Traditional Plans of Tata AIG

A SUMMER TRAINING PROJECT REPORT
ON
“TRADITIONAL PLANS OF TATA AIG LIFE INSURANCE

COMPANY”
Submitted in partial fulfillment of the requirement for the award of

BACHELOR OF BUSINESS ADMINISTRATION
(BANKING & INSURANCE)
Submitted By:
PRIYA SINGH
(0041931808)
5th semester
Under the Guidance of:

Mr. VIKRANT AGARWAL
Kasturi Ram College of Higher Education

(Affiliated to Guru Gobind Singh Indraprastha University)
Narela, Delhi-110040
CHAPTER-1
INTRODUCTION TO INSURANCE
1.1 INTRODUCTION
"Insurance is a contract between two parties whereby one party called insurer undertakes
in exchange for a fixed sum called premiums, to pay the other party called insured a fixed
amount of money on the happening of a certain event." Insurance may be described as a
social device to reduce or eliminate risk of life and property. Under the plan of insurance,
a large number of people associate themselves by sharing risk, attached to individual.
With the help of Insurance, large number of people exposed to a similar risk makes
contributions to a common fund out of which the losses suffered by the unfortunate few,
due to accidental events, are made good. Insurance is a tool by which fatalities of a small
number are compensated out of funds collected from plenteous. Gradually as competition
increased benefits given by industry to its customers increased by leaps and bounds.
Insurance is a basic form of risk management which provides protection against possible
loss to life or physical assets. Person who seeks protection against such loss is termed as
insured, and company that promises to honor claim, in case such loss is actually incurred
by insured, is termed as Insurer. In order to get insurance, insured is required to pay to
insurance company a certain amount called premium. Premium is collected by insurance
companies which acts as trustee to pool created through contributions made by persons
seeking to protect themselves from common risk. Any loss to the insured in case of
happening of an uncertain event is paid out of this pool. Insurance business is divided
into four classes:
• Life Insurance
• Fire Insurance
• Marine Insurance
• Miscellaneous Insurance.
Insurance is a mechanism that helps to reduce the effects of adverse situations in the
economical way. It promises to pay to the owner or beneficiary of the asset, a certain sum
if the loss occurs.
What Is Insurance?
The business of insurance is related to the protection of the economic values of assets.
The asset would have been created through the efforts of the owner. The asset is valuable
to the owner, because he expects to get some benefits from it because it meets some of
his needs. This benefit may be an income or in some other form.
In the case of a factory or a cow, the product generated by it is sold and income is
generated. In the case of a motor car, it provides comfort and convenience in
transportation, there is no direct income. Both are assets and provide benefits.
Every asset is expected to last for a certain period of time during which it will provide
the benefits, after that, the benefit may not be available. There is a life-time for a machine
in a factory or a cow or a motor car. None of them will last for ever. The owner is aware
of this and he can so manage his affairs that by the end of that period or life-time, a
substitute is made available. Thus, he makes sure that the benefit is not lost. However, the
asset may get lost earlier. An accident or some other unfortunate event may destroy it or
make it incapable of giving the benefits. An epidemic may kill the cow suddenly. In that
case, the owner and those enjoying the benefits there from, would be deprived of
the benefits. The planned substitute would not have been ready. There is an adverse or
unpleasant situation. Here, insurance helps to reduce the effects of such adverse
situations.
Concept of Insurance
Insured, are you? The functions of Insurance will give you an idea on how to go ahead
with the approach of insurance and what type of insurance to choose. In a layman's
words, insurance means, ‘a guard against pecuniary loss arising on the happening of an
unforeseen event’. In developing economies, the insurance sector still holds a lot of
potential which can be tapped. Majority of the people in the developing countries remains
unaware of the functions and benefits of insurance and it is for this reason that the
insurance sector is still to grow.
Tangible or intangible – an individual can insure anything! Be it a house, car, factory, or

the voice of a singer, leg of a footballer, and the hand of an author.....etc. It is possible to
insure all these as they have the possibility of becoming non functional by any disaster or
an accident.
1.2 FUNCTION OF INSURANCE
• Primary Functions
• Secondary Functions
• Other Functions
Primary Functions:
1. Providing protection – The elementary purpose of insurance is to allow security

against future risk, accidents and uncertainty. Insurance cannot arrest the risk
from taking place, but can for sure allow for the losses arising with the risk.
Insurance is in reality a protective cover against economic loss, by apportioning
the risk with others.
2. Collective risk bearing – Insurance is an instrument to share the financial loss. It
is a medium through which few losses are divided among larger number of
people. All the insured add the premiums towards a fund and out of which the
persons facing a specific risk is paid.
3. Evaluating risk – Insurance fixes the likely volume of risk by assessing diverse
factors that give rise to risk. Risk is the basis for ascertaining the premium rate as
well.
4. Provide Certainity – Insurance is a device, which assists in changing uncertainty
to certainty.
Secondary Functions:
1. Preventing losses – Insurance warns individuals and businessmen to embrace

appropriate device to prevent unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc.
2. Covering larger risks with small capital – Insurance assuages the
businessmen from security investments. This is done by paying small amount of
premium against larger risks and dubiety.
3. Helps in the development of larger industries – Insurance provides an
opportunity to develop to those larger industries which have more risks in their setting
up.
Others Functions:
1. Is a savings and investment tool – Insurance is the best savings and

investment option, restricting unnecessary expenses by the insured. Also to take the
benefit of income tax exemptions, people take up insurance as a good investment
option.
2. Medium of earning foreign exchange – Being an international business, any
country can earn foreign exchange by way of issue of marine insurance policies and a
different other ways.
3. Risk Free trade – Insurance boosts exports insurance, making foreign trade
risk free with the help of different types of policies under marine insurance cover.
1.3 LIFE INSURANCE
“Life insurance” is a contract between the policy owner and the insurer, where the insurer
agrees to pay a designated beneficiary 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 agrees to pay a stipulated amount (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.
The value for the policyholder is derived, not from an actual claim event, rather it is the
value derived from the 'peace of mind' experienced by the policyholder, due to the
negating of adverse financial consequences caused by the death of the Life Assured.
Life policies are legal contracts and the terms of the contract describe the limitations of
the insured events. Specific exclusions are often written into the contract to limit the
liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil
commotion.
Life-based contracts tend to fall into two major categories:
1. Protection policies - designed to provide a benefit in the event of specified event,

typically a lump sum payment. A common form of this design is term insurance.
2. Investment policies - where the main objective is to facilitate the growth of
capital by regular or single premiums. Common forms (in the US anyway)
are whole life, universal life and variable life policies.
1.4. ROLES OF THE LIFE INSURANCE

1. Life insurance as an investment: - Insurance products yield more than any other
investment instruments and it also provides added incentives or bonus offered by
insurance companies.
2. Life insurance as risk cover: - Insurance is all about risk cover and protection of
life. Insurance provides a unique sense of security that no other form of invest can
provide.
3. Life insurance as tax planning: - Insurance serves as an excellent tax saving

mechanism
Role of insurance in economic development:

Entrepreneurs manage the risk of accidental loss by weighing the costs and benefits of
each alternative. In a structured risk management process, this involves:
(1) Identifying the exposures to accidental loss;

