A

PROJECT REPORT
ON
“Organization study & study of problem related to
Recruitment, Training & Motivation level of Emloyees”

In the partial fulfillment of the

Master of Business Administration Program

2010-2011

Undertaken at

HDFC Standard Life Insurance

ADVENT INSTITUTE OF MANAGEMENT STUDIES

UDAIPUR

(Affiliated to Rajasthan Technical University, Kota)

SUPERVISED TO: SUBMITTED BY:

Dr. Dipin Mathur Bharti Tank

1
 MBA lIIrd Semester

CERTIFICATE

TO WHOM SOEVER IT MAY CONCERN

This is to certify that Miss Bharti Tank student of MBA III-sem , Advent
institute of management studies , Udaipur has successfully undergone
the training on “Organization study & study of problem related to
recruitment, training &motivation level of employees” in our
organization for the period from 25thJune to 9th Aug,2010.

During the tenure of training, we found him sincere and hardworking.

We wish him every success for his bright future career.

Manoj Tailor

Branch Manager

HDFC SLIC

Udaipur

2
 PREFACE

Man has found out himself many things to make himself and his near dear ones happy.
Insurance is one such invention of man. Insurance is many splendid things. It is not
just the reluctant entry and the periodical reminders for paying the premium and the
last receipt of the claim money which may look large or a mere pittance depending upon
whether the policy was in force earning handsome bonus or had been languishing in
a state of suspended animation. insurance is a wonderful world of mortality rates,
utmost good faith, medical examinations with ECG and treadmill exercises, bonuses
and no claim discounts and a host of other science and arts which the insurance people
learn in order to provide what they call financial security and peace of mind which no
other invention of man can match.
In this project I try to show the performance of the various funds of the HDFC
standard life insurance company limited. In the first chapter of this project I have focus
on the introduction, history, needs, importance of the insurance and along with this I also
focus on the insurance industry in the India. In the second chapter I have focus on the
insurance players in India and types of the plans.
In the third chapter of this project I have discuss on the various research
methodologies and objectives of this study and the limitation of the study.
In the fourth chapter of the project give introduction about the HDFC standard life
insurance company limited and it’s vision, mission and value. It focuses on various ULIP
plans. In the fifth chapter I have focused that how to design a Unit linked plan and types
of the unit linked plans.
The sixth chapter is very important because this chapter is the main part of my
study in this chapter I have show the performance of the various funds of the HDFC
standard life insurance company. what is the current position of the fund in market and
what is the current rate of return of the fund all this shows by the various charts and data
and the last chapter is related to the conclusion of this project.
The following research work takes a look on such persuasion of the insurance
companies and the way they deal with people regarding the support of life in old age-
3
 The Pension Plans.

ACKNOWLEDGEMENTS

I wo uld like to thank Dr. Dipin Mathur for supporting me during this
project and provid ing me an oppo rtunity to lea rn outside the cl ass
room. It was a truly wonderful lea rning exper ience.

I would like to thank Mr.Ravi Khabya Head of the department for providing me this
opportunity to work on this project.

I wo uld like to thank my project g uide M r. B.K. Panda, Sa les De velopment

Manager HDFC Standa rd Life Insu rance, Vinimay commercial
complex udaiapole,Udaipur for guiding me through my summer
inte rns hip and resea rch p roject. His encou ragem ent, time and effort
are greatly app reciated. I wish to extend my sincere gratitude to the branch
manager of HDFC SLIC, Vinimay commercial complex udaiapole,
Udaipur Mr. Praveen jha for his insight.

I extend my sincere thanks to Director Prof. N.S Rao and I would also like to thank
the supporting staff of ADVENT INSTITUTE OF MANAGEMENT STUDIES, for their
help and co-operation throughout my project.

I wo uld like to dedicate this project to my pa rents. Without their help

and constant support this project would not have been possible.

Lastly I would like to thank all my friends for their help in completion this project
and the respondents who off ered their opi nions and sug gestions
through the survey that was conducted by me in U d a i pur.
Thanking You

Bharti tank
4
 DECLARATION

I hereby declare that this project work “Organization

study & study of problem related to Recruitment, Training &
Motivation level of Employees” has been carried out by me in partial
fulfillment of “Master of Business administration”(MBA) is an own
record carried out by me under the supervision of Mr. Dipin
Mathur, Project Head.

I also declare that this project is originally prepared by me and not

been submitted to any University for the award of any degree.

Place: Udaipur

Date:

Signature
Bharti Tank

5
 EXECUTIVE SUMMARY

HDFC Standard Life Insurance is the oldest life insurance company in the world. It is the

th
largest insurer of U.K. and is 28 largest company of the world. In India, the company is
dealing in the marketing of life insurance products and unit linked investment plans. The
company faces competition from all private players in insurance industry but its major
competitor is ICICI Prudential Life Insurance Company Limited.

To compete with its rival HDFC SLIC have to come up with products at cheaper prices
with the same kind of services which they are providing to their esteem customers. They
can try to increase their market share by coming up with the products which are of short
term period and with small premium.

HDFC SLIC has now being started to advertise on different media as its competitors do.
But the drawback which I feel is that they are focusing on few of their popular products
only. Till date Indian customer has a false perception about the insurance – they feel that
it would benefit them if they do not live through the policy term. Family responsibilities and
high returns are the two main reasons for the people to invest in insurance. Optimum
return of 15-20% must be provided to consumers to keep them interested in purchasing
insurance.

On the whole HDFC SLIC is a good place to work at. Every new recruit is provided with
extensive training on unit linked funds and product of HDFC SLIC. With an improvement
in the sales techniques used, a fair bit of advertising and modifications to the existing
product portfolio. HDFC is set to capture the insurance market in India as it has around
the globe.

6
 Content

Acknowledgement
Declaration
Certificate
Preface
Executive summary

Chapter Page No.

CHAPTER 1 :-
Introduction of insurance 8
Role of insurance 10
Classification of insurance 11
History of life insurance business 12
Needs of life insurance 12
Benefits of life insurance 13
Role of life insurance 15
Law and regulations 17
Insurance industry in India 21
What is human life value 25
What is contract of insurance 26

CHAPTER 2 :-
The insurance player 28
Types of plan 31

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CHAPTER 3 :-
Research methodology 33
Objectives of research 34
Data collection 34
Techniques used in this study 37
Sources of data 37
Objectives of the study 38
Limitation of the study 38

CHAPTER 4 :-
Organizational profile 40
Why HDFC standard life 46
Vision, mission, values 47

CHPTER 5 :-
Product portfolio 51
Introduction to unit linked product 54
Benefits of unit linked plan 56
Design of a unit linked plan 60
Types of unit linked plan 63

CHAPTER 6 :-
Introduction of fund 80
Performance Statistics 87
Individual pension portfolio

CHAPTER 7 :-
Conclusion
Recommendation
Appendix
Bibliography
8
 INTRODUCTION OF INSURANCE

WHAT IS INSURANCE
Insurance is basically risk management device. The losses to assets resulting from
natural calamities like fire; flood, earthquake, accident etc. are met out of the common
pool contributed by large number of persons who are exposed to similar risks. This
contribution of many is used to pay the looses suffered by unfortunate few. However the
basic principle is that loss should occur as a result of natural calamities or unexpected
events, which are beyond 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 be forget that creator all these assets is the human being whose
effort have gone along way in building up to assets. In that scene human life is a unique
income generating assets. Unlike physical assets, which decrease with the passage of
time, the individual become more experienced and mature as he advances in age. This
raises his earning capacity and the purpose of life insurance is to protect the income to
individual and provide financial security to his family, which is dependent on his
income in the event of his pre-mature death. The individual also himself also needs
financial security for the old age or on his becoming permanently disabled when his
income will stop. Insurance also has an element of saving in certain cases.
Insurance is rupees 400 billion business in India and yet its spread in the country is
relatively thin. Insurance as a concept has not being able to make headway in India.
Presently LIC enjoys a monopoly in Life Insurance business while GIC enjoys it in
general insurance business. There has been very little option before the customer to
decide the insurer. A successful passage of the IRA bill has clear the way of private
sector operators in collaboration with their overseas partners. It is likely to bring in a more
professional and focused approach. More over the foreign players would bring
sophisticated actuarial techniques with them, which would facilitate the insurer to
effectively price the product. It is very important that the trained marketing professionals
who are able to communicate specific features of the policy should sell the policy. In the
next millennium all these activities would play a crucial role in the overall development
9
and maturity of the insurance industry.

GENERAL DEFINITION: -

In the words of John Magee, “Insurance is a plan by which large

numbers of people associate themselves and transfers to the shoulders Of all risks
that attach to individuals”

FUNDAMENTAL DEFINITION: -

In the words of D S Hansell, “Insurance may be defined as a social

device providing financial compensation for the effects of misfortune, the
payments being made from the accumulated contributions of all participating in the
scheme.”

CONTRACTUAL DEFINITION: -

In the words of justice Tindall “Insurance is a contract in which a

sum of money is paid to the assured as consideration of insurer’s incurring the risk
of paying a large sum upon a given contingency.

CHARACTERISTICS OF INSURANCE

Sharing of risk

Co-operative device

Evaluation of risk

Payment on happening of special event

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 The amount of payment depends on the nature of losses incurred

Role of Insurance in Economic Development

• For economies development, investment is necessary. Investment is made out of
savings. A life insurance company is a major instrument for the mobilization of
savings of people, particularly from the middle and lower income groups. These
savings are channeled into investment for economic growth.

• As on 31.3.2002,the total investment of LIC exceed rs.245, 000 corers, of which

more than rs.130, 000 corers were directly in government related securities, more
than rs.12000crores in hosing loan and Rs.4000 corers in water supply and
sewerage systems.

• The LIC is not an exception. All good life insurance companies have huge funds,
accumulated through the payment of small amount of premium of individual. These
funds are invested in ways that contributed substantially for the economic
development of the countries in which they do business.

• A life insurance company will have large funds. These amounts are collected by
way of premiums. Every premium represents a risk that is covered by that
premium. In effect, therefore, these vast amounts represent pooling of risks. These
fund are collected and held in trust for the benefit of the policyholders.

• Without insurance, trade and commerce will find it difficult to face the impact of
major perils like fire, earthquake, floods, etc.

11
Classification of insurance business:

The insurance is broadly classified as:

1 .Life insurance business
2. Non-life insurance business/General Insurance business.

Life insurance business:

It is the business of effecting contracts of insurances upon human life including any
contract whereby the payment of money is assured on death or on the happening of
any
Contingency to the dependent on human life and any contract which is subject to the
payment of premiums for a term and shall be deemed to include:
The granting disability and double and triple indemnity accident benefits, if so
provided in the contract of insurance.
The granting of annuties of human life. The granting of super-annuation allowance and
annuities payable out of any fund applicable solely to the relief and maintenance of the
person engaged or who have been engaged in any particular profession, trade or
employment or of the dependents of such persons.

