7
6.464
MONTH

Table 3 & Figure 5: NAVs of HDFC


Standard Life
(Source:
wwww.hdfcstandardlife.com)
Month NA
Apr- V
8.409
08
May- 9
7.712 BAJAJ ALLIANZ
08
Jun- 4
7.537 30
08
Jul- 4
8.179 25
08
Aug- 7
7.963 20
08
Sep- 2
5.974

NA
15

V
08
Oct- 0
5.796 10
08
Nov- 8
5.670 5
08
Dec- 6
5.510 0
08
Jan- 0
5.447

Aug-
May-

Nov-

Mar-
Jul-

Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
09 9 Jun-

08

08

09
08
Feb- 5.151

09
08

08
08

09
08

09
08
09
Mar- 6
6.159
09 7 MONTH
Apr- 6.464
09 6
Table 4 & Figure 6: NAVs of
Bajaj Allianz
(Source:
www.bajajallianz.com)

Month NA
Apr- V
56.350
08
May- 0
56.605 ICICI PRUDENTIAL
08
Jun- 0
48.925 60
08
Jul- 0
48.870 50
08
Aug- 0
51.445 40
08
Sep- 0
49.145
NA

30
V

08
Oct- 0
39.445 20
08
Nov- 0
35.685 10
08
Dec- 0
36.400 0
08
Jan- 0
34.845
Aug-
May-

Nov-

Mar-
Jul-

Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
Jun-

08

08

09 0
09
08

Feb- 34.265
09
08

08
08

09
09
08

08

09
Mar- 0
33.405
09 0 MONTH
Apr- 39.915
09 0
Table 5 & Figure 7: NAVs of
Bajaj Allianz
(Source:
www.iciciprulife.com)
Mont NA
h
Apr- V
12.240
08
May- 0
12.173 LIC
14
08
Jun- 5
11.058
12
08
Jul- 5
11.029
10
08
Aug- 0
11.495 8
08 0

NA
Sep- 11.115 6

V
08
Oct- 59.550
4
08
Nov- 5
9.377 2
08
Dec- 5
9.616 0
08
Jan- 5
9.613

Aug-
May-

Nov-

Mar-
Jul-

Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
Jun-

08

08

09
08
09
Feb- 0
9.539

09
08

08
08

09
08

09
08
09
Mar- 5
9.476
09 5 MONTH
Apr- 10.571
09 5
Table 6 & Figure 8:
NAVs of LIC
(Source:
www.licindia.com)

Mont NA
h
Apr- V
10.583
08
May- 8
10.499 IDBI FORTIS
08
Jun- 19.176 12
08
Jul- 5
9.344 10
08
Aug- 8
9.818 8
08 3
NA

Sep- 9.091 6
V

08
Oct- 5
7.078 4
08
Nov- 5
6.902 2
08
Dec- 8
6.915 0
08
Jan- 1
6.686
Aug-
May-

Nov-

Mar-
Jul-

Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
Jun-

08

08

09
08

09 1
09
08

08
08

09
08

09
08

Feb- 6.532
09
Mar- 8
6.460
MONTH
09
Apr- 5
7.774
09 6
Table 7 & Figure 9: NAVs of
IDBI FORTIS
(Source:
www.idbifortis.com)
Month NA
Apr- V
13.479
08 0 TATA-AIG
May- 13.346 16
08
Jun- 0
11.980 14
08
Jul- 5
11.912 12
08
Aug- 5
12.324 10
8

NA
08
Sep- 0
11.797

V
6
08
Oct- 5
10.129 4
08
Nov- 09.840 2
08
Dec- 0
9.914 0
08
Jan- 0
9.800

Aug-
May-

Nov-

Mar-
Jul-

Sep-

Dec-
08

Feb-
Oct-
Apr-

Apr-
Jan-
Jun-

08

08

09
08

09
08
09 0

08
08

09
09
08

08
Feb- 9.667
09
Mar- 5
9.417 MONTH
09
Apr- 5
10.734
09 0
Table 8 & Figure 10: NAVs of TATA AIG
(Source: www.tata-aig-life.com )

COMPANY %
BAJAJ ALLIANZ CHANGE
-
HDFC STANDARD 43.84%
-
LIFE
ICICI 38.74%
-
PRUDENTIAL
IDBI FORTIS 40.98%
-
LIC 38.95%
-
TATA AIG 23.38%
-
30.13%