(2) Evaluating alternative techniques for treating each loss exposure;
(3) Choosing the best alternative; and
(4) Monitoring the results to refine the choices.
Those who do not apply a structured process still make decisions about risk, although
sometimes by default rather than design. The scope of an economy’s insurance market
affects both the range of available alternatives and the quality of information to support
decisions. For example, a manufacturer might produce only for the local market, forgoing
more lucrative opportunities in distant markets in order to avoid the risk of losing goods
in shipment. Transport insurance can mitigate this loss exposure and enable the
manufacturer to expand. Similarly, to avoid the risk of total loss from drought, a
commercial farmer may keep half of his seed in reserve. Crop insurance can protect
against drought and permit all of the seed to be planted for a smaller premium than the
cost of holding half in reserve. Thus public policies that encourage insurance operations
improve the economy’s productivity by broadening the range of investments. Insurers
also contribute specialized expertise in the identification and measurement of risk. This
expertise enables them to accept carefully specified risks at lower prices than non-
specialists. They also have an incentive to collect and analyze information about loss
exposures, since the more precisely they measure the cost of risk, the more they can
expand. As a result, the insurance market generates price signals to the entire economy,
helping to allocate resources to more productive uses. Insurers also have an incentive to
control losses, which is a significant social benefit. By offering discounts for seat belts,
smoke detectors, or other measures that reduce the frequency or severity of losses, they
lower their eventual claims costs, in the process saving lives and reducing injuries. On the
investment side, due to the long term nature of their liabilities, sizeable reserves, and
predictable premiums, life insurance providers can serve an important function as
institutional investors providing capital to infrastructure and other long term investments
as well as professional oversight to these investments. Of course, these benefits are fully
realized only in markets where insurance providers invest a substantial portion of their
portfolios domestically. The net result of well functioning insurance markets should be
better pricing of risk, greater efficiency in the overall allocation of capital and mix of
economic activities, and higher productivity. Importantly, these unique functions of
insurance should be complementary to banking and financial sector deepening more
broadly. For instance, insurance facilitates credit transactions such as the purchase of
homes and cars and business operations, while depending in turn on well functioning
payment systems and robust investment opportunities.
1.5 IMPORTANCE OF THE LIFE INSURANCE
1. Protection against untimely death: - Life insurance provides protection to the

dependents of the life insured and the family of the assured in case of his untimely
death. The dependents or family members get a fixed sum of money in case of
death of the assured.
2. Saving for old age: - After retirement the earning capacity of a person reduces.
Life insurance enables a person to enjoy peace of mind and a sense of security in
his/her old age.
3. Promotion of savings: - Life insurance encourages people to save money

compulsorily. When life policy is taken, the assured is to pay premiums regularly
to keep the policy in force and he cannot get back the premiums, only surrender
value can be returned to him. In case of surrender of policy, the policyholder gets
the surrendered value only after the expiry of duration of the policy.
4. Initiates investments: - Life Insurance Corporation encourages and mobilizes the

public savings and canalizes the same in various investments for the economic
development of the country. Life insurance is an important tool for the
mobilization and investment of small savings.
5. Credit worthiness: - Life insurance policy can be used as a security to raise

loans. It improves the credit worthiness of business.
6. Social Security: - Life insurance is important for the society as a whole also. Life
insurance enables a person to provide for education and marriage of children and
for construction of house. It helps a person to make financial base for future.
7. Tax Benefit: - Under the Income Tax Act, premium paid is allowed as a
deduction from the total income under section 80C
1.6 INSURANCE CYCLE
Lloyd's Franchise Performance Director Rolf Tolle stated in 2007 that “mitigating the
insurance cycle was the “biggest challenge” facing managing agents in the next few
years”.
All industries experience cycles of growth and decline, 'boom and bust'. These cycles are
particularly important in the insurance and re-insurance industry as they are especially
unpredictable.
Lloyd's of London research in 2006 revealed, for the second year running, that Lloyd’s
underwriters see managing the insurance cycle as the top challenge for the insurance
industry, and nearly two-thirds believe that the industry at large is not doing enough to
respond to the challenge.
The Insurance Cycle affects all areas of insurance except life insurance, where there is
enough data and a large base of similar risks (i.e. people) to accurately predict claims,
and therefore minimize the risk that the cycle poses to business.
History:
The insurance cycle is a phenomenon that been recognized since at least the 1920s. Since
then it has been considered an insurance 'fact of life'. The corporate culture that
dominates insurance assumes that inherent uncertainty of the business must logically lead
to a cyclical business model. Lloyd's counters that this has become “a self-fulfilling
prophecy”.
More recently, insurers have attempted to model the cycle and base their policy pricing
and risk exposure accordingly.
Description of the cycle:
For the sake of argument lets start from a 'soft' period in the cycle, that is a period in
which premiums are low, capital base is high and competition is high. Premiums continue
to fall as naive insurers offer cover at unrealistic rates, and established businesses are
forced to compete or risk losing business in the long term.
The next stage is precipitated by a catastrophe or similar significant loss, for

example Hurricane Andrew or the attacks on the World Trade Center. The graph below
shows the effect that these two events had on insurance premiums.
After a major claims burst, less stable companies are driven out of the market which
decreases competition. In addition to this, large claims have left even larger companies
with less capital. Therefore, premiums rise rapidly. The market hardens,
and underwriters are less likely to take on risks.
In turn, this lack of competition and high rates looks suddenly very profitable, and more
companies join the market whilst existing business begin to lower rates to compete. This
causes a market saturation and Insurance Cycle begins again.
Dealing with the insurance cycle:
Whilst many underwriters believe that the cycle is out of their hands, Lloyd’s is trying to
push for more proactive management of the ups and downs of the industry. In 2006 they
published their ‘Seven Steps’ to managing the insurance cycle:
1. Don’t follow the herd. Insurers need to be prepared to walk away from markets when
prices fall below a prudent, risk-based premium.
2. Invest in the latest risk management tools. Insurers must push for continuous
improvement of these tools based on the latest science around issues such as climate
change, and make full use of them to communicate their pricing and coverage decisions.
3. Don’t let surplus capital dictate your underwriting. An excess of capital available
for underwriting can easily push an insurer to deploy the capital in unsustainable ways,
rather than having that capital migrate to other uses such as hedge funds and equities, or
returning it to shareholders.
4. Don’t be dazzled by higher investment returns. Don’t let higher investment returns
replace disciplined underwriting as base rates creep up on both sides of the Atlantic.
Notionally, splitting the business into insurance and asset management operations, and
monitoring each separately, is one way to achieve this.
5. Don’t rely on “the big one” to push prices upwards. The spectacular insured loss
should not be used as an excuse to raise prices in unrelated lines of business. Regulators,
rating agencies, and analysts - not to mention insurance buyers – are increasingly
resisting such behaviour.
6. Redeploy capital from lines where margins are unsustainable. There is little that
individual insurers can do to alter overall supply-and-demand conditions. But insurers
can set up internal monitoring systems to ensure that they scale back in lines in which
margins have become unsustainable and migrate to other lines.
7. Get smarter with underwriter and manager incentives. Incentives for key staff
should be structured to reward efficient deployment of capital, linking such rewards to
target shareholder returns rather than volume growth.
The Lloyd’s Managing Cycle report has several problems. It focuses on the industry as a
whole being able to work together to reduce the effect of market fluctuations. However,
this is somewhat unrealistic, as if underwriters do not write business in a soft market (i.e.
at cheap prices for the customer), it will be hard to win this business back in a hard
market due to loyalty issues.
Rolf Tolle asserts that “There is nothing complex about the cycle. It is about having the
courage of your convictions to act with strength. Swiss Re argue that instead of ‘beating’
the cycle, insurers should learn to anticipate its fluctuations. “Cycle management is
essentially proper timing. Monitoring the market, predicting market trends and accurately
assessing prices play an important role”.
Swiss Re give several examples of potential business strategies. One is to write risks at a
roughly fixed rate. This is clearly not practicable as it does not allow for the cyclical
nature of the market. Another is to fail to react fast enough to changes in the market,
which leaves a company even more exposed. The recommended strategy is one that relies
on prediction of the business cycle and setting premiums based on models and
experience.
The future of the insurance cycle:
The unpredictable nature of the insurance industry makes it very unlikely that the cycle
can be eliminated. For several years Lloyd's have been urging caution in soft periods and
restraint in hard periods. We are currently entering a soft period of high competition and
falling premiums. This suggests that the free market has not heeded the warnings of
previous periods. Having said this, the insurance industry as a whole is several hundred
years old and has survived several other softening and hardening periods.
1.7 OBJECTIVES
Each research study has its own specific purpose. It is like to discover to Question
through the application of scientific procedure. But the main aim of our research to find
out the truth that is hidden and which has not been discovered as yet. Our research study
has two objectives:-
PRIMARY OBJECTIVE:
How TATA AIG Ltd is best services providers as a insurance company in the Tri-city
region.
SECONDARY OBJECTIVE: -
• To know about the awareness towards insurance companies and their products
• To study about the competitive position of TATA AIG Ltd in Competitive
Market.
• To study about the effectiveness & efficiency of TATA AIG Ltd in relation to its
competitors
• To study about whether people are satisfied with TATA AIG Services &
Management System or not
• To study about the difficulties faced by persons while dealing with TATA AIG
1.8 SCOPE OF THE STUDY
 A big boom has been witnessed in insurance sector in Indian Economy in

recent times..
 The study deals with TATA AIG in focus with marketing strategies of the
company and their impact on indian market .
 The study then goes to evaluate and analyse the findings so as to present a clear
outlook of the marketing strategies and the growth of the insurance sector .
1.9 METHODOLOGY
Step1: Research Methodology:
It is the highly intellectual human activity used in investigation and deals in the manner
in which how data is collected and analysed
Step 2: Develop the research plan:
It includes the following methods?
1. observation
2. surveys
3. behavioral data
4. experiments
Step 3: Research design
Research design provides the glue that holds the research project together. A design is
used to structure the research, to show how all of the major parts of the research project --
the samples or groups, measures, treatments or programs, and methods of assignment --
work together to try to address the central research questions. Here, after a brief
introduction to research design, I'll show you how we classify the major types of designs.
You'll see that a major distinction is between the experimental designs that use random
assignment to groups or programs and the quasi-experimental designs that don't use
random assignment. People often confuse what is meant by random selection with the
idea of random assignment. Understanding the relationships among designs is important
in making design choices and thinking about the strengths and weaknesses of different
designs.
Step 4: Data source:

There are 2 types of data source collection which are as follows:
a. primary data : This type of data is collected by the researcher himself and is
done through interviews and questionnaires
b. secondary data is the data when it is not collected by the researcher and is
collected by various other methods or with the help of other projects
Step 5: Research instruments: In this, questionnaire is to be filled on the basis of

responses of the customers and the sample size of the other people
a. Sample unit: This is that element or set of elements considered for selection in some
stage of sampling (same as the elements, in a simple single-stage sample). In a multi-
stage sample, the sampling unit could be blocks, households, and individuals within the
households.
b. Sampling frame: This is the actual list of sampling units from which the sample, or
some stage of the sample, is selected. It is simply a list of the study population.
c. Sample design: This refers to a set of rules or procedures that specify how a sample is
to be selected. This can either be probability or non-probability.
d. Sample size: The number of elements in the obtained sample.
Area of study: South Delhi
Time of study: 8 weeks
Advantages of Sampling
i. Sampling saves time and money
ii. Sampling saves labor
Step 7: Analyzing information:

To extract findings from the collected data . It includes the formatting and tabulation of
data by the researcher which make pie charts on the basis of analyzed data.
1.10 LIMITATIONS OF THE STUDY
CHAPTER-2
INTRODUCTION TO INDIAN INSURANCE INDUSTRY
2.1 INDIAN INSURANCE INDUSTRY

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972,
Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related
Acts. With such a large population and the untapped market area of this population
Insurance happens to be a very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 per cent annually. Together with banking services, it adds
about 7 per cent to the country’s GDP .In spite of all this growth the statistics of the
penetration of the insurance in the country is very poor. Nearly 80% of Indian
populations are without Life insurance cover and the Health insurance. This is an
indicator that growth potential for the insurance sector is immense in India. It was due to
this immense growth that the regulations were introduced in the insurance sector and in
continuation “Malhotra Committee” was constituted by the government in 1993 to
examine the various aspects of the industry. The key element of the reform process was
Participation of overseas insurance companies with 26% capital. Creating a more
efficient and competitive financial system suitable for the requirements of the economy
was the main idea behind this reform.
Since then the insurance industry has gone through many sea changes .The competition
LIC started facing from these companies were threatening to the existence of LIC .since
the liberalization of the industry the insurance industry has never looked back and today
stand as the one of the most competitive and exploring industry in India. The entry of the
private players and the increased use of the new distribution are in the limelight today.
The use of new distribution techniques and the IT tools has increased the scope of the
industry in the longer run.
2.2 HISTORY OF INSURANCE SECTOR

The business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of
the important milestones in the life insurance business in India are given in the table 1.
Table 1: Milestone’s in the life insurance business in India
Year Milestones in the life insurance business in India
1912 The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business
1928 The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance
businesses
1938 Earlier legislation consolidated and amended to by the Insurance Act with
the objective of protecting the interests of the insuring public.
1956 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of rs. 5crore from the
Government of India.
The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in the
year 1850 in Calcutta by the British. Some of the important milestones in the general
insurance business in India are given in the table 2.
Table 2: Milestone’s in the general insurance business in India
Year Milestones in the general insurance business in India
1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact
all classes of general insurance business
1957 General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business
practices
1968 The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972 The General Insurance Business (Nationalization) Act, 1972 nationalized
the general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies viz. the
National Insurance Company Ltd., the New India Assurance Company Ltd.,
the Oriental Insurance Company Ltd. and the United India Insurance
Company Ltd. GIC incorporated as a company.
2.3 INDIAN INSURANCE MARKET
Insurance has a long history in India. Life Insurance in its current form was introduced in
1818 when Oriental Life Insurance Company began its operations in India. General
Insurance was however a comparatively late entrant in 1850 when Triton Insurance
company set up its base in Kolkata. History of Insurance in India can be broadly
bifurcated into three eras: a) Pre Nationalization b) Nationalization and c) Post
Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance
Corporation of India was formed by consolidating the operations of various insurance
companies. General Insurance followed suit and was nationalized in 1973. General
Insurance Corporation of India was set up as the controlling body with New India, United
India, National and Oriental as its subsidiaries. The process of opening up the insurance
sector was initiated against the background of Economic Reform process which
commenced from 1991. For this purpose Malhotra Committee was formed during this
year who submitted their report in 1994 and Insurance Regulatory Development Act
(IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private
companies and Private Insurance Company effectively started operations from 2001.
The introduction of private players in the industry has added value to the industry. The
initiatives taken by the private players are very competitive and have given immense
competition to the on time monopoly of the market LIC. Since the advent of the private
players in the market the industry has seen new and innovative steps taken by the players
in this sector. The new players have improved the service quality of the insurance. As a
result LIC down the years have seen the declining phase in its career. The market share
was distributed among the private players. Though LIC still holds the 75% of the
insurance sector but the upcoming natures of these private players are enough to give
more competition to LIC in the near future. LIC market share has decreased from 95%
(2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of
the insurance industry. Table 3 shows the mane of the player in the market.
Insurance Market-Present:
The insurance sector was opened up for private participation four years ago. For years
now, the private players are active in the liberalized environment. The insurance market
have witnessed dynamic changes which includes presence of a fairly large number of
insurers both life and non-life segment. Most of the private insurance companies have
formed joint venture partnering well recognized foreign players across the globe.
There are now 29 insurance companies operating in the Indian market – 14 private life
insurers, nine private non-life insurers and six public sector companies. With many more
joint ventures in the offing, the insurance industry in India today stands at a crossroads as
competition intensifies and companies prepare survival strategies in a detariffed scenario.
There is pressure from both within the country and outside on the Government to increase
the foreign direct investment (FDI) limit from the current 26% to 49%, which would help
JV partners to bring in funds for expansion.
There are opportunities in the pensions sector where regulations are being framed. Less
than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first
license for a standalone health company in the country as many more players wait to
enter. The health insurance sector has tremendous growth potential, and as it matures and
new players enter, product innovation and enhancement will increase. The deepening of
the health database over time will also allow players to develop and price products for
larger segments of society.
State Insurers Continue To Dominate There may be room for many more players in a
large underinsured market like India with a population of over one billion. But the reality
is that the intense competition in the last five years has made it difficult for new entrants
to keep pace with the leaders and thereby failing to make any impact in the market.
Also as the private sector controls over 26.18% of the life insurance market and over
26.53% of the non-life market, the public sector companies still call the shots.
The country’s largest life insurer, Life Insurance Corporation of India (LIC), had a share
of 74.82% in new business premium income in November 2005.
Similarly, the four public-sector non-life insurers – New India Assurance, National
Insurance, Oriental Insurance and United India Insurance – had a combined market share
of 73.47% as of October 2005. ICICI Prudential Life Insurance Company continues to
lead the private sector with a 7.26% market share in terms of fresh premium, whereas
ICICI Lombard General Insurance Company is the leader among the private non-life
players with a 8.11% market share. ICICI Lombard has focused on growing the market
for general insurance products and increasing penetration within existing customers
through product innovation and distribution.
Reaching Out To Customers No doubt, the customer profile in the insurance industry is
changing with the introduction of large number of divergent intermediaries such as
brokers, corporate agents, and bank assurance.
The industry now deals with customers who know what they want and when, and are
more demanding in terms of better service and speedier responses. With the industry all
set to move to a detariffed regime by 2007, there will be considerable improvement in
customer service levels, product innovation and newer standards of underwriting.
Intense Competition In a detariffed environment, competition will manifest itself in

prices, products, underwriting criteria, innovative sales methods and creditworthiness.
Insurance companies will vie with each other to capture market share through better
pricing and client segmentation.
The battle has so far been fought in the big urban cities, but in the next few years,
increased competition will drive insurers to rural and semi-urban markets.
Global Standards While the world is eyeing India for growth and expansion, Indian
companies are becoming increasingly world class. Take the case of LIC, which has set its
sight on becoming a major global player following a Rs280-crore investment from the
Indian government. The company now operates in Mauritius, Fiji, the UK, Sri
Lanka, Nepal and will soon start operations in Saudi Arabia. It also plans to venture into
the African and Asia-Pacific regions in 2006.
The year 2005 was a testing phase for the general insurance industry with a series of
catastrophes hitting the Indian sub-continent.
However, with robust reinsurance programes in place, insurers have successfully

managed to tide over the crisis without any adverse impact on their balance sheets.
With life insurance premiums being just 2.5% of GDP and general insurance premiums
being 0.65% of GDP, the opportunities in the Indian market place is immense. The next
five years will be challenging but those that can build scale and market share will survive
and prosper.
How big the insurance market is?