Non life insurance

business :
Conventional classification of insurance business:
1. Fire insurance
2. Marine insurance
3. Miscellaneous insurance (accident)

Modern classification of general insurance

1. Insurance of person
2. Insurance of property
3. Insurance of interest
4. Insurance of liability

12
History of Life Insurance

Life insurance or life assurance is a contract between the policy owner and the insurer,
where the insurer agrees to pay a sum of money upon the occurrence of the insured
individual's or individuals' death or other event, such as terminal illness or critical
illness. In return, the policy owner (or policy payer) agrees to pay a stipulated amount
called a premium at regular intervals or in lump sums. There may be designs in some
countries where bills and death expenses plus catering for after funeral expenses
should be included in Policy Premium. In the United States, the predominant form
simply specifies a lump sum to be paid on the insured's demise.

As with most insurance policies, life insurance is a contract between the insurer and the
policy owner (policyholder) whereby a benefit is paid to the designated Beneficiary
(or Beneficiaries) if an insured event occurs which is covered by the policy. To be a life
policy the insured event must be based upon life (or lives) of the people named in the
policy

NEED OF THE LIFE INSURANCE: -

The original, basic intention of life insurance is to provide for one’s family
and perhaps others in the event of death. Originally, polices were to provide for short
periods of time, covering temporary risk situations, such as sea voyages. As life
insurance became more established. It was realized what a useful tool it was in a
number of situations, including:

1. Temporary needs/ threats:

The original purpose of Life Insurance remains an important element, namely

providing for replacement of income on death etc.

13
2. Regular Saving:

Providing one’s family and oneself, as a medium to long term exercise (through a
series of regular payment of premiums). This has become more relevant in recent times
as people seek financial independence from their family.

3. Investment:

Put simply, the building up of saving while safeguarding it from ravages of inflation.
Unlike regular saving products are traditionally lump sum investments, where the
individual makes are one time payment.

4. Retirement:

Provision for one’s on later years has become increasingly necessary, especially in
changing culture and social environment. One can buy a suitable insurance policy, which
will provide periodical payments in one’s old age.

BENEFITS:

1. It is superior to traditional saving machine

As well as providing a secure vehicle to build up saving etc. it provides piece of mind to
the policy holder. In the event ultimately death, of say the main earner in the family,
the policy will pay out guaranteed sum assured, which is likely to be significantly more
then the total premiums paid. With more traditional saving vehicles, such as fixed
deposits, the only return would be the amount invested plus any interested accrued.

14
2. It encourages saving and forces thrift:
Once an insurance contract has been entered into, the insured has an obligation to
continue paying premiums, until the end of the term of policy, otherwise the policy will
lapse. In other words, it becomes compulsory for the insure to save regularly and spend
wisely. In contrast savings held in a deposit account can be accessed or stop easily.

3. It provides easy settlement and protection against creditors

Once a person appointed for receiving the benefits or a transfer of rights is made
(assignment), a claim under the life insurance contract can be settled easily. In addition,
creditors have no right to any mommies by the insurer, where the policy is written under
trust. Under the married woman’s act the money available from the policy forms a kind
of trust which creditors can not claim on.

4. It can be encased and facilities borrowing:

Sum contracts may allow the policy can be surrendered for a cash amount, if policy
holder is not in a position to pay the premium. A loan, against certain policy, can be
taken for a temporary period to tide over the difficulty. Presence of life insurance policy
facilitates credit for personal or commercial loans as it can be offered as collateral
security.

5. Tax relief :
The policy holder obtains income tax rebates by paying the insurance premium. The
specified form of saving which enjoys a tax rebate u/s
88 of the income tax act. Include Life Insurance premiums and contribution to a
recognized PF etc.

15
ROLE OF LIFE INSURANCE
========================

Role 1: Life Insurance as “investment”

Insurance is an attractive option for investment. While most people recognize the
tax hedging and tax saving potential of life insurance, many are not aware of its
advantages as an investment option as well as. Insurance products yield more
compared to regular investment option as this is besides the added incentives (read
bonuses) offered by insurers.
You can not compare an insurance product with other investment schemes for
simple reason that it offers financial protection from risks, something that is the missing in
non- insurance products.
Infect, the premium you pay for a investment against risk. Thus, before comparing
with other scheme, you must accept that a part of 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-products, you get maturity benefits on survival at the
end of the term. In other words, if you take a life insurance policy for 20 years and
survive the term the amount investor as premium in the policy will come back to you
with added returns. In the unfortunate event of death within the tenure of the policy, the
family of the deceased will receive the sum assured.
Now, let us compare insurance as an investment options. If you invest
Rs.10000/- in PPF, year money grows to Rs.10950 at 9.5% interest over a year. But in
this case, the access to your funds will be limited. One can withdraw 50% of the
initial deposit only after four years.
The sane amount of Rs. 10000/- can give you an insurance cover of up to
approximately Rs. 5 to 12 lacks. (Depending upon the plan, age and medical condition of
life insure etc.) And this amount can become immediately available to the nominee of
the policy holder on death. Thus insurance is a unique investment avenue that delivers
sound returns in addition to protection.

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17
Role 2: Life Insurance as “Risk Cover”

First and foremost, insurance is about risk cover and protection – financial
protection, to be more precise-to help out last once unpredictable losses. Designed to
safe guard against losses suffered on account of an unforeseen events. Insurance
provide you with that uniqueness sense of security that no other form of investment
provides. By buying life insurance, you buy peace of mind and are prepared to face
any financial demand that would hit the family incase of an untimely demise.
To provide such protection, insurance firms collect contributions for many people
who face the same risk. A loss claim is paid out of the total premium collected by the
insurance companies, who act as trustees to the monies.

Insurance also provides a safeguard in the case of accident or a drop in income

after retirement. An accident or disability can be devastating and an insurance policy
can lend timely support to the family in such time. It also comes as a great help when
you retire, in case untoward incident happens during the term in the policy.

With the entry of private sector player in insurance, you have a wide range of
products and services to choose from. Further, many of these can be further customized
to fit individual/group specific needs considering the amount you have to pay now; it’s
worth buying some extra sleep.

ROLE 3: Life Insurance as “Tax Planning”

Insurance serves as an excellent tax saving mechanism too. The Govt. of India
has offered tax incentives to life insurance products in order to facilitate the flow of funds
into productive assets. U/S 88 of Income Tax Act 1961, an individual is entitled to rebate
20% on the annual premium payable on his/her life and life of his/her children or adult
children. The rebate is reducible from tax payable by a individual or Hindu undivided
family. This rebate is can be availed up to a maximum of Rs 12000/- on payment of
yearly premium of Rs 60000/- a year, you can buy anything upward of Rs 100000/- in
sum assured. This means that you get Rs 12000/- tax benefit. This rebate is deductible

18
from the tax payable by an individual or a Hindu undivided family.

LAW AND REGULATIONS

Insurance act 1938

• The insurance act 1938, which came into effect from 1st July 1938, and was
amended in 1950 and later in 1999, is the principle enactment related to the
business of insurance in India. The act contains provisions regarding licensing of
agents and their remuneration, prohibition of rebates, and protection of
policyholder’s interest. It also has provision placing limits on the expenses of
insurer, use of funds and patterns of investments, maintaining solvency levels, and
constitution of insurance association and insurance council and the tariff advisory
committee foe general insurance.
• Section 2(5A) defines ‘chief agent’ as a person who, not being a salaried employee
of an insurer, in consideration of commission (I) perform any administrative and
organizing function for the insurer and (ii) procures life insurance business for the
insurer by employing or causing to be employed, insurance agents on behalf of the
insurer. Section 2(17) defines a ‘special agent’ as one who procures life insurance
business, in consideration of commission, employing or causing to be employing
insurance agents on behalf of the insurer. He only procures business through
agents but dose not perform administrative functions like a chief agents. Special
agents can work in the life insurance business, not in a general insurance
business.
• Individuals companies or firm can be appointed as chief agents or special agents.
The individuals, the director of companies or partners of firms, wanting to become
chief agents or special agents must be free of the disqualification specified in
connection with agents.
• Section 42A provides for the registration of chief agents and special agents.
Certificates to functions as such are to be insured after registration. The certificates
are valid for 12 month and may be renewed. The provision also stipulated the
19
 number of insurance agents that chief agents may employ directly or through
special agents and the minimum business they have to do. Similarly, there are
stipulations about the number of agents to be employed by a special agents and
the minimum business to be done. Renewal of certificate is subject to compliance
with these requirements. No chief agents or special agents were registered till the
end of 2001.
• The act vest the IRDA with powers to inspect documents, to appoint add- itional
director, to issue direction, to take over the management of an insurer and to
appoint administration. The IRDA has powers to adjudicate on disputes between
insurer and intermediaries or between intermediaries and to decide on disputes
relating to settlement of claim of amount and exceed Rs 2000. not may disputes
are likely to be referred to the authority under this section, as the amount of Rs
2000 is very small.

Life Insurance Corporation Act, 1956

• This act was the basis for the establishments of the L.I.C as a body corporate
consisting of not more than 16 members appointed by the central government, one
of them being the chairmen. The corporation’s duty was to carry on life insurance
business to the best advantage of the community. Section 30.gave the L.I.C
exclusive privilege to transact life insurance business in India. This exclusive
privilege ceased as a result of the amendment made in 1999. These amendments
were made in pursuance of the government’s policy of economic reforms and 11
insurance companies were registered and had commenced life insurance business
till 31.3.2002.

Insurance Regulatory and Development Authority Act 1999

20
 • This act, passed in December 1999, provided for the establishment of the IRDA to
protect the interest of holders of insurance policies, to regulate, promote and
ensure orderly growth of insurance industry and for matter connected therewith or
incidental there to. It also sought to amend the insurance act, 1938 the life
insurance corporation act 1956 and the general insurance business act, 1972.

• The IRDA is a corporate body. It is advised by an insurance advisory committee

consisting of not more than 25 member to represent the interest of commerce,
industry, transport, agriculture, consumer forums, surveyors, agents,
intermediaries, organization engaged in safety and loss prevention, research
bodies and employees’ association in the insurance sector. It replaces the
‘controller of insurance’ to administer the provision of the insurance act. That
includes registration, licensing, and laying down regulations for the proper conduct
of the business and the protection of the interest of policyholders.
• The regulations framed by the IRDA, in so far as they affect the working of the
agents, are reproduced in full at the end of this course.