PERCENTAGE (% )
CHANGE

TATA
ALLIANZ
AI

LI

IDBI FORTIS

ICICI

PRUDENTIAL

HDFC STANDARD

LIFE BAJAJ
-30.13%
-40.98%
-23.38%
-38.74%
-38.95%
-43.84%

Table 9 & Figure 11: Percentage changes in NAVs of various


companies due to recession
PRIMARY DATA
ANALYSIS

We have done a detailed survey in Hyderabad city to understand and


study the consumer’s responses. The primary data was collected through
questionnaires. This questionnaire was mainly formulated to target the
common man to see his perception and awareness of various investment
options available. The sample size of the survey was 133.Out of these 89
were male and 45 were female. The sample of respondents was carefully
selected covering people in all age groups and with different
backgrounds and occupations. The analysis of these questionnaires
gives us an insight about the mindset of people regarding various
investments. We have also used factor analysis in SPSS to extract the
prominent factors influencing the investments decisions of the customers
.Customer preferences as to where they would like to invest have been
studied . Also we come to know about the preferences given by customers
towards various top life insurance companies and their reasons for it. Here
we see that most of the customers invest regularly from quite some
time but since the last few months their investments have come down
due to recession and market slowdown. Following is the analysis of the
primary data collected through questionnaires. (Please refer to annexure I)

The sample included respondents from all the age groups out of which
people in the age group
18-40 constituted
around 70%.

50
45
40
REPONDENTS

35
30
25
20
NO. OF

15
10
5
0
18-30 31-40 41-50
>50

AGE
GROUP

Figure 12: Break-up of respondents between


different age groups
The sample of respondents was heterogeneous with people of various
occupations right from government service to ones who were self
employed. Out of these people who were working in
private companies constituted round 65%.
80%

60%

PERCENTAGE OF 40%
RESPONDENTS
20%

0%

OCCUPATI
ON

Figure 13: Break-up of respondents by their occupations

Also the customers’ preferences for different forms of savings have been
carefully studied. The main savings instruments generally preferred by
customers are bank deposits, fixed deposits, investments and post office
schemes. Out of these Investments has been preferred by around
43% respondents and fixed deposits by
around 27%.

PREFERENCE OF
SAVINGS

6%
12
Bank Deposits
12% %
Fixed Deposits

Investments
27%
Post Office Schemes

Others
43%

Figure 14: Break-up of respondents based on their preferences for


various savings instruments
When we talk about making investment decisions around 45% respondents
considered their
own decision and another 40% respondents considered their family’s
opinion before making
any important investment decision.

50%

40%
PERCENTAGE OF
RESPONDENTS

30%

20%

10%

0%
Family's Friend' Broker' Own Any
Opinion s s Decisio Other
Advic Advic n s
e e
DECISION
MAKING

Figure 15: Break-up of respondents based on factors


influencing their decision

The various forms of investments generally preferred by customers have


been identified as mutual funds, stocks and shares, insurance products
and government bonds. Out of these
around 35% preferred stocks and shares and around 20% preferred
insurance products.

FORMS OF
INVESTMENT
35%

29%

20%

13%

5%

Mutua l fun
Stocks and
Shares Insuranc Produc Govt Bonds Others
e ts

Figure 16: Break-up of respondents based on preferences for various


forms of investment
The main reason for people to invest in the insurance products was
that they had the advantage of both life cover and tax benefits apart from
other normal benefits.

Talking about the frequency of investment around 45 respondents


preferred investing once a year and another 25% preferred investing 2-3
times a year. It was also noticed that greater majority of respondents
owned an insurance policy. Only 11% of the respondents did not own
an insurance
policy.