The insurance sector was opened up for private participation four years ago. For years
now, the private players are active in the liberalized environment. The insurance market
have witnessed dynamic changes which includes presence of a fairly large number of
insurers both life and non-life segment. Most of the private insurance companies have
formed joint venture partnering well recognized foreign players across the globe. There
are now 29 insurance companies operating in the Indian market – 14 private life insurers,
nine private non-life insurers and six public sector companies. With many more joint
ventures in the offing, the insurance industry in India today stands at a crossroads as
competition intensifies and companies prepare survival strategies in a detariffed scenario.
There is pressure from both within the country and outside on the Government to increase
the foreign direct investment (FDI) limit from the current 26% to 49%, which would help
JV partners to bring in funds for expansion. There are opportunities in the pensions sector
where regulations are being framed. Less than 10 % of Indians above the age of 60
receive pensions. The IRDA has issued the first license for a standalone health company
in the country as many more players wait to enter. The health insurance sector has
tremendous growth potential, and as it matures and new players enter, product innovation
and enhancement will increase. The deepening of the health database over time will also
allow players to develop and price products for larger segments of society. Insurance is a
Rs.400 billion business in India, and together with banking services adds about 7% to
India's Gap.
Indian Scenario:
Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd
largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual
growth, rising foreign exchange reserves, a booming capital market and a rapidly
expanding FDI inflows, it is on the hinge of an ever increasing growth curve. Indians
have a tendency to invest in properties and gold followed by bank deposits. They
selectively invest in shares also but the percentage is very small--4-5%. This in itself is an
indicator that growth potential for the insurance sector is immense. It’s a business
growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion.
India is a vast market for life insurance that is directly proportional to the growth in
premiums and an increase in life density. With the entry of private sector players backed
by foreign expertise, Indian insurance market has become more vibrant. Competition in
this market is increasing with company’s continuous effort to lure the customers with
new product offerings. However, the market share of private insurance companies
remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation
(LIC) of India dominates Indian insurance sector. The heavy hand of government still
dominates the market, with price controls, limits on ownership, and other restraints. The
upward growth trend started from 2000 was mainly due to economic policies adopted by
the then Indian government. This year saw initiation of an era of economic liberalization
and globalization in the Indian economy followed by several reforms and long-term
policies that created a perfect roadmap for the success of Indian financial markets.
The general insurance industry grew by 16% in 2006-07 as private insurers

continued their robust performance, while public sector players like New India Assurance
and Oriental Insurance improved their show. Despite continuous fall in business of
government-owned National Insurance, the 12 non-life insurers collected Rs 20,378 crore
in first year premium in the last fiscal compared to Rs 17,531 crore collected in2005-06,
according to data compiled by regulator IRDA.New India Assurance collected Rs 4,762
crore in premium and continued to lead the non-life sector by cornering 23.36% of the
market. National Insurance was at the second spot by collecting Rs 3,524 crore in
premium, a decline of 7%, but had a market pie of 17.29%.Oriental Insurance mopped up
Rs 3,518 crore in premium income after logging 16.6% growth in business to corner a
market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to
collect Rs 3,147 crore in premium and had 15.44% of the market. The eight private
players expanded their business by52% to collect Rs 5,427 crore in premium income and
increased their combined market share to 26.6% from20.2% a year ago ICICI Lombard
led the private players by logging 80% growth in premium at Rs1,592crore, followed by
Bajaj Allianz, which grew by 50% to collect Rs. 1,287 crore in premium. ICICI Lombard
had a market share of 7.81% and Bajaj Allianz had 6.31% of the market
2.4 PRESENT SCENARIO OF INSURANCE INDUSTRY

• India with about 200 million middle class household shows a huge untapped
potential for players in the insurance industry. Saturation of markets in many
developed economies has made the Indian market even more attractive for global
insurance majors. The insurance sector in India has come to a position of very
high potential and competitiveness in the market. Indians, have always seen life
insurance as a tax saving device, are now suddenly turning to the private sector
that are providing them new products and variety for their choice.
• Consumers remain the most important centre of the insurance sector. After the
entry of the foreign players the industry is seeing a lot of competition and thus
improvement of the customer service in the industry. Computerization of
operations and updating of technology has become imperative in the current
scenario. Foreign players are bringing in international best practices in service
through use of latest technologies
• The insurance agents still remain the main source through which insurance
products are sold. The concept is very well established in the country
like India but still the increasing use of other sources is imperative. At present the
distribution channels that are available in the market are listed below.
 Direct selling
 Corporate agents
 Group selling
 Brokers and cooperative societies
 Banc assurance
• Customers have tremendous choice from a large variety of products from pure
term (risk) insurance to unit-linked investment products. Customers are offered
unbundled products with a variety of benefits as riders from which they can
choose. More customers are buying products and services based on their true
needs and not just traditional money back policies, which is not considered very
appropriate for long-term protection and savings. There is lots of saving and
investment plans in the market. However, there are still some key new products
yet to be introduced - e.g. health products.
• The rural consumer is now exhibiting an increasing propensity for insurance

products. A research conducted exhibited that the rural consumers are willing to
dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the
insurance the awareness level for life insurance is the highest in rural India, but
the consumers are also aware about motor, accidents and cattle insurance. In a
study conducted by MART the results showed that nearly one third said that they
had purchased some kind of insurance with the maximum penetration skewed in
favor of life insurance. The study also pointed out the private companies have
huge task to play in creating awareness and credibility among the rural populace.
The perceived benefits of buying a life policy range from security of income bulk
return in future, daughter's marriage, children's education and good return on
savings, in that order, the study adds.
2.5 ROLE OF IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section, the
powers and functions of the Authority shall include, -
(a) issue to the applicant a certificate of registration, renew, modify, withdraw,
suspend or cancel such registration;
(b) protection of the interests of the policy holders in matters concerning assigning of
policy, nomination by policy holders, insurable interest, settlement of insurance claim,
surrender value of policy and other terms and conditions of contracts of insurance;
(c) specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents;
(d) specifying the code of conduct for surveyors and loss assessors;
(e) promoting efficiency in the conduct of insurance business;

(f) promoting and regulating professional organizations connected with the insurance and
re-insurance business;
(g) levying fees and other charges for carrying out the purposes of this Act;
(h) calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organizations connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under section 64U of the Insurance Act,
1938 (4 of 1938);
(j) specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
(k) regulating investment of funds by insurance companies;
(l) regulating maintenance of margin of solvency;
(m) adjudication of disputes between insurers and intermediaries or insurance
intermediaries; (n) supervising the functioning of the Tariff Advisory Committee;
(o) specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f);
(p) specifying the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector; and
(q) exercising such other powers as may be prescribed.
2.6 NAME OF DIFFERENT INSURANCE COMPANIES
Name of the insurance company and the share holding pattern