OMBUDSMAN

• In exercise of the powers conferred by sub-section (1) of section 114 of the

insurance act, the central government has framed rules known as Redressal of
public grievances rules, 1998 whereby Ombudsmen are appointed. The governing
body of the insurance council appoints ombudsmen. Their function is to resolve
complaints in respect of disputes between policyholders and complaints in respect
of disputes between policyholders and insurers in cost effective, efficient and
impartial manner.
• The complaints to the Ombudsman may relate to (a) partial or total repudiation of
claims (b) any dispute regarding premium paid or payable in terms of the policy (c)
any disputes on the legal construction of the policy relating to claims (d) delay in

21
 settlement of claims (e) non- issue of any insurance document to customers after
receipt of premium.
• The Ombudsman shall act as counsel and mediator in matter within its terms of
reference. It is not a judicial authority. It has no right to summon witnesses. It has to
make its decision on the basis of document submitted to it. The complaints and the
insurer are allowed to make personal submission. But lawyers are not permitted to
argue the case.
• Complaints to the Ombudsman lie only when the insurer had rejected the complaint
or no reply was received within one month of the complaint or the reply was not
satisfactory. A complaint can be made within one year after the insurer had
rejected the representation. The subject matter should not be already before any
court or consumers’ forum or arbitration.
• The Ombudsman is expected to make a recommendation with in one month from
the date of receipt of complaint. If the complaint accepts this recommendation, the
insurer had to comply within 15 days and inform the Ombudsman accordingly. If
the complaints dose not accept the Ombudsman’s recommendation, the
Ombudsman shall pass an award an in writing, starting the amount awarded which
shall not be in excess of what is necessary to cover the loss suffered by the
complaint as a direct consequence of the insured peril or for an amount not
exceeding Rs20, 00,000, whichever is lower. The award has to be passed within 3
month. the complaint has to intimate his acceptance of the award within one month
by a letter of acceptance to the insurer and the insurer has to comply within 15
days and inform the Ombudsman. If the complaint dose nit intimate acceptance,
the award cannot be implemented.

GOVT. ROLE:

Govt. keen to reduce the dependency on the state via private pension provisions.
They have a choice between using compulsion and incentives. Most of the govt.
chooses the later method. Tax relief is guaranteed in the pension plants and is
extremely generous, reflecting the value that the govt. and the society and large place
22
on the provision of retirement benefits. Tax treatments of the benefit vary by country
and by benefits.
In India, the proceeds of gratuity and provident fund are tax free in the hand of
the members. In UK, a certain amount of the proceeds can be taken as tax lump sum
and reminder as taxable income. Benefits due on withdrawal from schemes are
generally taxed unless they are transferred to another scheme or approved pension
plan.

23
Insurance industry in india

Brief History

The insurance sector in India dates back to 1818, when Oriental Life Insurance
Company like Bombay life Assurance Company, in 1823 and Tritons Insurance
Company, for General Insurance, in 1850 were incorporated. Insurance ACT was
passed in 1928 but it was subsequently reviewed and comprehensive legislation was
enacted in 1938.
The nationalization of life insurance business took place in 1956 when 245 Indian and
Foreign insurance societies were first merged and then nationalized. It paved the way
towards the establishment of life insurance Corporation (LIC) and since then it has
enjoyed a monopoly over the life insurance business in India. General Insurance
business. Subsequently in 1973, non-life insurance business was nationalized and
the General Insurance Business (Nationalization) ACT, 1972 was promulgated.
The General Insurance Corporation (GIC) in its present form was incorporated in 1972
and maintains a very strong hold over the non-life insurance business in India. Due to
concerns of relatively low spread of insurance in the country.
The efficient and quality functioning of the Public Sector Insurance Companies.
The untapped potential for mobilizing long-term contractual savings funds for
infrastructure.
The (Congress) government set up Insurance set u an Insurance Reforms committee in
April 1993. The committee submitted its report in January 1994, recommended a
phased program of liberalization, and called for private sector entry and restructuring of
the LIC and GIC.

EVALUATION OF INSURANCE INDUSTRY IN INDIA:

Life Insurance in its modern form is a western concept. The Indian insurance
industry is as old as it is in other part of the world. Although life insurance business
has been taking shape for the last 300 years, it came to India with the arrival of
Europeans. First Life Insurance Company was established in 1818 as Oriental

24
Insurance Company, mainly to provide for widows of Europeans. The companies that
follow mainly catered to Europeans and charged extra premium on Indian Lives. The
first insurance company insuring Indian Lives at standard rates was BOMBAY
MUTUAL LIFE INSURANCE COMPANY which was formed in 1870. This was also

the year when 1st Insurance act was passed by the British Parliament. The years
subsequent to the Swadeshi movement saw the emergence of several insurance
companies. At the end of the year 1955 there were 245 insurance companies. All the
insurance companies were nationalized in 1956 and brought under one umbrella- LIFE
INSURANCE CORPORATION OF INDIA (LIC) which enjoyed a monopoly of the Life
Insurance business until near the end of 2000. By enacting the IRDA act 1999,
the Govt of India effectively ended LIC’s monopoly and opened the doors for
private Insurance companies.

Indian Scenario:

Unfortunately the concept of insurance is not popular in our country .As per the latest
estimates, the total premium income generated by life and general insurance in India is
estimated at around a meager 1.95% of GDP. However India's share of world insurance
market has shown an increase of 10% from 0.31% in 2004-2005 to 0.34% in 2005-
2006
India's market share in the life insurance business showed a real growth of 11 % thereby
out performing the global average of 7.7% Non-life business grew by 3.1% against
global average of 0.20%. In India insurance spending per capita was among the lowest
in the world at $7.6 compared to $7 in the previous year. Amongst the emerging
economies, India is one of the least insured countries but the potential for further growth
is phenomenal, as a significant portion of its population is in services and the life
expectancy has also increased over the years.

Insurance Sector

The practice of insurance in the world is quite old infect. How ever, life insurance

25
business, as it is known today, is a much later development. It evolved from the great
transformation in life, which began with the decline of the agrarian society in the western
countries in the 19th century.
Industrialization with its cities, factories, cash economy and an urban ‘saving’
class set the stage for life insurance as a large – scale national institution. It can truly be
that life insurance is a product of modern industry. Growth of life insurance Company in
any country will illustrate introduced modern life insurance business didn’t make much
headway. The business started taking its deeper roots only when in the late 19 th
century ‘India’ insurance companies appeared on the scenes and started accepting
‘India’ lies freely on the same terms as European lives in India. The growth of India life
insurance business continued to remain restricted till the Swedish movement gathered
momentum. The business passed through the period of ups and downs with the political
and economic situation in the country.

Need for Association

With the rise in the number of Indian life insurance companies occasioned by the growth
in the national spirit as a result of the independent movement a need was felt by the
companies for an organization to assist them in solving the problems faced by them.
With a view to meeting this need and also to providing a representative body for
expression of a common viewpoint of Indian insurance before the government regarding
insurance legislation and Indian life Assurance offices association was established in
1928. The association played companies’ forum for expression of representative views
on insurance and taxation legislation and imparting insurance education.

Nationalization

Even during days of the freedom struggle there was occasional demand
for nationalization of life insurance industry. The demand naturally gathers mare
momentum after independence. Mismanagement had lead to liquidation of as many as

26
 25 life insurance companies in the decade after independence. Another 25 insurance
companies had during the same period so frittered away their resources that their
business had to be transferred to other companies. All these cost financial losses and
consequent suffering to several policyholders who had entrusted their hard earned
saving to the care of the company management. This misuse of power, position and
privilege by these companies in the private sector was one of the most compelling
reasons that influenced the decision of the government of India to nationalize the life
insurance industry in 1956. The life insurance industry in India had to be geared up
for raising resources for execution national
programs. One of the objectives of the national plans was to build a pay welfare state. It
was therefore, essential that benefits of life insurance were made available to every
family in the country and that the business should be conducted with utmost economy
by the management acting in a spirit of trusteeship to enable maximization of the
people’s saving that could be analyzed through the life insurance into the
development programs.

Objectives of nationalization:

The decision of the Government of India to nationalize life insurance industry was
implemented by the passage of the life insurance Corporation Act, 1956, by
Parliament. The objectives of nationalization of life insurance industry that
emerged out of the discussion and speeches in the parliament in the time passage of
the act were:
Spread of message of life insurance as far and wide as possible reaching out beyond
the more advanced urban areas well into hitherto neglected areas.
• Effective mobilization of the people’s
savings. Complete security to policyholders.
• Prompt and efficient services to the policyholders.
• Conducting of the business with the utmost economy and with the full
realization that the money. Belonged to the policyholders.

27
• Investment of funds in such a way as to secure maximum yield
consistent with safety of capital.
• Economic premium rates.
• Development of a dynamic and vigorous organization under a
management conducted in sprit of Trusteeship.
• Formulation of scheme of insurance to suit different section of the
community.

28
How big is the insurance market?

Insurance is a Rs.400 billion business in India, and together with banking services adds
about 7% to India's Gap. Gross premium collection is about 2% of Gap and has been
growing by 15-20% per annum. India also has the highest number of life insurance
policies in force in the world, and total investible funds with the LIC are almost 8% of
GDP. Yet more than three-fourths of India's insurable population has no life insurance
or pension cover. Health insurance of any kind is negligible and other forms of non-life
insurance are much below international standards.

What is Human Life Value

(HLV)?

Human life value is:-

• Capitalized value of the net earnings
• Present value of the total income lost to the family in the event death.

These points will be more cleared with this example:-

• Suppose an individual earns Rs. 10000/month.
• The personal expense is Rs.2000/month
• Therefore the income provided to his family is Rs. 8000/month.
• The annual income provided to his family works out to Rs. 96000
• Now if he were not to earn it for them , the family would have to Rs.1600000 in a
bank so that they get Rs. 96000 yearly at 6% interest.(96000*100/6)
• Therefore the HLV of the person is Rs. 1600000.

Ps. Note that we have not taken into account the future income growth of the person.
Hence this is not the exact human life value but only a representation to give
the customer a fair idea of how it works.
29
What is a contract of insurance?

A contract of insurance is a contract of utmost good faith, technically known as

uberrima fides. The doctrine of disclosing all material facts is embodied in this important
principal that applies to all forms of insurance. The purpose, who is one of the parties to
the contract, is presumed to have means of knowledge that are not accessible to the
corporation who is the other party to the contract. Therefore, the purpose is bound to tell
the insurer everything affecting the judgment of the insurer. In all the contracts of
insurance the proposes is bound
to make full disclosure of all material facts and not merely, those which he thinks
material Misrepresentation non-disclosure or fraud in any document leading to the
acceptance of the risk automatically discharges the corporation from all liability under
the contract. Although Section 45 of the Insurance Act, 1938 provides that no policy can
be called in question after a period of two years from the date of its issue on the ground
that any statement in proposal or a related document was false or inaccurate (making
the policy indisputable), This provision is not applicable if the corporation can prove that
misrepresentation or non- disclosure was on a material fact and was fraudulently
made and that the policyholder knew at the time that statement he made was false. It is,
therefore, in the interest of the would be policyholder to disclose all the material facts to
the corporation to avoid any complication when the claim arises. It is equally obligatory
on an agent to see that the assured doesn't obtain the contract by means of untrue
representation or concealment in any respect. It is the duty that the agent owes both to
his client and to the corporation.