FREQUENCY OF
INVESTMNET

1% Once a year
14%
2-3 Times a year
15% 45
% More than 3 Times a year

25% Not Investing (No Idea)

Not Interested

Figure 17: Break-down of respondents based on their frequencies of


investment

OWN AN INSURANCE
POLICY

89
%

11
%

Yes No
Figure 18: Break-down of respondents who own/do not own an
insurance policy
Unit Linked
Insurance Plans

39%

28%
23%

6%
4%

High risk Low risk They No idea


are
Moderate safe
risk

Figure 19: Break-down of respondents who rated risk involved in


ULIPs

LIC
1% ICICI Prudential
2%
2% IDBI Fortis
5%
Bajaj Allianz
7% 3%
HDFC Standard Life

13% 63 SBI Life


% Max New
York Birla
Sunlife Kotak
Mahindra
Others

Figure 20: Break-down of respondents who own insurance policies in various


life insurance companies

Around 63% respondents felt that there was an amount of moderate to


high risk involved with ULIPs. Around 63% of the respondents owned an
insurance policy in LIC which clearly shows that LIC still continues to be the
market leader in as it has been since the last 50 years or so in spite of the
presence various powerful private players which are still finding hard to
capture a
major market share. Around 13%b respondents chose
ICICI Prudential.
Following is the rating (from 1-5, 1-bad, 5-best) given by respondents to
the five selected life insurance companies. Here we can clearly see that LIC
has the best rating. The reasons given by the respondents were that LIC
was a public sector company which is well established and has got loads of
experience

1 2 3 4 5

BAJAJ ALLIANZ

HDFC STANDARD LIFE

ICICI PRUDENTIAL

IDBI FORTIS

LIC

TATA-AIG

Figure 21: Rating scale selected insurance companies

w WEALTHSURANCE

No idea 29%

All the 42%

above A finacial security and 16%

risk coverage A savings plan 10%


with good returns
3%
Tax saving plan

0% 20% 40% 60%

Figure 22: Break-down of respondents with different perceptions about the


term “WEALTHSURANCE”
71%

26
%
3%

IDBI Fortis is It has a long Don't know


one of way to
the go
best

Figure 23: Break-down respondents with various responses about the


future of IDBI Fortis

Many people responded that they have no idea about IDBI Fortis or its
various products under the umbrella “wealthsurance”.That is true as it is a
new company it has a long way to go as responded by around 26% of the
respondents.

This could be due to the fact that IDBI FORTIS has a limited presence and it
has just started its operations just more than a year ago.

We also have found out the age played an important role in deciding the
investing patterns of the respondents .It was found out that people who
were generally in between 18-30 had a higher tendency to invest quite
frequently in a year. The following table and the figure below
show us the
results.

Age No of % Average Frequency of


investments per
Respondent
s yea
18-30 49 36.84 2.1052631
% 58
30-50 70 52.63% 1.537313433
>50 14 10.52 1.4615384
% 62
133 100%

Table 10: Average frequency of investments among different age


groups
2.5
2.1
2 0
1.5
1.5
FREQUE 3
1.4 Average
6
NCY
1 Frequency of
investments
0.5 per year

0
18-30(young) 30-50(middle)

>50(old)
AG
E

Figure 24: Average frequency of investments among


different age groups

In order to find the relationship between the age of the respondents and
their investment patterns, a chi-square test for independence of attributes
was used and results of the test is
shown in the following table:

Factor Calculated Tabulated DF Significance


χ2 χ2
AGE valu
2.801856 valu
7.814728 3 Significant at 5%
level
of
Table 11: Age and Frequency of investment (Chi-Square table)

It is noted from the above table that the calculated Chi-square value is less
than the table value and the result is significant at 5% level. Hence, the null
hypothesis “the age of the respondents and frequency of investment” holds
good. From the above analysis it is concluded that there is a close
relationship between the age of the respondents and their investment
patterns

We have also used factor analysis in SPSS (Statistical Package in Social


Sciences) extract most prominent factors that considered by a consumer
before making an investment decision. We had initially considered 28
factors which can influence a consumer’s investment decision and we have
asked the customers to rate them according to their importance in the
questionnaire
(Refer to
annexure I).
So through the factor analysis the number of factors extracted was 9.KMO
(Kaiser-Meyer-Olkin Measure of Sampling Adequacy) and Bartlett’s test of
sphericity were used and for extraction principle component method had
been used. About 75.68% of the information has been extracted
through this test which shows that the results are reliable. The output of
the factor analysis has been included in the annexure. (Refer to annexure
II).

Also we can see from below that the KMO coefficient is 0.702. The
coefficient always lies between 0 and 1 and the requirement is that it
should not be less than 0.50. So here we can say
this is a good
test.