Name of the Insurance Company Shareholding
Agricultural Insurance Co Bank and Public Ins Co
Bajaj Allianz General Insurance Co. Ltd. Privately Held
Cholamandalam MS General Insurance Co. Ltd. Privately Held
Export Credit Guarantee Company Public Sector
HDFC Chubb General Insurance Co. Ltd. Privately Held
ICICI Lombard General Insurance Co. Ltd. Privately Held
IFFCO-Tokio General Insurance Co. Ltd. Privately Held
National Insurance Co. Ltd. Public Sector
New India Assurance Co. Ltd. Public Sector
Oriental Insurance Co. Ltd. Public Sector
Reliance General Insurance Co. Ltd. Privately Held
Royal Sundaram Alliance General Insurance Co. Ltd. Privately Held
Tata AIG General Insurance Co. Ltd. Privately Held
United India Insurance Co. Ltd. Public Sector
There are a total of 13 life insurance companies operating in India, of which one is a
Public Sector Undertaking and the balance 12 are Private Sector Enterprises.
List of Companies are indicated below:-
Name of the life insurance company and share holding pattern
Name of the company Nature of Holding

Allianz Bajaj Life Insurance Co Private
Aviva Life Insurance Private
Birla Sun Life Insurance Co Private
HDFC Standard Life Insurance Co Private
ICICI Prudential Life Insurance Co Private
ING Vysya Life Insurance Co. Private
Life Insurance Corporation of India Public
Max New York Life Insurance Co. Private
MetLife Insurance Co. Private
Om Kotak Mahindra Life Insurance Private
Reliance insurance Private
SBI Life Insurance Co Private
TATA- AIG Life Insurance Company Private
Name of the player market share (%)
Name of the Player Market share (%)

LIFE INSURANCE CORPORATION OF INDIA 82.3
ICICI PRUDENTIAL 5.63
BIRLA SUN LIFE 2.56
BAJAJ ALLIANZ 2.03
SBI LIFE INSURANCE 1.80
HDFC STANDARD 1.36
TATA AIG 1.29
MAX NEW YARK 0.90
AVIVA 0.79
OM KOTAK MAHINDRA 0.51
ING VYSYA 0.37
MET LIFE 0.21
2.7 APPLICATION OF INFORMATION TECHNOLOGY IN INSURANCE

SECTOR
There is a evolutionary change in the technology that has revolutionized the entire
insurance sector. Insurance industry is a data-rich industry, and thus, there is a need to
use the data for trend analysis and personalization.
With increased competition among insurers, service has become a key issue. Moreover,
customers are getting increasingly sophisticated and tech-savvy. People today don’t want
to accept the current value propositions, they want personalized interactions and they
look for more and more features and add ones and better service
The insurance companies today must meet the need of the hour for more and more
personalized approach for handling the customer. Today managing the customer
intelligently is very critical for the insurer especially in the very competitive
environment. Companies need to apply different set of rules and treatment strategies to
different customer segments. However, to personalize interactions, insurers are required
to capture customer information in an integrated system.
With the explosion of Website and greater access to direct product or policy information,
there is a need to developing better techniques to give customers a truly personalized
experience. Personalization helps organizations to reach their customers with more
impact and to generate new revenue through cross selling and up selling activities. To
ensure that the customers are receiving personalized information, many organizations are
incorporating knowledge database-repositories of content that typically include a search
engine and lets the customers locate the all document and information related to their
queries of request for services. Customers can hereby use the knowledge database to
mange their products or the company information and invoices, claim records, and
histories of the service inquiry. These products also may be able to learn from the
customer’s previous knowledge database and to use their information when determining
the relevance to the customers search request.
CHAPTER-3
INTRODUCTION TO TATA AIG
3.1 TATA AIG INSURANCE COMPANY

Tata Enterprises with 82 companies, spread over seven sectors and with an annual
turnover exceeding US $8.8 billion, employs more than 262,000 people. Tata Group has
shown over years that it is a value driven company and has pioneering contributions in
various fields including insurance, aviation, iron and steel. Interims of capital market
performance as many as 40 listed Tata companies account for nearly 5% of the total
market capitalization of all listed companies. The Group has had a long association with
India's insurance sector having been the largest insurance company in India prior to the
nationalization of insurance.
3.2 THE TATA GROUP
Tata is a rapidly growing business group based in India with significant international
operations. Revenues in 2007-08 are USD 62.5 billion (around Rs. 251,543 crores), of
which 61% was from business outside India. The Group’s Net Profit for 2007-08 is USD
5.4 billion (around Rs. 21,578 crores). The Group employs around 350,000 people
worldwide. The Tata name has been respected in India for 140 years for its adherence to
strong values and business ethics. The business operations of the Tata Group currently
encompass seven business sectors - Communications and Information Technology,
Engineering, Materials, Services, Energy, Consumer Products and Chemicals. The
Group's 28 publicly listed enterprises have a combined market capitalisation of around
$60 billion, among the highest among Indian business houses, and a shareholder base of
2.9 million. The major companies in the Group include Tata Steel, Tata Motors, Tata
Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels, Tata
Tele services and Tata Communications.
3.3 TATA GROUP IN INSURANCE

Tata AIG General Insurance Company Ltd, and Tata AIG Life Insurance Company Ltd.,
(collectively "Tata AIG") are joint venture companies between the Tata group India's
most trusted industrial house and American International Group, Inc. (AIG), the leading
U. S. based international insurance and financial services organization. The Late Sir
Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group
company incorporated way back in 1919. Government of India took over the
management of this company as apart of nationalization of general insurance companies
in 1972. Not deterred by the move, Tata group have ventured into risk management
services having tied up with AIG group, back in 1977, with the incorporation of Tata
AIG Risk Management Services Pvt. Ltd. The Tata Group is one of India's largest and
most respected business conglomerates, with revenues in 2006-07 of $28.8 billion
(Rs129,994 crore), the equivalent of about3.2 per cent of the country's GDP, and a
market capitalization of $72.2 billion as on December 6, 2007. Tata companies together
employ some 289,500 people.
3.4 AIG
American International Group, Inc. (AIG), is a major American insurance corporation
based at the American
International Building in New York City. The British headquarters are located on
Fenchurch Street in London, continental Europe operations are based in La Defense,
Paris, and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list,
AIG was the 18th-largest company in the world.
Company Background: AIG’s history dates back to 1919, when Cornelius Vander Starr
established an insurance agency in Shanghai, China. Starr was the first Westerner in
Shanghai to sell insurance to the Chinese. • In 1962, Starr gave management of the
company's less than successful U.S. holdings to MauriceR. \"Hank\" Greenberg, who
shifted the company's U.S. focus from personal insurance to high.1969.American
International Group, Inc is the leading U.S. based international insurance and financial
services organization and the largest underwriter of commercial and industrial insurance
in the United States. Its member companies write a wide range of commercial and
personal insurance products through a variety of distribution channels in over 130
countries and jurisdictions throughout the world. AIG's Life Insurance operations
comprise of the most extensive worldwide network of any life insurer. AIG's global
businesses also include financial services and asset management, including aircraft
leasing, financial products, trading and market making, consumer finance, savings
products.
3.5 THE JOINT VENTURE

Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent
has been brought in by Tata Sons and the American partner brings in the balance 26 per
cent. Mr. George Oommen has been named managing director of Tata AIG Life. Tata-
AIG plans to provide broad array of life insurance plans to cover to both individuals and
groups. The company headquartered in Mumbai, with branch operations in Delhi,
Chennai, Hyderabad, Bangalore Calcutta, Pune and Chandigarh.
3.6 ABOUT TATA-AIG
Tata AIG Insurance Solutions is one of the leading insurance companies that provide
both life insurance as well as general insurance. This pioneer company is a joint
collaboration between the American International Group, Inc. (AIG) and Tata Group.
They own the company in the ratio of 26:74. It is a leading financial institution that has
carved a niche for itself all over the world. Tata AIG Insurance provides facilities to both
corporate and individuals. Starting its operations on April 1, 2001, it seeks to serve
different categories of people. It acquired its license for carrying out operations in India
on February 12, 2001. Tata AIG Insurance Solutions is one of the most prestigious
organizations in the business world. It employs thousands of employees and offers
various opportunities to people to build a prospective career. As a leading name in the
financial world, it identifies the potential and experience of the individual. This insurance
company identifies the clients needs and works accordingly. It stresses on innovative
aspect and opening of new markets. It believes in new economy and latest Internet
technology. Tata AIG Insurance offers a number of products for the General Insurance
holders. General insurance products include:
• Individual insurance
• Small business insurance
• Corporate insurance
Tata AIG Insurance offers flexible life insurance to the individuals, business organization
and other association. For the corporate, there are various insurance products like group
pensions, employee benefits, work place solutions and credit life. For the individuals,
Tata AIG Insurance offers various products for adults, children and for retirement
planning.
CHAPTER-4
TATA AIG PRODUCTS
PRODUCTS (in brief):
4.1 PRODUCTS FOR ADULTS
The company has a slew of life insurance of plans for adults as follows.
1. Life Assure Lifeline Plans: High coverage at an affordable cost
2. Life Assure Growth Plans: It is an Endowment policy which keeps your money safe
and has it grow
3. Life Assure 21 years Money Saver: Cash payments at the end of every 3 years.
Life insurance coverage plus the flexibility of periodic payments.
4. Life Assure Golden Years Plan: It is an Endowment policy which gives Safety as well
as returns.
5. Life Easy Retire: It is an Annuity plan with Return of Purchase Price Single premium
payment.
6. Life Invest Assure Health: It is a Unit linked investment plan and helps to achieve
financial goals along with a comprehensive health policy.
7. Life Hospi CashBack: It gives multiple claims against unforeseen hospitalization
expenses.
8. Life Health Investor: Benefit on diagnosis of 12 critical illnesses. It provides cover in