30
The Insurance Players…

– HDFC Standard Life Insurance Company Limited

– Birla Sun Life Insurance Company Limited
– TATA AIG Life Insurance Company Limited
– Max New York Life Insurance Company Limited
– Kotak Mahindra Old Mutual Life Insurance Limited
– SBI – Cardiff Life Insurance Company Limited
– ING Vysya Life Insurance Company Limited
– Bajaj Allianz Life Insurance Company Limited
– ICICI Prudential Life Insurance Company Limited
– MetLife Life Insurance Company Limited
– Aviva Life Insurance Company Limited
– Reliance Life Insurance Company Limited
– Sahara India Life Insurance Limited
_ Shriram Life Insurance Company Limited

31
THE FOLLOWING COMPANIES HAS THE REST OF THE MARKET

SHARE OF THE INSURANCE INDUSTRY.

NAME OF THE PLAYER (%) MARKET SHARE

LIC 82.3

ICICI PRUDENTIAL 5.63

BIRLA SUN LIFE 2.56

BAJA ALLIANZ 2.03

SBI LIFE 1.80

HDFC STANDARD 1.36

TATA AIG 1.29

MAX NEW YORK 0.90

AVIVA 0.79

OM KOTAK MAHINDRA 0.51

ING VYASA 0.37

AMP SANMAR 0.26

METLIFE 0.21

32
 Sharesoftheinsuranceindustry

90

80
LIC

ICICI
70 PR UDENTIAL
BIRLASUN
LIFE
BAJA
60 ALLIANZ
SBILIFE

HDFC
50
STANDARD
TATAAIG

40 MAXNEW
Y
O RK
AVIVA

30 OMKO TAK
MAHINDRA
INGVY
ASA

20 AMP
SANMAR
METLIFE

10

0
1

33
Types of Plan…..

Conventional
ULIP

Conventional:-

Conventional plans are those plans in which returns are known and are fixed. Example: -
Children’s Plan. In this plan the customer has knows how much return he will get after
maturity or any miss happening occurs. Here risk is low and returns are also low,
because it is not dependent on the market risk and is a rigid policy.
It is seen that people also invest less in such type of policies as returns are
less and there is a compulsion attached is of compulsory premium submission till the
policy matures.
Illustration: -
Premium for 10 yrs is 20000
20000+20000+20000+20000+20000+20000+20000+20000+20000+20000= 2lks
Return described was 2.5 times
So the customer will get approx 5 lakhs after deducting all charges.

Insurance is always of the parent and beneficiary is the child. There are 2
types of loss that occurs on any type of miss happening i.e. emotional loss and monetary
loss company can’t full fill emotional loss but can help in monetary loss by giving the
2lks Rs. At the miss happening and will give the rest premium by its own and will give
the bonus at maturity again to the child.

ULIP

ULIP stands for UNIT LINK INSURANCE PLAN. As it is said higher risk higher

34
return

35
 RESEARCH METHODOLOGY

MEANING OF RESEARCH METHODOLOGY

“A Research is a careful investigation or inquiry, especially through search for new facts
in any branch of knowledge. It is a systemized effort to gain more knowledge.”

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. We study the
various steps that are generally adopted by a researcher in studying his research problem
along with the logic behind them. It is necessary for the researcher to know not only the
research methods or techniques but also the methodology. Researcher always needs to
understand the assumptions underline various technique and they need to know the
criteria by which they can decide that certain technique and procedures will be applicable
to certain problems and other will not.

Research is an organized enquiry designed and carried out to provide information for
solving a problem.

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically.

36
 OBJECTIVES OF RESEARCH

1. Research extends knowledge of human beings, social life and environment.

Scientists and researchers search answers for various types of questions: what,
where, when, how and why.

2. Research unravels the mysteries of nature, brings to light hidden information that
might never be discovered fully during the ordinary course of life.

3. Research verifies and tests existing facts and theory and these help improving our
knowledge and ability to handle situation and events.

4. Research aims to analyze inter-relationships between variables and to derive

causal explanations and thus enables us to have a better understanding of the
world in which we live.

5. Research also aims at developing new tools, concepts and theories for a better
study of unknown phenomena.

DATA COLLECTION

The task of data collection begins after a research problem has been defined.
While deciding about the method of data collection to be used for the study, the
researcher should keep in mind two types of data viz ,primary and secondary.

37
 Primary data may be described as those data that have been observed and recorded
by the researchers for the first time to their knowledge.

Primary data can be classified into two types:

• Data classified by their nature.

• Data classified according to function.

Primary data can be collected through several methods. Some of the

important ones are:

1. Observation method
2. Interview method
3. Questionnaires
4. Schedules
5. Other methods

Secondary data are statistics not gathered for the immediate study at hand but for
some other purposes.

Secondary data can be classified into two types:

Internal data which include

• sales analysis.
• Investor annual report.
• Earlier research done in the company.

38
 External data which include

• Encyclopedias.
• Text books.
• Magazines.
• Published research.

Other Source of data collection

• Index.
• Internet search engines.

39
 TECHNIQUES USED IN THIS STUDY

1 Consultation and personal observation.

2 Collection classification, compilation, tabulation analysis and figure relevant to fund
performance of the company.
3 Analysis of funds of the various plans of the HDFC standard life insurance
company.
4 Taking the help of the various broachers.

SOURCES OF DATA

The analysis was based on following document and related Information.

1 The annual financial statements of the concern i.e. balance sheet, profit & loss
account, annual report.
2 The company publication includes booklets, templates, Broachers etc.
3 Secondary data from various mutual funds.
4 Getting the various documents on websites, books, newspapers etc.
5 Various documents relating to the performance of the fund.
6 Data published by the CRICIL (Credit Rating company).

40
 OBJECTIVES OF THE STUDY

1. To study the performance of the fund of the HDFC standard life

insurance company in various ULIP plans.
2. To study the investment structure of HDFC standard life insurance
company in ULIP plans.
3. To study the return on the various funds of HDFC standard life insurance
company limited under the various plans.
4. To know the awareness of the customer about various plans and their
funds of HDFC SLI company.

LIMITATION OF THIS STUDY

1. There is general paucity of adequate database.

2. The study is totally based on secondary data because the primary data relating to this
topic is very difficult to get from the general public.

3. The secondary data are not sufficient for this study.

41
 ORGANIZATIONAL PROFILE

HOUSING DEVELOPMENT FINANCE CORPORATION:

HDFC was started by Hasmukh Bhai Parekh in1977 with the formation of Malhotra
Committee. HDFC was incorporated with the primary objective of meeting a social need
that of promoting home ownership by providing long-term finance to households for their
housing needs. HDFC was promoted with an initial share capital of Rs. 10 crores.

HDFC has since emerged as the largest residential mortgage finance institution in
the country. The corporation has had a series of share issues raising its capital to Rs. 119
crores. The net worth of the corporation as on March 31, 2000 stood at Rs. 2,096 crores.

HDFC operates through 75 locations throughout the country with its Corporate
Headquarters in Mumbai, India. HDFC also has an international office in Dubai, U.A.E.,
with service associates in Kuwait, Oman and Qatar.

HDFC’s main goals are to:

a) Develop close relationships with individual households.

b) Maintain its position as the premier housing finance institution in the country.

c) Transform ideas into viable and creative solutions.

d) Provide consistently high returns to shareholders.

e) To grow through diversification by leveraging off the existing client base.

42
INTRODUCTION

Founded in 1977, HDFC is today the market leader in housing finance in India and has
extended financial assistance to more than 15 lacks homes. HDFC has more than 110
offices in India presently. It has also one international office in Dubai and 3 more
services associate in Kuwait, Qatar and sultanate of OMAN. HDFC’s assets base
amount to over 15,000 crore. Its financial strength is reflected in highest safety rating of
‘FAAA’ and ‘MAAA’ awarded by CRISIL and ICRA – two of India’s leading credit rating
agency respectively, for the last 6 year consecutively. It has a depositor base of
over 11 lacks customer and a deposit agents force of over 46,000 of the total deposit,
73% are sourced from individual and trust depositors, which demonstrates the
tremendous confidence that retail investors have in the company.

HDFC- promoted companies have emerged to meet the investors and

customers needs. HDFC bank for commercial banking, HDFC Mutual Fund for mutual
fund products, to be followed very shortly by HDFC Standard Life Insurance Company for
the life insurance and pension products. Being an institution that is strongly committed to
the highest standards of quality and excellence, HDFC has won several accolades in the
past few years. One such award is the “ Ramakrishnan Bajaj National Quality Award “ for
the year 1999. this award was instituted to award recognition to Indian companies for
business excellence and quality achievement. HDFC is the only company so far to
receive this award in the service category.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life
insurance companies, which offers a range of individual and group insurance solutions.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard
Life plc, leading providers of financial services in the United Kingdom. Both the
promoters are well known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry – all-important
factors to consider when choosing your insurer.

43
STANDARD LIFE:

The Standard Life Assurance Company ("Standard Life") was established in 1825 and the
first Standard Life Assurance Company Act was passed by Parliament in 1832. Standard
Life was reincorporated as a mutual assurance company in 1925.

Standard Life is Europe's largest mutual life assurance company. Standard Life,
which has been in the life insurance business for the past 182 years, is a modern
company surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from its original Edinburgh premises, opening offices in
other towns and acquiring other similar businesses.

Standard Life currently has assets exceeding over £70 billion under its
management and has the distinction of being accorded "AAA" rating consequently for the
past six years by Standard & Poor.

Banking, Healthcare & Investments -

The group set up Standard Life Bank, its UK mortgage and retail savings banking
subsidiary, in 1998 and Standard Life Investments, which had previously been the in-
house investment management unit of the group’s life assurance and pensions business,
was separated into a distinct legal entity in the same year, with the aim of establishing it
as an independent investment management business providing services to both the group
and third party retail and institutional clients. The group acquired Prime Health Limited
(subsequently renamed Standard Life Healthcare) in the United Kingdom in 2000.
Standard Life Healthcare expanded in March 2006 with the acquisition of the PMI
business of First Assist. Standard Life Asia Limited/Joint ventures -

The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL Asia”), was
incorporated in 1999 as a joint venture and became a wholly-owned subsidiary of
Standard Life in 2002. The group’s operations in Hong Kong were established to give the
group a presence in the Far East from which it could expand into China. The group’s joint
ventures in India with Housing Development Finance Corporation Limited (“HDFC”) were
incorporated in 2000 (in relation to the life assurance and pensions joint venture) and
44
2003 (in relation to the investment management joint venture). The group’s joint venture in
China with Tianjin Economic Development Area General Company (“TEDA”) became
operational in 2003. Standard Life international Limited - The group also incorporated
Standard Life International Limited (“SLIL”) in 2005 for the purposes of providing the
group with an offshore vehicle, based in Ireland, through which it could sell tax-efficient
investment products into the United Kingdom. Sales of these products commenced in
2006.