Kaiser-Meyer-Olkin Measure of Sampling .702


Adequacy.
Bartlett’s test of Sphericity :

Approx Chi-Square 1363.09


6
DF 378

Si .000
g
Table 12: KMO and Bartlett’s test of sphericity

So following are the nine extracted prominent factors that influence


the consumer while making an investment decision:

1. Rate of return
2 .Death benefits and lock in period
3. Present market scenario and tax benefits
4. Past performance of the company
5. Flexible investment options and the risk involved
6. Amount payable and the after investment service
7. Opinion of media, friends and acquaintances
8. Level of knowledge about investment
9 .Commercials associated with investments

Table 13: The prominent factors influencing the consumer’s


investment decision
ANNEXURE - I (QUESTIONNAIRE)

QUESTIONNAIRE

(This questionnaire is only of the sake of some research work being done on insurance
companies. Confidentiality would be maintained.)

Name :

Gender : Male Female Contact no :

Age Group:

18-30 31-40 41-50 >50

Qualification:
th th
Post Graduate Graduate 12 < 12

Occupation:

Government Service Businessman Private Company

Self Employed Any Other (Please specify)

Your income range (per annum):

Below 150000 150000-250000 250000-350000

350000-450000 More than 450000

Your savings per year:

Below 10000 10000-25000 25000-50000

50000-100000 More than 100000

You would prefer savings in which form?

Bank deposits Fixed deposits Investments

Post Office schemes Any other (please specify)

What do you consider while making an investment decision?

Family’s opinion Friends advice Broker’s advice

Your own decision Any other (please specify)


Your opinion about investment:

Tax Saving Good returns Better future after retirement

Wealth creation Any other (please specify)

Preferably you would like to invest in:

Mutual funds Stocks and shares Insurance products

Govt. Bonds & securities Any other (please specify)

How frequently do you invest?

Once a year 2-3 times a year More than 3 times a year

Not investing (no idea) Not interested

Do you agree that Insurance products are susceptible to very low risk when compared to the
other options for investment?

Yes No Don’t know

What do you understand by the term “Wealthsurance”?

A tax savings plan A savings plan with good returns

A financial security and risk coverage for your family All the above

I have no idea

Name three insurance companies that come to your mind:

1.
2.
3.

Do you own an insurance policy?

Yes No

If yes in which company?

According to you what is the amount of risk involved in (ULIPs) Unit Linked Investment Plans?

High risk Moderate risk Low risk

They are Safe No Idea


Rate the following insurance companies (on a scale of 1-5):

Company Rating
IDBI FORTIS
ICICI Prudential
Life Insurance Corporation of India
Bajaj Allianz
Max NewYork Life Insurance
Tata AIG Life

According to you which is the best insurance company and why?

Please rate between 1-5 for all the following factors depending on thier effectiveness in
influencing you to make an investment decision.

1- If the factor has no effect on your preference for the investment option

2- If the factor has only a slight affect on your preference for investment option

3- If the factor affects your preference for an investment option

4- If the factor will strongly affect your preference for the investment option

5- If the factor will be decisive in your preference for the investment option

Particulars Rating
Rate of return( The amount which you get in return)
Extra returns for extra investments
Returns constant in all conditions (No opportunity for multiple returns)
Can give huge returns but high risk ( no guarantee of even min returns)
Tax benefits
Lock in period (Money cannot be withdrawn before a specific period)
Death benefits( Benefits upon your inadvertent death)
Compulsory investment (Mandatory for you to save a specific amount every
year making you get greater amount at maturity date, e.g. Regular premium in
insurance )
Transmission ( The investment option gets transferred to your nominee in case
of any eventuality for example death)
Amount payable can be adjusted later
Amount payable ( Amount that you have to pay for investing)
Amount of charges( Amount deducted for maintenance of your investment etc)
Level of knowledge about an investment option in particular
General level of knowledge about investment options
Level of knowledge to be developed once you start investing
After investment service( Level of advice you get when needed)
Renewal procedure( in case of any discontinuity in payment)
Time to be spent in future
Regulatory authority
Past history& performance of that investment option
Market scenario
Opinion of friends & acquaintances
Opinion of Media
Commercials associated with an investment option
Your past experience in investments.
Political factors( Government policies)
Investment option caters to my group (Retired employees, etc)
Other factors( Known person working in that sector etc)

--------------THANK YOU SO MUCH FOR YOUR VALUABLE TIME---------------

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