case of unfortunate death.100% return of premium in case of no claims.
9. Life Invest Assure II: Life cover plus high returns.
10. Life Invest Assure Apex: Unit-linked life insurance plan. Guaranteed Maturity Unit
Price.
11. Life Invest Assure Care: Non-participating unit linked insurance plan
Inbuilt Critical Illness benefit .
12. Life Invest Assure Flexi: Unit linked endowment plan. Helps one achieve financial
goals
13. Life Invest Assure Gold: There is a flexibility to invest more money. It takes care of
emergency cash requirements
14. Life Life Plus: If you outlive the term get premium back. In case of death by natural
causes get sum assured.
15. Life MahaLife Gold: Good for retirement planning. Provides for steady income and
insurance coverage.
16. Life Raksha: Large cover at a small premium.
17. Life Shubh Life: Life insurance protection and high returns.
18. Life Health First: Covers health contingencies.
19. Life Health Protector: Covers cost of major surgery or treatment.

4.2 CHILDREN FUTURE PLANNING
To ensure your children lead happy and successful lives, it’s important to plan now so
that they will have the financial support they need in the future.
Tata AIG has a range of flexible insurance products to help you secure your children’s
financial future.
Tata AIG provides products for children’s which include the following:
Tata AIG Life Invest Assure Superstar
Tata AIG Life Invest Assure Superstar is a non- participating unit linked endowment plan
that allows you to secure a financial future for your child.
Tata AIG Life United Ujjwal Bhawishya Plus
This is a unit linked endowment plan which provides you the assurance to realize your
child’s dreams.
Tata AIG Life Assure Career Builder
This money-back policy provides financial assistance at key stages of your child’s life,
from education to their first steps into a new career.
Tata AIG Life Assure Educare at 18 & Tata AIG Life Assure Educare at 21
This first of its kind juvenile endowment policy is geared toward funding your child’s
education. You can choose between Assure Educare 18 and Assure Educare 21,
depending on your child’s needs.
Tata AIG Life Assure 21 years Money Saver
This savings plan provides you with cash payments in the form of survival benefits at
regular intervals to fund your child’s needs at critical milestones or support your financial
obligations. You get the dual benefits of life insurance coverage plus the flexibility of
periodic payments.
Tata AIG Life MahaLife Gold
This unique policy ensures that your child will have a steady income and insurance
coverage for life! Premiums are payable only for the first 15 years.
Tata AIG Life Starkid
An exceptional endowment policy that ensures you can afford to give your child the very
best for his career & marriage. Get more details like Key features, Tax Benefits, Riders
and Age Eligibility about any of above mention products for children.
4.3 MICRO INSURANCE PLANS
Micro Insurance is the process of delivering and servicing relevant and affordable life
insurance products to the low-income socio economic strata. The focus of Tata AIG
Life’s Micro insurance program is rural India, where traditionally the far-flung, lower and
lower middle-income segments have had limited access to life insurance services.
How do Tata operate there?
It operates in 11 states with a specific relationship management team for each state. A
dedicated & trained sales and marketing team manages the front end of the Micro
insurance program. Its micro insurance distribution model collaborates with NGO’s
(Non-governmental organizations) and Rural organizations with community level SHG
(Self Help Group) women advisors who provide insurance advisory services to the rural
customers at their doorstep.
The grassroots level agents explain the product details in the local language of the
customer, thereby enabling the customer to make a decision. The training programs,
brochures, contract documents, and application forms are available in 8 different
languages other than English and Hindi.
Cost of Micro Insurance plans:

Tata AIG Life Micro insurance plans are available with or without survival benefits and
with death benefits ranging from Rs.5,000 to Rs.50,000. With premiums as low as Rs.5**
per month, there is now an affordable life insurance product for nearly every rural
household in India.
Term Plans
• Tata AIG Life Assure One year/ Five Years/10 Years/ 15 Years / 20 Years / 25
Years Lifeline Plans, and Term to age 60 known as Assure Lifeline to Age 60
• Tata AIG Life Raksha.
Money back Plans
• Tata AIG Life Assure 21 years Money Saver
Pension Plans
• Tata AIG Life Nirvana

• Tata AIG Life Nirvana Plus
Health Plans
• Tata AIG Life Health First

• Tata AIG Life Health Investor
• Tata AIG Life Health Protector - 5 Year Guaranteed Renewal Accident and
Health Plan
• Tata AIG Life Hospi CashBack
Endowment Plans
• Tata AIG Life Assure 10 Years / 20 Years / 30 Years Security & Growth
Plans
• Tata AIG Life Assure Golden Years Plan
• Tata AIG Life Shubhlife
Wholelife Plans
• Tata AIG Life Mahalife Gold
Annuity Plans
• Tata AIG Life Easy Retire

•
Children Plans
• Tata AIG Life Assure Career Builder

• Tata AIG Life Assure Educare at 18 & Assure Educare at 21
• Tata AIG Life Starkid
Unit Linked Plans
• Tata AIG Life Invest Assure Superstar

• Tata AIG Life Invest Assure Sampatti
• Tata AIG Life Invest Assure Insta+
• Tata AIG Life Invest Assure Optima Plus
• Tata AIG Life Invest Assure Swarna Jeevan Plus
4.4 RETIREMENT PLANNING
The estimated lifespan of an averagely healthy person is around 75 years. This means that
you will have to fund your lifestyle for 20 years without a regular salary if you plan to
retire at the age of 55.
We can truly make our retirement years into Golden years by following Retirement plans:
Tata AIG Life Apex Pension Plans:

These plans provide a platform ensuring the upside potential of the equity markets while
safeguarding the investors interest by offering a highest NAV guarantee on maturity.
Tata AIG Life Assure Golden Years Plan:

This endowment policy gives safety AND returns. In case of death, the dependants get
the sum assured otherwise the savings grow. If insured survives, he still gets that sum
assured along with a whole host of bonuses.
Tata AIG Life Easy Retire:

This is an immediate annuity plan with Return of Purchase Price (RoPP) which can be
purchased through a single premium payment. The plan provides for annuity payments
which are paid throughout the life time of an annuitant.
Tata AIG Life MahaLife Gold :

This distinctive policy is the ideal planning vehicle to fund the retirement. It provides us a
steady income and insurance coverage for life! Premiums are payable only for the first 15
years.
Tata AIG Life Nirvana:
The highly flexible Nirvana retirement plan lets you choose your retirement age (from 50
to 65 years).
Tata AIG Life Nirvana Plus:

This is India’s first and only pension policy with a guaranteed addition of 10 percent of
sum assured every 5 years. We can choose from three levels of cover, and also decide the
age we want to retire.
Tata AIG Life Invest Assure Swarna Jeevan Plus:

This is a unit linked non participating pension plan. This plan helps to invest money,
build and multiply capital.
Tata AIG Life Invest Assure Future Plus:

This is a Unit Linked pension plan with a single purpose - to preserve and multiply your
happiness even after you stop working. Invest Assure Future Plus is built as a custom-
made retirement solution to meet the needs of capital accumulation, growth and indeed,
multiplication.
4.5 POLICIES AVAILABLE AT TATA AIG
1. Tata AIG Life Navkalyan Yojana
2. Tata AIG Life Ayushman Yojana
3. Tata AIG Life Sampoorn Bima Yojana
4. Tata AIG Life Sumangal Bima Yojana
1. Tata AIG Life Ayushman Yojana

It is a single premium plan where the policyholder pays the premium at the beginning of
the policy term. This is especially useful for those rural people who have a seasonal
income.
Key features include:
• Policy Term : 10 years

• Coverage Limits : Minimum Death Benefit (Sum Assured): Rs.5,000/-
Maximum Death Benefit (Sum Assured): Rs.50,000/-
• Death Benefit : Sum assured to the policyholder’s nominee
• Maturity Benefit: On survival, 125% of the single premium paid.
Tax Benefits and Age Eligibility:
• Premiums paid under this plan are eligible for tax benefits to the extent of 20% of
Sum Assured as per the Income Tax Act, 1961 and are subject to amendments
made therein from time to time.*
• Anyone between ages 18 and 60 can apply for this policy.
2. Tata AIG Life Sampoorn Bima Yojana
It is a low cost insurance plan where the policyholder receives all the premiums paid
during the policy term upon survival until the term of the policy. Here, Premiums are
payable for only 10 years, while the coverage is up to 15 years.