Service company

Following the group’s strategic review in 2004, the group established a service company
structure for the provision of central corporate services to the group’s business units.
Standard Life Employee Services Limited (“SLESL”) supplies a wide range of central
services to the rest of the group, including IT, facilities, legal and human resources
services, and employs staff working in the group’s UK and Irish operations (other than
SLI, SLB and SLH,which employ their staff directly). This service company structure was
created to enable Standard Life to comply with regulatory restrictions on the provision of
non-insurance services and to exploit group-wide synergies.

STANDARD LIFE ASIA LIMITED/JOINT VENTURES:

The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL Asia”), was
incorporated in 1999 as a joint venture and became a wholly-owned subsidiary of
Standard Life in 2002. The group’s operations in Hong Kong were established to give the
group a presence in the Far East from which it could expand into China. The group’s joint
ventures in India with Housing Development Finance Corporation Limited (“HDFC”) were
incorporated in 2000 (in relation to the life assurance and pension’s joint venture) and
2003 (in relation to the investment management joint venture). The group’s joint venture in
China with Tianjin Economic Development Area General Company (“TEDA”) became
operational in 2003.

Demutualization of Standard Life

45
 On 31 May 2006, Standard Life's voting members voted in favor of the Special
Resolution for the demutualization of The Standard Life Assurance Company and the
flotation of Standard Life plc on the London Stock Exchange.

STANDARD LIFE GROUP:

• The Standard Life group has been looking after the financial needs of customers
for over 182 years
• It currently has a customer base of around 7 million people who rely on the
company for their insurance, pension, investment, banking and health-care needs
• Its investment manager currently administers £125 billion in assets
• It is a leading pensions provider in the UK, and is rated by Standard & Poor's as
'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's
• Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at
the Money Marketing Awards, and
• It was voted a 5 star life and pension’s provider at the Financial Adviser Service
Awards for the last 10 years running.
• The '5 Star' accolade has also been awarded to Standard Life Investments for the
last 10 years, and to Standard Life Bank since its inception in 1998.
• Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the
Mortgage Magazine Awards in 2006.

INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO. LTD.:

The company was incorporated on 14th August 2000 under the name of HDFC
Standard Life Insurance Company Limited.

Their ambition from the beginning was to be the first private company to re-enter
the life insurance market in India. On the 23rd of October 2000, this ambition was realized
when HDFC Standard Life was the first life company to be granted a certificate of
registration.
46
 HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while
Standard Life owns 18.6%. Given Standard Life's existing investment in the HDFC Group,
this is the maximum investment allowed under current regulations.

HDFC and Standard Life have a long and close relationship built upon shared
values and trust. The ambition of HDFC Standard Life is to mirror the success of the
parent companies and be the yardstick by which all other insurance companies in India
are measured.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life
insurance companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.), India’s leading housing finance institution and one of the subsidiaries of Standard
Life plc, leading providers of financial services in the United Kingdom.

Both the promoters are well known for their ethical dealings and financial strength
and are thus committed to being a long-term player in the life insurance industry.

HDFC Standard Life Insurance Co. Ltd was incorporated on 14th august 2000. It is a
joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.)
India and UK based Standard Life Company. Both the joint venture partners being one
of the leaders in their respective areas came together in this 81.4:18.6 joint venture to
form HDFC Standard Life Insurance Company Limited.

The MD and CEO of HDFC Standard Life Mr. Deepak Satwalekar, has given the
company new directions and has helped the company achieve the status it currently
enjoys. HDFC Standard Life brings to you a whole range of insurance solutions be it
group or individual or NAV services for corporations, they can be easily customized as
per specific needs.
47
The Banc assurance partners of HDFC Standard Life Insurance Co Ltd are HDFC,
HDFC Bank India Limited, Union Bank of India, Indian Bank, Bank of Baroda, Saraswat
Bank and Bajaj Capital.

48
Why HDFC standard life

There are many reasons why people should choose HDFC Standard Life
Insurance Company Ltd. as their partner in meeting their insurance need:

a) Innovative products to meet customer’s needs.

b) Efficient customer service team.

c) Good financial track record of both parents – HDFC & Standard Life.

d) Certified Financial Consultants to advice prospective customers.

e) Professional approach in managing customer’s investments.

f) Income Tax benefits for their insurance products.

g) Innovative products to meet customer’s needs.

h) Efficient customer service team.

i) Good financial track record of both parents – HDFC & Standard Life.

j) Certified Financial Consultants to advice prospective customers.

k) Professional approach in managing customer’s investments.

49
 VISION
“The most successful and admired life insurance company, which means that we are
the most trusted company, the easiest to deal with, offer the best value for money, and
set the standards in the industry. In short, “The most obvious choice for all”.

MISSION
We aim to be the top new life insurance company in the market. This doe’s not just
mean being the largest or the most productive company in the market; rather it is a
combination of several things like-

Customer service of the highest order Value for

money or customers Professionalism in carrying

out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

VALUE
INTIGRITY
What is it?
• Honest and Truthful in every action.
• Transpare
ncy
• Stick to principles irrespective of outcome.
• Be just and fair to everyone.
Why?
• Integrity is the bedrock on which the company and the expectations of the
customers and employees are built.
• Integrity establishes the credibility of the person, defines the character
50
and empowers one to do justice to the job.

51
• Enables building confidence and trust, achieving transparency and laying
a strong foundation for a binding relationship.
• Guiding principle for all walks of life.

INNOVATION
What is it?
• Building a store house of treasures through experiences.
• Looking at every product and process through fresh eyes
everyday.
Why?
• To exceed customer expectation and maximise customer retention.
• To achieve competitive advantage.
• To promote growth and upgrade standards in the industry.
• To foster creativity amongst employees and partners
• To open a world of new possibilities.

CUSTOMER
CENTRIC
What is it?
• Understand his expectations by keeping him as the centre - point
• Listen
actively
• Understand customer needs and deliver solutions.
• Customer interest always supreme.
Why?
• Reinforce brand loyalty by complete transparency.
• Customer is the source of revenue for the company.
• Customer is the reason for our existence.
52
• Ensure that customer chooses our company to do business with.
• Customers’ goodwill alone can bring more business and more
customers.
• Will contribute to customer retention.

PEOPLE CARE
What is it?
• Genuinely understanding the people we work with.
• Guiding their development through training and support
• Helping them develop requisite skills to reach their true potential.
• Know them on a personal front.
• Create an environment of trust and openness.
• Respect for the time of others.
Why?
• People are the most valuable assets of the company.
• Motivate individual to give his / her best.
• Establish a valuable relationship with them to create a joyful working
environment .
• Job
satisfaction

TEAM WORK “One for all and all for one”

What is it?
• Whole team takes the ownership of the deliverables
• Consult all involved , understand and arrive at a common objective
• Co-operate and support across departmental boundaries
• Identify strengths and weaknesses accordingly allocate responsibility to
achieve common objectives.
Why?
• Together Everyone Achieves More :- TEAM
53
• It adds joy at work place
• Team work generates synergy and provides a focussed approach.
• An idea or activity performed in a group has greater acceptability
• “One for all and all for one”

JOY AND SIMPLICITY

54
 PRODUCT PORTFOLIO

HDFC offers products as per the life stages of the customers and their respective needs.

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

55
 LIFE STAGES & NEEDS IN HAT STAGES

STAGE 1: YOUNG & SINGLE

An important stage where one lays down the foundation of a successful life ahead.
Take advantage of the time and power of compounding to ensure that you build up your
dreams. Start saving early.

NEEDS:

 Save for Home & Wedding

 Tax Planning
 Save for Golden Years

STAGE 2: JUST MARRIED

Marriage brings about a significant change. New dreams and new opportunities
also bring in additional responsibilities. While both of you look forward to a happy and
secure life, it is equally important to ensure that eventualities don’t come in the way of
shaping your dreams.

NEEDS:

 Planning for home / securing your home loan liability.

 Save for vacation.
56
  Save for your first child.

STAGE 3: PROUD PARENTS

Once you have children, your need for life insurance is even more. You need to
protect your family from an untoward incident. Ensure your protection umbrella takes into
account the future cost of securing your child’s dream. You will want life to go on for your
loved ones, and having enough life insurance is a way to help ensure that.

NEEDS:

 Provide for children's education

 Safeguarding family against loan liabilities
 Savings for post-retirement

STAGE 4: PLANNING FOR RETIREMENT

While you are busy climbing the ladder of success today, it is important
for you to take time and plan for your life after retirement. Having an early start for
retirement planning can make a significant difference to your savings. Think about your
golden years even before you have reached them. The key is to think ahead and plan well
using your time and money.

NEEDS –

57
  Provide for regular income post retirement
 Immediate Tax benefits
 Lead a secure, independent and comfortable life style in your retirement years.

INTRODUCTION TO UNIT LINKED PRODUCTS

What is Unit Linking?

UNIT-LINKED POLICIES ARE UNBUNDLED

Unbundling means the separate identification of the constituent parts of the insurance
policy. That is the investment element, expense and administration charges, and benefit
charges (e.g. mortality charge), as well as the benefits themselves, are clearly identified to
the client.
Until the 1960s , most life insurance policies was conventional policies, whereby the client
was not aware of what portion of the premium covered expenses of benefits, nor indeed,
of now investment returns were allocated to the policy. The first step to unbundling was to
identity the investment element separately from the other elements of the product.
Because this was explained to the client and formed a legal part of the policy, it was the
real start of unbundling. Some more years passed before the level of unbundling that
HDFC Standard Life see today was achieved.

As time went on in the 1960s and 1970s, the other major parts of life insurance policies
(mortality and expenses) also became unbundled. Product designers did this by
setting out the way that expense and mortality costs would affect the policy.

Unbundled products are also said to be transparent because the client can see the
progress of the policy. This is aided by an annual report on the status and performance of
the policy, including explicit reporting of charges taken from, and investment returns
allocated to, the policy.

In practice, however, the details of unbundled policies are quite complicated and whether
transparency is achieved from the client’s point of view depends primarily on the
clarity of the communication from the insurer and the extent to which the client is

58
interested in such detail.

59
UNIT LINK POLICY MAKE USE OF UNIT LINK FUNDS

In the UK, unbundled policies are generally referred to as being unit-linked because the
investment element of the policy is housed in funds that are divided into units of equal
value.

A unit-linked policy is one whose underlying investments are identifiable and determine its
cash values.

It is important to recognize that the assets of the funds may not be shares –they may be
fixed-interest securities, money market instruments, property, derivative instruments, as
well as shares. Indeed, the assets of a particular fund may consist of a mixture of these
asset types. The client normally has a choice of funds having different characteristics to
which premiums can be allocated. Capital by reducing new-business strain.