• Premium payment frequency : Monthly, quarterly, half yearly & yearly
• Death Benefits : Sum assured is paid to the policyholder’s nominee
• Maturity benefit: At the end of the 15 years, all the premiums paid will be
returned to the policyholder.
• Premiums paid under this plan are eligible for tax benefits as per the Income Tax
Act, 1961 and are subject to any amendments made therein from time to time.*
3. Tata AIG Life Sumangal Bima Yojana
It is to encourage regular long term savings from those who prefer to set aside some
money and get periodic returns, while enjoying the benefits of insurance protection. Tata
AIG Life Insurance Company introduces "Tata AIG Life Sumangal Bima Yojana”, a
limited premium pay money back plan.
In this plan, we have to pay premium for 10 years and we get insurance protection for 15
years. Enjoy total guaranteed returns of 120% of the total policy premium at specified
intervals during term of the policy.

• Premium Paying term : 10 years
• Survival Benefit: We shall pay you the survival benefits as below, if you have
paid all due premiums.
Policy Anniversary Year end Guaranteed Pay outs

6th 10% of (*Total Policy Premium)
• Payment of Survival Benefits will not reduce the death benefit. Survival benefits
are not payable during Auto cover period.
• Death Benefit :Death Benefit will be paid to the nominee i.e. Sum assured in the
event of the Insured’s unfortunate death during the term of the policy and
provided the policy is in force on the date of death of the policy holder. Any
unpaid premiums and any balance of premium due for the full policy year in
which death occurs shall be deducted from the death benefit payable.
• Maturity benefit: It shall pay the Maturity Benefit i.e. 60% of the total Policy
Premium, if we have paid all due premiums.
• Rider: Option to attach Tata AIG Life Accidental Death Benefit Limited
Underwriting Rider for a Coverage Amount of at least Rs. 10,000 at a nominal
extra charge. An additional amount equal rider Sum Assured becomes payable in
the event of death of insured due to an accident. The rider shall not be available
during Auto cover period. This benefit is available during premium paying term
only.

Act, 1961 and are subject to any amendments made therein from time to time.*
4. Tata AIG Life Navkalyan Yojana
It is a regular premium payment, low cost term plan for the rural adults who seek life
insurance protection without any maturity benefit.

• Death Benefit : Sum assured to the policyholder’s nominee
• Maturity benefit : None
• Rider: Option to attach Accident Death Benefit Rider for issue ages 18 to 55 years
at a nominal extra charge.
Act, 1961 and are subject to any amendments made therein from time to time.
Anyone between ages 18 and 60 can apply for this policy.

CHAPTER-5
TRADITIONAL PLANS OF TATA AIG
1. Tata AIG Life Shubh Life

2. Tata AIG Life Life plus
3. Tata AIG Life Assure 21 years Money Saver
4. Tata AIG Life Assure Career builder
5. Tata AIG Life Mahalife Gold
5.1 SHUBH LIFE

Have you been delaying getting life insurance because you cannot afford to pay high
monthly premiums? Then we have the ideal product for you.
Shubh Life provides you 100% life insurance protection and a range of bonuses but the
premiums you pay are among the lowest of any similar endowment policy.
• Term policies just give you death cover. This policy gives you bonuses along with
death cover.
• You can choose a term of 10, 15, 20, 25 or 30 years.
• Apart from full premium paying term, you can pay your premiums over 3, 5, 7 or
10 years.
• Guaranteed addition of 3% of sum assured of the Basic Policy is added on the
first (1st) policy anniversary and on every alternate policy anniversary thereafter
up till a maximum of half the policy term. The GA will be payable if the insured
dies while the policy has been in force or if the policy matures.
• A simple reversionary bonus will be credited from the sixth policy anniversary
until the end of the plan term depending on the performance of our Company.
Tax Benefits, Riders and Age Eligibility:
• Premiums paid under this plan are eligible for tax benefits under Section 80C of
the Income Tax Act, 1961. Any sum received under this plan is exempt from tax
under section 10(10D) of the Income Tax Act, 1961.*
• Attach Disability, Accident, Term, Waiver of premium and Critical Illness riders
to this policy for added protection.
10 Years 18 to 65 Years
5.2 LIFE PLUS

If you outlive the 20-year term of a Life Plus policy, all of your premium payments
will be refunded; if you die by natural causes while the policy is in force, your
beneficiaries will receive the sum assured; should you die due to accidental causes,
your beneficiaries will receive double the sum assured.
• All premiums paid are returned (without interest) in the event you outlive the
policy’s 20-year term.
• Premiums are payable only for the first 15 years of the 20-year term.
• Policy available for persons between 18 and 60 years of age.
Illustration for Sum Assured of Rs. 2 lakhs
Accidental Death
Age Annual Premium Death Benefit Maturity
Benefit*
25 3,482 2,00,000 2,00,000 52,230
35 4,562 2,00,000 2,00,000 68,430
45 7,270 2,00,000 2,00,000 1,09,050
5.3 ASSURE 21 YEARS MONEY SAVER
This savings plan gives you the cash payments at specified intervals to fund your
family’s needs at critical milestones or support your financial obligations. You get the
dual benefits of life insurance coverage plus the flexibility of periodic payments
• 10% of the sum assured is paid on survival on the 3rd /6th /9th /12th /15th and
18th policy anniversaries.
• 40% of the sum assured will be paid on maturity (i.e. on the 21st anniversary of
this policy).
• The entire sum assured is distributed to your beneficiaries, irrespective of cash
payments already made, in the unfortunate event of your death before the end of
the policy’s term.
• A 10% Guaranteed Addition is payable on death or maturity, if the policy has
been enforce for 10 years.
• A reversionary and terminal bonus payable on death or maturity. Terminal bonus
is available only if policy is in force for more than 10 years.
• Bonuses are paid depending on performance of the company.
5.4 ASSURE CARRIER BUILDER

Tata AIG Life's Assure Career Builder is a juvenile insurance product designed to
provide your children with the financial support they’ll need at important junctures in
their life.
• Lump sum payments at various stages of your child’s life: 20% of sum assured on
your child’s 18th birthday, 20% on his/her 21st birthday, 20% on his/her 24th
birthday and the remaining 40% when the policy matures on your child’s 27th
birthday.
• Periodic payments against the policy do not affect the full payment of the sum
assured in case of the insured’s death.
• A guaranteed addition of 10% of the sum assured to be paid at the time of
maturity or death (policy must be in force for a minimum 10 years).
• A compound reversionary bonus, as declared by the Company, is credited to the
policy on the policy anniversary.
• A terminal bonus payable on death or maturity (policy must be in force for a
minimum 10 years).
• Compound reversionary bonus and terminal bonus are non-guaranteed and