THE UNDERLYING FUNDS THE UNITS

At HDFC Standard Life, the client has a choice of funds in which to invest.

Our unit linked funds have different investment objectives and give the customer the
opportunity to be exposed to different types of assets.

As a result, the customer can choose his fund according to his own attitude to risk and
desire of investment return.

UNIT-LINKED POLICIES ARE LINKED

Linking implies matching. The value of the policy is linked to the value of the net
assets (assets less liabilities) of the fund. The investment risk and reward are
therefore transferred from the insurer to the client. This is the real distinguishing feature of
unit linking. Of course, the policy might offer some investment guarantees but in many

60
countries this is now the exception rather than the rule.

61
Our unit linked funds have different investment objectives and give the customer the
opportunity to be exposed to different types of assets.As a result , the customer can choose
his fund according to his own attitdew to risk and desire of investment return.

BENEFITS OF UNIT LINKED PLANS

To the client

- Flexibility of premium, sum assured and benefit

- Transparency

- Control over investment strategy

- Control over the degree of investment risk

To the insurer

- Product demanded by the market

- Retention of existing client and attracting new client

Unit-Linked Policies Have Explicit Charges:

With all insurance products we allow for the expenses, the cost of benefits incurred and a
profit margin to the company.
In HDFC standard life’s unit-linked policies the customer sees the charges being
deducted explicitly from their policy in respect to these expenses.
Some of these charges are charges deducted from the premium and some are deducted
from the fund.

62
The charges on a unit linked plan of HDFC Standard Life:

The charges under this policy are deducted to provide for the benefits and the
administration provided by HDFC standard life charges when taken together, are
among the lowest in the industry and are structured to the give the better returns over
the long term.
Investment Content Charge: This is a premium based charge. After deducting this
charge from the premiums, the remainder is invested to buy units. The following
table shows how much is used to buy units.
This percentage is called the investment content Rate.

INVESTMENT
CONTENT RATE (ICR)
1st & 2nd years 3rd year
Up to 200000 73.00% 99.00%
From 200000 to
80.00% 99.00%
Regular 500000
Premiums From 500000 to
85.00% 99.00%
1000000
Above 1000000 90.00% 99.00%
Additional single premiums 97.50% 99.00%

Other Charges Explanation

Reduced ICR A reduced percentage of the policy holder’s premium is
added to the fund.
These charges are intended to cover the marketing
distribution (including commission) and some other
administrative costs relating to the policy.

63
Fund Management Deducted as a percentage of the customer’s fund on a daily
Charge (FMC) basis.
These are intended to cover the ongoing costs of managing
the investments of the policy.
The daily unit price already includes a low fund management
charge of 1.25 % per annum of the fund’s value.
In the long term, the key to building reat maturity values
is low FMC.

Administration A charge of Rs. 6 0 per month is charges to cover regular

Charges administration costs.
HDFC SL make the charge by canceling units in each of the
funds customer have chosen, in the proportion customer have
chosen.

Policy Fee A fixed monetary deduction done from the customer’s fund
on a monthly basis.
This charge is taken to cover the ongoing costs of
administration of the policy and for any renewal commissions.

Risk Charges Deducted from the customer’s fund on a monthly basis.to

cover the cost of lie cover critical illness and accidental death
depending on the option the customer has chosen. Every
month HDFC SL customers make a charge or providing
customer with the death or f critical illness customer with the
death or critical illness cover they have selected. The amount
of charges taken each month depend on customer age.

64
 Miscellaneous
However you may come across other charges, which are used by other companies
else where in the market. Here are few examples:

Surrender Charges
Are applied when a policy is surrendered.

They are used to recover costs and lost profits.

On cancellation or surrender of the policy before 3 years of regular

premiums have been paid.
The company will make a charge of 25% of the outstanding premiums due
for the remainder of this 3 year period.

Switch or Redirection Charges

These cover the additional administration costs associated with switching
investments between funds and redirecting premiums. Companies also
sometimes use them to discourage excessively frequent switches are premium
redirections.
Premium alterations include stopping and restarting the regular premium after
3 years.
The Co. HDFC SL does not charge for any of these options currently.
The HDFC SL reserves the right to introduce such charges after approval from
the IRDA

WHY BUY A UNIT LINKED PLAN

A unit – linked plan offers the benefits of market – linked returns. It give flexibility in
o Premium paying g
o Withdrawals

o Protective elements.

65
66
DESIGN OF AN UNIT LINKED PLAN

The product specification would include (where relevant):

CLASS OF PRODUCT
The technical class of product – e.g. whole, endowment, pension. Versions available –
single life, joint life (first death, last survivor), and business.
Premium options – single, regular, flexible. Allowable insurance benefit add-ons.

INVESTMENTS
Fund links available and investment objectives of each fund. Investment
guarantees (or lack of investment guarantees) Methods and frequency of unit
pricing. The investment accounting and management system to be used.

MARKETING AND DISTRIBUTION

The distribution channels through which the product is available. Variations of
product design by distribution channels, if any.
The initial and renewal commission payable rules Capabilities of illustration
system to be used. Marketing material to be available, Training and qualification
standards of anti linked insurance intermediaries.

ADMINISTRATION
Business processing rules – new and ongoing business. Policy and endorsement
wordings.Cash processing rules – allocation of cast to policies, late processing
rules.Permitted policy changes (by the insurer and by the client) Availability of
loans and / or partial withdrawals and the rules for administering them Non-
forfeiture provisions.

67
PRICING
This means the level and type of charges that the insurer can take under the
policy. The types of charge, which can be levied, are initial charges, surrender
charges, renewal charges, fund management charges, and switch or
redirection charges. In addition, charges are taken for add-on benefits if the
premium for such benefits is not included in the total premium payable.

INITIAL CHARGES
Initial charges are intended to cover the marketing, distribution and other new
business costs relating to the policy. There are many different variations of initial
charges, but essentially, whatever method is used; the effect is that less money is
actually allocated to the policy than is received from the client for a period of time.
Some possible way of doing this are:

Allocate no money to the policy for a period of months.

Allocate only a proportion of each premium to the policy for a period of months.
Allocate money received in the early months of a policy to units that have a higher fund
management charge than these purchases by later premiums.

In the event of the policy being surrendered, the future excess fund management
charges, in excess of the regular charges that would have been levied on these units,
are levied at the point of surrender. As such, the excess fund management charges will
be received regardless of whether the policy runs its full term or not, and only the
amount of money required to purchase the units net of the excess fund management
charges needs to be allocated to the policy.

ADD-ON BENEFITS CHARGES

These are usually calculated using a current cost method (unless the premium for add-
on benefits is included in the total premium). This means that risk premium rate are
applied each month the sum at risk under each benefit. Any charge over and above

68
the pure risk premium charge will help offset expenses.

CHOOSING A CHARGING STRUCTURE

The pattern of expenses incurred for a life insurance policy will always be high
acquisition costs followed by much lower but steadily increasing renewal costs. There
will also usually be a high initial commission followed by a much lower renewal
commission. Ideally, therefore, the charging structure should match this incidence of
expenses with a high initial charge followed by a much lower level of renewal charges.
For marketing reasons, this may be unacceptable and the insurer may have to either
recoup initial expenses over a period of time by taking charges that (Significantly)
exceed there renewal expenses or disguise the high initial charges. It was this latter
approach that gave rise to the concept of initial units (units that have a high fund
management charge.

The alternative approach of taking higher renewal charges makes the insurer
vulnerable to early lapses, particularly if no surrender penalty is applied. Taking
charges more evenly can be accomplished in a variety of ways, but the main ones
are:

A high bid/offer spread.

An allocation rate of (significantly) less than 100%. This may be increased after a
period of years to 100% or more and can be marketed as a loyalty bonus.
An investment fee (often expressed as a percentage of the premium)

This is effectively an additional bid/offer spread.

A high fund management fee on all units. This could be reduced after a period

of years (for example by allocating bonus units) to bring the fund management

charge into line with the market more. These can be used either in isolation or in

combination.

69
 Types of Unit linked plan

There are many unit linked plan of HDFC standard life insurance company.

1. Unit Linked Young Star Plus II

2. Unit Linked Pension II

3. Unit Linked Endowment II

4. Unit linked enhanced life protection

5. children plan

6. Money back plan

7. Single premium whole of life plan

8. Saving assurance plan

But in this project I have discuss only three plans because these three plans have the
maximum share in the total business of the HDFC Standard life insurance company
limited. These plans are as follows:

1. Unit Linked Young Star Plus II

2. Unit Linked Pension II

3. Unit Linked Endowment II

70
 1. Unit linked Young Star Plus II

As a parent, your priority is your children’s future and being able to meet their dreams and
aspiration. Today, we need more money for providing a good education, establishing a
professional career or even a modest wedding because these are expensive. Costs are
increasing fast. Just imagine how much we need when our children take these important
steps in life when institute like IIM is increasing their fees for education by leaps and
bound.

This plan ensures us a bright future for your children. It makes your child able to
lead a life of respect and dignity with a secured financial future.

Benefits of this plan

The HDFC unit linked Young star Plus II gives us:

• Valuable protection to your child in case you are not around.

• An outstanding investment opportunity by providing a choice of thoroughly
researched and selected investments.
• Regular loyalty units to boost your fund value every year.
• Flexible benefit combinations and premium payment options.
• Flexible additional benefit options such as critical illness cover.
• Flexible benefit payment preferences- Double and Triple Benefit.

Three steps to own your plan

Step1: CHOOSE YOUR REGULAR PREMIUM

IN this policy you will continue to pay each year of the policy. You can pay monthly, half-
yearly or annually. The minimum regular premium is Rs. 12,000 per year for annual and

71
half yearly policies. For monthly mode, the minimum regular premium is Rs 1500 per
month.

Step2: CHOOSE YOUR LEVEL OF PROTECTION

we can choose any amount of sum Assured with, a minimum of 5 times your chosen
annul regular premium and a maximum of 40 times your chosen annul regular premium.

Step3: CHOOSE ADITIONAL PLAN BENEFIT

It offers a range of valuable protection options to secure the future for whole family.

Benefit Benefit payment Summary of the

Types Preference benefits

1.It will pay the sum assured to the beneficiary.

2. Our family need not pay any further premiums. it will

pay 100% of all the future regular premiums at the
Double
original level towards the beneficiary policy as and when
Benefit due, on an annual basis.

3. Any Critical illness cover terminates immediately.

Death 1. It will pay the Sum Assured to the beneficiary.

Benefit 2. Our family need not pay any further premiums. it will
pay 50% of all the future premiums at the original level
Triple
towards our policy and 50% of the premiums will be paid
72
 Benefit to the beneficiary as and when due, on an annual basis.

3. Any critical illness cover terminates immediately.

1. We will pay the sum Assured to the beneficiary.

2. our family need not pay any further premiums. It will

pay 100% of all the future regular premiums at the
Double
original level towards your policy as and when due, on an
Benefit annual basis.

3. The death benefit cover terminates immediately.

Critical 1. it will pay the sum assured to the beneficiary.

Illness 2. our family need not pay any further premiums it will
pay 50% of all the future premiums at the original level
Benefit Triple
towards your policy as and when due, on an annual
Benefit basis.

3. The death benefit cover terminates immediately.

Step4: CHOOSE YOUR INVESTMENT FUNDS

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by
the investor. This means that the premiums you pay in this plan are subject to investment
risks associated with the capital markets. The unit prices of the funds may go up or down,
reflecting changes in the capital markets.

So to balance investors level of risk and return, making the right investment choice
is very important and you are responsible for the choices you make.

It has 7 funds that give investor:-

a) The potential for higher but more variable returns over the term of your policy; or

73
 b) The more stable returns with lower long-term potential.

Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.

Table of funds are given below:-

Asset Class Risk &

Money Bank Govt. Equity
Return Rating
market++ Deposit++ securities
Fund + Composition
Fund &bonds
Liquid Fund 100% - Low

Stable Managed 0-30% 70-100% - Low

Fund

Secure Managed 0-5% 0-20% 75-100% - Low-

Fund Moderate

Defensive Managed 0-5% 0-15% 50-85% 15%-30% Moderate

Fund

Balanced Managed 0-5% 0-15% 20-70% 30%-60% High

Fund

Equity Managed Fund 0-5% 0-10% 0-40% 60%-100% Very high

Growth Fund 0-5% - - 95%-100% Very high

+ note on the funds shows will manage the investment in each fund so that the proportion
of each Asset class is always with the ranges. + + shows Money market instruments. It
include liquid Mutual Funds, commercial papers, commercial bills, treasury bills,
government securities having an unexpired maturity up to one year. Bank deposits means
deposits issued by any primary dealer or non Banking and banking financial company
approved by the reserve by the reserve bank of India or any other public Financial

74
institutions or by Housing Finance Companies approved by the National Housing Bank.
The past performance of any of the funds

is not necessarily an indication of future performance. Unit prices can go up and down. No
fund offers an assured return. The names of the fund it offer under this plan do not, in any
way, indicate the quality of the plan, its future prospects or returns.

ELIGLBILTY

The age and term limit for taking out a HDFC unit linked young star plus II are as show
below:

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) MAXIMUM AGE

Minimum Maximum Minimum Maximum AT MATURITY

BENEFIT OPTION
(Yrs.)

Life option 10 25 18 65 75

Life and health option 10 25 18 55 65

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

PRIMIUM PAID DURING YEAR (Rs.) / ALLOCATION RATE

PRIMIUM FREQUENCY YEARLY HALF YEARLY MONTHLY

Single premium top up (s) -Year 1 97.50% 97.50% 97.50%

75
Single premium top up (s) -Year 2+ 98.00% 98.00% 98.00%

2. Unit Linked Pension II

The masses of Unit linked Pension is live a life of dignity and self respect. Today we are
busy climbing the ladder of success and realizing your dreams. Today, time is with you.
Just take a moment and think. It will make you able to continue at the same pace.

The HDFC Unit Linked Pension is an insurance policy that is designed to provide a
retirement income for life with the freedom to maximize your investment returns. Stride
into your golden years of retirement with dignity and pride.

Benefits of this plan

The HDFC unit linked pension gives you

• An outstanding investment opportunity by providing a choice of thoroughly

researched and selected investments.
• It gives a post retirement income for life
• Flexibility to plan your retirement date and
• Freedom to invest premiums as per your preference

Steps regarding this Plan

Step1: CHOOSE YOUR RETIREMENT AGE

You can select any age you wish to retire at vesting age, between 50 years and 75 years.

Step2: CHOOSE YOUR PREMIUM YOU WISH TO INVEST, BASED ON YOUR

RETIREMENT NEED

76
You can choose either a single premium policy or a regular premium policy

For a regular premium policy, you continue to pay your chosen premium each year of the
policy. The minimum regular premium is Rs.10,000 per year. You can pay monthly (using
standing instructions or ecs Mandate), quarterly, half yearly or annually.

The minimum premium for a single premium policy is Rs.25,000. you may choose
to pay a hoc single premium top-up or additional regular premiums depending on the
policy type you have chosen and your convenience.

Step3: CHOOSE YOURT INVESTMENT STRATEGY

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by
the investor. This means that the premiums you pay in this plan are subject to investment
risks associated with the capital markets. The unit prices of the funds may go up or down,
reflecting changes in the capital markets.

So to balance investor’s level of risk and return, making the right investment choice
is very important and you are responsible for the choices you make.

It has 7 funds that give investor:-

a) The potential for higher but more variable returns over the term of your policy; or

b) The more stable returns with lower long-term potential.

Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.

77
Table of funds are given below:-

78
 Asset Class Risk &
Money Bank Govt. Equity
Return Rating
market++ Deposit++ securities
Fund + Composition
Fund &bonds
Liquid Fund 100% - Low

Stable Managed 0-30% 70-100% - Low

Fund

Secure Managed 0-5% 0-20% 75-100% - Low-

Fund Moderate

Defensive Managed 0-5% 0-15% 50-85% 15%-30% Moderate

Fund

Balanced Managed 0-5% 0-15% 20-70% 30%-60% High

Fund

Equity Managed Fund 0-5% 0-10% 0-40% 60%-100% Very high

Growth Fund 0-5% - - 95%-100% Very high

ELIGIBILITY

The age and term limit for taking out the HDFC unit linked pension II are as below:

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) AGE AT VESTING (Yrs.)

Minimum Maximum Minimum Maximum Minimum Maximum

10 40 18 65 50 75

Premium allocation charges

79
This is the premium based charge. After deducting this charge from your premium, the
remainder is invested to buy unit. The allocations are guaranteed for the entire duration of
the policy term.

PRIMIUM PAID DURING YEAR (Rs.) / PREMIUM ALLOCATION RATE

PRIMIUM FREQUENCY YEARLY HALF YEARLY MONTHLY

Annualized regular premium -Year 1

12,000 to 4,99,999 60% 60% 60%

5,00,000 to 10,00,000 80% 80% 80%

Annualized regular premium -Year 2 85% 80% 80%

Annualized regular premium -Year 3+ 98% 98% 98%

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

SINGLE PREMIOUM TOP-UP (s) ALLOCATION RATE

Paid during -Year 1 97.50%

Paid during -Year 2+ 98.00%

3. Unit Linked Endowment II

It’s massage is to invest in financial security and self respect for your and your family in
this policy, the investment risk in investment portfolio is borne by the policy holder.

80
Benefits of this product

The HDFC unit linked endowment plus II gives

• A valuable protection to your family in case you are not around.

• An outstanding investment opportunity by providing a choice of the thoroughly
Researched and selected investment.

• Flexible additional benefit options such as critical illness cover.

• Flexibility benefits combination and premium payment option.

Simple steps for this product

Step1: CHOOSE YOUR REGULAR PREMIUM

This is the premium you will continue to pay each year of the policy. You can pay monthly,
half-yearly or annually. The minimum regular premium is Rs 12,000 per year for annual
and half yearly policies. For monthly mode, the minimum regular premium is Rs.1,500 per
month.

You may also choose to pay although single premium or additional regular
premiums depending on your convenience.

Step2: CHOOSE YOUR LEVEL OF PROTECTION

You can choose any amount of sum Assured with:

• A minimum of 5 times your chosen annual regular premium.

81
 • A maximum of 40 times your chosen annual regular premium.

Step3: CHOOSE ADITION PLAN BENEFIT

It offer a range of valuable protection options to secure the future for your family

Life option - Death Benefit

Extra Life option - death benefit + accidental Death benefit

Life and health option - Death benefit + critical illness benefit

Extra life and health option - Death benefit + critical illness benefit + Accidental
Death benefit.

Benefit types Summary

We will pay the greater of your sum assured (less any

withdrawals you have made in the two year before your
Death Benefit
claim) and your total fund value to your family.

The policy will terminate.

We will pay the greater of your sum assured (less any

withdrawals you have made in the two year before your
claim) and your total fund value to your family.
Critical illness benefit
The policy will terminate.

In addition to the death benefit, we will pay a further

sum assured to your family.
Accidental Death Benefit.
The policy will terminate.

82
Step4: CHOOSE YOUR INVESTMENT FUNDS

The most significant part of the Unit Linked Plan is that investor can choose the mode of
investment. In this plan the investment risk in your chosen investment portfolio is borne by
the investor. This means that the premiums you pay in this plan are subject to investment
risks associated with the capital markets. The unit prices of the funds may go up or down,
reflecting changes in the capital markets.

So to balance investors level of risk and return, making the right investment choice
is very important and you are responsible for the choices you make.

It has 7 funds that give investor:-

a) The potential for higher but more variable returns over the term of your policy; or

b) The more stable returns with lower long-term potential.

Your investment will buy units in any of the following 7 funds designed to meet your risk
appetite.

Table of funds are given below:-

83
 Asset Class Risk &
Money Bank Govt. Equity
Return Rating
market++ Deposit++ securities
Fund + Composition
Fund &bonds
Liquid Fund 100% - Low

Stable Managed 0-30% 70-100% - Low

Fund

Secure Managed 0-5% 0-20% 75-100% - Low-

Fund Moderate

Defensive Managed 0-5% 0-15% 50-85% 15%-30% Moderate

Fund

Balanced Managed 0-5% 0-15% 20-70% 30%-60% High

Fund

Equity Managed Fund 0-5% 0-10% 0-40% 60%-100% Very high

Growth Fund 0-5% - - 95%-100% Very high

+ note on the funds shows will manage the investment in each fund so that the proportion
of each Asset class is always with the ranges. + + shows Money market instruments. It
include liquid Mutual Funds, commercial papers, commercial bills, treasury bills,
government securities having an unexpired maturity up to one year. Bank deposits means
deposits issued by any primary dealer or non Banking and banking financial company
approved by the reserve by the reserve bank of India or any other public Financial
institutions or by Housing Finance Companies approved by the National Housing Bank.
The past performance of any of the funds is not necessarily an indication of future
performance. Unit prices can go up and down. No fund offers an assured return. The

84
names of the fund it offer under this plan do not, in any way, indicate the quality of the
plan, its future prospects or returns.

ELIGLBILTY

The age and term limit for taking out a HDFC unit linked Endowment II are as show below:

TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) MAXIMUM AGE

Minimum Maximum Minimum Maximum AT MATURITY

BENEFIT OPTION
(Yrs.)

Life option 10 30 18 65 75

Extra life option 10 30 18 55 70

Life and health option 10 30 18 55 65

Extra life and health 10 30 18 55 65

option

Single Premium top up Allocation:

The allocation rate for single premium top up are given below:

SINGLE PREMIOUM TOP-UP (s) ALLOCATION RATE

Paid during -Year 1 97.50%

Paid during -Year 2 97.50%

Paid during -Year 3+ 98.00%

85
Tax benefit (Based on current tax law)

You will be eligible for tax benefit under section 80C and section 10(10D) of the income
tax, 1961, subject to the provision contain therein.

• Under section 80C, you can save up to Rs. 33,990 from your tax each year
(calculate on the higher tax bracket) as premium up to Rs. 1,00,000 are allowed at
a deduction from your taxable income.
• Under section 10(10D), the benefit you receive from this policy are exempt from
tax.

The above mentioned tax benefits are subjected to the change in the tax law.

86
INTRODUCTION OF FUNDS

All the unit linked plans of HDFC standard life insurance company have the 7 types of
fund. They are as follows:-

1. Liquid fund

2. Stable managed fund

3. Secure managed fund

4. Defensive managed fund

5. Balanced managed fund

6. Equity managed fund

7. Growth fund

The HDFC standard life insurance provide these 7 funds to their investor. These fund are
different from each other according to their investment paturn. This fund is useful and
fruitful for all type of investors. These funds are different from each other some fund
provide higher return to their investor with a high risk, some fund provide less return with
very less risk, and some funds provide moderate return with a moderate rate of risk. So
the investors have various types of options to invest their fund. If the investor want less
return but security of investment then there is liquid fund for them, if the investor wants
high return and accept the high risk factor then there is growth fund is available. For the
moderate return there are balanced managed fund, equity managed fund, defensive
managed fund are available. Thus the investors have various option for investment their
money.

87
 FUNDS AND INVESTMENTS

The fund choices available on our unit linked young Star plan are the same as
the funds under the existing unit linked endowment plan. You would already be
familiar with these funds:

a) Liquid Fund

The Liquid fund invests 100% in bank deposits and high quality short-term money
market instruments. The fund is designed to be cash secure and has a very low level of
risk; however unit prices may occasionally go down due to the use of short-term money
market instruments.
At inception, investments up to 20% can be allocated to this fund. Individual life

88
b) Secure Managed Fund

The Secure Managed fund invests 100% in Government Securities and Bonds issued
by companies or other bodies with a high credit standing, however a small amount of
working capital may be invested in cash to facilitate the day- to-day running of the fund.
This fund has a low level of risk but unit prices may still go up or down.

individual pension

89
 C) Defensive Managed Fund

15% to 30% of the Defensive Managed fund will be invested in high quality Indian
equities. The remainder will be invested in Government Securities and Bonds issued
by companies or other bodies with a high credit standing. In addition, a small amount of
working capital may be invested in cash to facilitate the day-to-day running of the fund.
The fund has a moderate level of risk with the opportunity to earn higher returns
in the long term from some equity investment. Unit prices may go up or down.

90
d) Balanced Managed Fund

30% to 60% of the Balanced Managed fund will be invested in high quality Indian equities.
The remainder will be invested in Government Securities and Bonds issued by
companies or there bodies with a high credit standing. In addition a small amount of
working capital may be invested in cash to facilitate the day-to-day running of the fund.
The fund has a higher level of risk with the opportunity to earn higher returns in the long
term from the higher proportion it invests in equities Unit prices may go up or down.

91
E) Growth Fund

The Growth fund invests 100% in high quality Indian equities. In addition a small amount
of working capital may be invested in cash to facilitate the day-to-day running of the
fund. The fund has a higher level of risk with the opportunity to earn higher returns in the
long term.

92
F) Stable Manage fund

100% fund of stable manage fund are invested in Government securities & bonds issues
by companies and other bodies with a high credit standing. This fund have a low level of
risk due to exposure only to short term bond (maximum 2 years). This fund gives the
higher potential return than liquid fund over a long period of time. this fund have no invest
in short term money market instruments.

G) Equity managed fund

60 to 100% of equity managed fund will be invested in high quality Indian equity and
remaining of fund is invested in government securities and bonds issues by companies
and other bodies with a high credit standing. In addition a small amount of working capital
may be invested in cash to facilitate to day-to-day running of the funds. The fund has the
high level of risk with a greater long term return. The small bond holding will add
diversification and provide a little stability.

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 Performance Statistics

The long-term worth of any Unit Linked policy comes from

# The investment return it gives over time

# The effect of the charges over the lifetime of the policy

The illustration provide at the point of sale comply with IRDA guidelines and show the effect of
charges. This investment return data show that how, in general the various funds are performing.

This illustrated shows how our unit-linked funds available to our Retail Pension business have
performed so far.

We are illustrating our performance from 01-Jan-05 (1-year after launch: 02-Jan-04) to July,
2009.using charts.

These charts are showing that actual year-on-year performance of our fund against the year-on-
year performance of a comparable market index @ (Source: AMFI).they are not showing the unit
prices (normally called NAVs)

They are the superior way of understanding performance because:

# Allow us to compare different funds with different starting NAVs

# Allow us to compare Actual performance

# Provide us with a more comprehensive summary than traditional charts.

For a day where the green column is higher than the red line, HDFC SL has provided a better
return than the index over the preceding year. For a day where the green column is lower than the
red line, HDFC SL has provided a lower return than the index over the preceding year.

To let you see both when HDFC SL has make under or over performed the Index we have shown
the index returns as a line not a series of columns.

CRISIL © Indices are the sole property of CRISIL Limited (CRISIL). CRISIL Indices shall not be
copied, retransmitted or redistributed in any manner for any commercial use. CRISIL has taken
due care and caution in computation of the Indices, based on the data obtained from sources,
which it considers reliable.

94
 INDIVIDUAL-PENSION

A look at changes in unit prices over a various period of time

1. Liquid fund

Liquid fund CRISIL liquid fund

12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2004-05 2005-06 2006-07 2007-08 2008-09

2. Secure managed fund

Secured manage fund I-sec composit index

15.00%

10.00%

5.00%

0.00%

-5.00%
2004-05 2005-06 2006-07 2007-08 2008-09

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3. Balanced managed fund

Balanced managed fund CRISIL balanced fund

50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
2004-05 2005-06 2006-07 2007-08 2008-09

4. Growth fund

Growth fund BSE 100

100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
-20.00%
-40.00%
2004-05 2005-06 2006-07 2007-08 2008-09

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5. Equity managed fund

Equity managed fund

75% BSE 100 + 25% I-sec composit index

40.00%

30.00%

20.00%

10.00%

0.00%
2004-05 2005-06 2006-07 2007-08 2008-09

6. Defensive managed fund

Defensive managed fund CRISIL mip blended

20.00%

15.00%

10.00%

5.00%

0.00%

-5.00%
2004-05 2005-06 2006-07 2007-08 2008-09

97
 CONCLUSION
The main objective of all the investor is to earn the higher return on their investment so
they always try to invest in those securities and fund which give them higher return with a
less risk.

In this project i tried to focus on the performance of various funds of the HDFC SLI. From
the various data available for helping in the project compilation I we said that the
performance of the various funds of the HDFC Standard life insurance is better than what
is prescribed by CRISIL

In this project I conclude that the return on the various funds of the HDFC standard life
insurance is high than the CRISIL indexed. The return of the growth fund of HDFC SLI is
greater than the BSE 100. The return on the balanced managed fund is also greater than
the CRISIL balanced fund. The return of this fund was equal for some time to the CRISIL
balanced fund.

The performance of the defensive managed fund of the HDFC standard life
insurance is always better than the CRISIL mip blended index. This fund always gives the
high return to their customer.

The performance of the secure managed fund of HDFC standard life insurance is
mostly equal to the performance of the I-sec composite index. Both the fund give the good
return to their customer.

The liquid fund of the HDFC standard life insurance is very high than the CRISIL liquid
fund. The performance of this fund is always better than the other fund.

The equity fund of HDFC standard life insurance not gives the good return to their investor
but it is fair and sufficient.

Thus after see all the available data we can said that the all the funds of the HDFC
standard life insurance give the higher return to their customer than the other fund. The
performance of the entire fund in the market is good and the investor like to invest in these

98
funds. On the above discussion we can said that the performance of those funds may be
good in future but is totally depends upon the market condition and fluctuation.

99
 RECMONDATION

The performance of fund is good. They give higher return to their investor but all the
investor wants higher and higher return because it’s human nature. So HDFC SLI should
try to increase their return of various funds.

Company can increase their return through selection of better securities, shares, bonds,
government securities etc. Company should take the effective portfolio investment
decision. No doubt company provides good return to their investor but if the company
selects effective and fruitful portfolio investment plan than company increase their return.
If the company provides better return to their investor than it increases the goodwill and
market share of the company and it become a top insurance company.

100
 APPENDIX

(This Information is for our internal use only, will not to be disclosed to any other
organization / department)

Consumer Behavior towards Insurance

Name Address

Telephone Age

Occupation Annual Income

Marital Status Single Ø Married Ø (Age of Children if applicable)

---------------------------------------------------------------------------------------------------

Q. 1 Any There Insurance Companies, which you are aware of ?

Q. 2 What do you think Insurance Is ?

A2. Necessity for Protection and security Ø

Imposition as an Extra Burden on expenditure Ø

A compulsory Tool for Tax Saving Ø

Q.3 What are the main considerations that a customer looks at while purchasing
an insurance policy.

101
A3. Tax Ø Saving Ø Protection Ø Pension Ø Investment Ø

Q.4 What would you see while purchasing an Insurance Policy from a
Company ?

A4. Standing and Goodwill of the Company Ø

Product range of the Company Ø

Advertisement being given by the company Ø

Services beings given by the Company Ø

Communications and Knowledge of the representative Ø

Returns and Bonus declared by the Company Ø

Other Ø Please specify _________________________________

Q.5 Why you want to buy another Insurance ?

A.5 Tax Benefits Ø Savings Ø Other Ø

Q.6 If saving, What are your financial needs in next 10-20 years.

A.6 Child Education Ø Marriage House Construction Retirement Needs Ø

Q. 7 Are you aware about the Unit Link Plans beings launched by various
Insurance Companies.

A.7. Yes Ø No Ø (If yes, name the Co. and products)

Any other comments :

________________________________________________________________

________________________________________________________________

________________________________________________________________
102
(Thank You)

BIBLIOGRAPHY

WEBSITES

www.hdfcinsurance.com
www.economictimes.com
www.irdaindia.com

www.iiifindia.com

www.google.com and other search engines

BROUCHERS

HDFC Standard Life Insurance

BOOKS

Life Insurance of RNIS Collage of Insurance

Mishra, M.N.; Insurance Principal and Practice

References

Websites

103
http://www.hdfcstandardlifeinsurance.com

http://www.iciciprulife.com/index.jsp

104