depend on the performance of the Company.
• Assure Career Builder is supported by a money-back guarantee. If you change
your mind, simply return the policy document within 15 days of receipt and your
premiums will be refunded (minus a nominal deduction to cover administrative
charges).
• You can attach the Payer Benefit Rider at a nominal extra cost, which waives all
future payments for this policy in the event of your unfortunate death or disability.
• Minimum entry age is 0 years, with a maximum of 15 years. The policy matures
at age 27.
5.4 MAHALIFE GOLD
This unique policy is an ideal planning vehicle to fund your retirement. It provides a
steady income and insurance coverage for life. Premiums are payable only for the
first 15 years, and can be used to cover the future expenses of your children.
• A guaranteed annual coupon of 5% of the sum assured every year for the rest of
the insured’s term from the 10th policy anniversary.
• Yearly cash dividends are available from the 6th policy anniversary onwards
(depending on Company performance).
• The entire sum assured is paid tax-free as per current Income Tax Laws.
• The guaranteed 5% coupon and non-guaranteed cash dividends are tax free as per
current Income Tax Laws.
• Disability, Accident, Term and Critical Illness riders are available for added
protection at a nominal extra cost. (For juveniles, only Pay or Benefit Rider is
available).
CHAPTER-6
COMPARATIVE ANALYSIS
6.1 HDFC Standard Life Insurance Company Ltd.
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 The Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Their
cumulative premium income, including the first year premiums and renewal premiums is
Rs. 672.3 for the financial year, Apr-Nov 2005. They have managed to cover over
11,00,000 individuals out of which over 3,40,000 lives have been covered through our
group business tie-ups.
6.2 Max New York Life Insurance Co. Ltd.
Max New York Life Insurance Company Limited is a joint venture that brings together
two large forces - Max India Limited, a multi-business corporate, together with New
York Life International, a global expert in life insurance. With their various Products and
Riders, there are more than 400 product combinations to choose from. They have a
national presence with a network of 57 offices in 37 cities across India.
6.3 ICICI Prudential Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and Prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst the
first private sector insurance companies to begin operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA). The
company has a network of about 56,000 advisors; as well as 7 bank assurance and 150
corporate agent tie-ups.
6.4 Om RELIANCE Mahindra Life Insurance Co. Ltd.
RELIANCE Mahindra Old Mutual Life Insurance Ltd. is a joint venture between
RELIANCE Mahindra Bank Ltd. (KMBL), and Old Mutual plc.
6.5 Birla Sun Life Insurance Company Ltd.
Birla Sun Life Insurance Company is a joint venture between Aditya Birla Group and
Sun Life financial Services of Canada.
6.6 SBI Life Insurance
SBI Life Insurance is a joint venture between the State Bank of India and BNP Paribas
Assurance. SBI Life Insurance is registered with an authorized capital of Rs 2000 crores
and a Paid-up capital of Rs 1000 Crores. SBI owns 74% of the total capital and BNP
Paribas Assurance the remaining 26%.
State Bank of India enjoys the largest banking franchise in India. Along with its 7
Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across
the country, arguably the largest in the world. BNP Paribas Assurance is the insurance
arm of BNP Paribas - Euro Zone’s leading Bank. BNP Paribas, part of the world's top 10
group of banks by market value and part of Europe top 3 banking companies, is one of
the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas
Assurance is the forth largest life insurance company in France, and a worldwide leader
in Creditor insurance products offering protection to over 50 million clients. BNP Paribas
Assurance operates in 42 countries mainly through the bank assurance and partnership
model.
SBI Life has a unique multi-distribution model encompassing Bank assurance, Agency
and Group Corporates.
SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance
products along with its numerous banking product packages such as housing loans and
personal loans. SBI’s access to over 100 million accounts across the country provides a
vibrant base for insurance penetration across every region and economic strata in the
country ensuring true financial inclusion.
6.7 Allianz Bajaj Life Insurance Company Ltd.
Bajaj Allianz Life Insurance Company Limited is a Union between Allianz SE, one of the
world’s largest Life Insurance companies and Bajaj Auto, one of the biggest 2- &- 3
wheeler manufacturers in the world.
Allianz SE is a leading insurance conglomerate globally and one of the largest asset
managers in the world, managing assets worth over a Trillion Euros (Over R. 55,00,000
crores). Allianz SE has over 115 years of financial experience in over 70 countries.
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years. At Bajaj
Allianz customer delight is our guiding principle. Ensuring world-class solutions by
offering customized products with transparent benefits, supported by best technology is
our business philosophy.
OTHER PLAYERS:
 Tata AIG Life Insurance Company Ltd
 ING Vysya Life Insurance Company Private Limited
 Met life India Insurance Company Pvt. Ltd.
 AMP SANMAR Assurance Company Ltd.

 Dabur CGU Life Insurance Company Pvt. Ltd.
6.8 COMPARISON OF TATA AIG AND HDFC STANDARD LIFE

INSURANCE
RIDERS AND BONUSES
HDFC STANDARD LIFE TATA AIG LIFE

INSURANCE INSURANCE
Free Look Period 15 days 15 days
Reversionary BONUS Based on company’s Based on company’s
performance performance
Terminal Bonus Based on company’s Based on company’s
performance performance
Top Up Min.Rs.5000 Min.Rs.5000
RIDERS
Critical Illness(CI) Gives on Diagnosis of Gives on Diagnosis of
Benefits anyone on 6 critical illness anyone on 12 critical illness
Additional Term Provides Provides
Benefit(ATB)
Accidental Death Provides Provides
Benefit(ADB)
Double Benefit Provides Does not Provide
Triple Benefit Provides Does not Provide
Payer Benefit Rider Does not Provide Provides
(PBR)
Waiver of Premium Provides Provides

(WOB)Benefit
POINTS OF DIFFERENCE
HDFC STANDARD LIFE TATA AIG LIFE
INSURANCE INSURANCE
Grace Period 15 Days 31 Days
Policy Administration Rs. 60 per month Rs. 55 per month

Charge
Guaranteed Bonus Does not Give 10% on sum assured after
10 year
Loyalty Bonus 0.1% every year 0.25% after every 4th year
Fund Switching Charge Total 24 free switches in a 4 free switches per year
policy after this Rs.100 per after this Rs.250per switch
switch
Guaranteed Surrender 50% of all premium paid 30% of all premium paid
Value excluding 1st premium excluding 1st premium
Fund Management 0.80% per annum on the 1.75% per annum on the
Charge fund value fund value
Premium Redirection Total 12 free premium First 2 premium Redirection

Charge Redirection in a policy after in a year is free after this
this Rs.250 per premium Rs.1000 per premium
redirection Redirection
Last Year Return 42.70% 72%
We see that both the life insurance companies’ products are almost same. They have
same charges, fees and deductions. There is slightly difference in charges and maximum
limits of all charges are fixed by IRDA. Before buying any life insurance policy one
should check charges and fees on policy and company’s overall performance and return
given to its consumer. But in case of Bonuses, and last year return TATA AIG is best.
CONCLUSION AND RECOMMENDATIONS
CONCLUSION
There is a probability of a spurt in employment opportunities. A number of web-sites are
coming up on insurance, a few financial magazines exclusively devoted to insurance and
also a few training institutes being set up hurriedly. Many of the universities and
management institutes have already started or are contemplating new courses in
insurance. Life insurance has today become a mainstay of any market economy since it
offers plenty of scope for garnering large sums of money for long periods of time. A
well-regulated life insurance industry which moves with the times by offering its
customers tailor-made products to satisfy their financial needs is, therefore, essential if
we desire to progress towards a worry-free future.
RECOMMENDATIONS
 The company should concentrate more on sales and marketing department so that
more and more products can be sold out.
 Advertisements should be the best method to advertise the products and popular
among the public
 Cheaper products should be introduced by the company so that it can reach the
middle class public
 Transparency should be made in between the product details and the original
product sold to the customers.
 Company –customer ratio should be maintained
QUESTIONNAIRE
1. From where have you hear the name of TATA AIG Life Insurance?
Newspapers
Television
Internet
From friends
2. Which product of the company do you like the most?

Maha Life
Assure Golden Years Plan
Life Plus
TATA AIG Health First
3. What do you like most in Maha Life Plus?

Only for children purposes
Withdrawal option
Flexibility to choose any fund
High savings and bonuses
4. According to you in Tata AIG Life Insurance company can you Invest your
Money?
Yes
No
Risky sometimes
Can’t say
5. which plan would you choose for the purpose of high returns and savings
ULIP plans
Money-Back Plans
Endowment plans
Retirement or Pension Plans
6. Are you satisfied with the Services given by the company in buying a Policy or
taking a Claim
Yes
No
Very poor
Excellent
7. Do You think the charges applied to Your Policy by the company is valid or not?
No,its too high
Yes
No, charges should be applied
Can’t say

Traditional Plans of Tata AIG

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A SUMMER TRAINING PROJECT REPORT

“TRADITIONAL PLANS OF TATA AIG LIFE INSURANCE

Submitted in partial fulfillment of the requirement for the award of

Under the Guidance of:

Kasturi Ram College of Higher Education

Tangible or intangible – an individual can insure anything! Be it a house, car, factory, or

1.2 FUNCTION OF INSURANCE

1. Providing protection – The elementary purpose of insurance is to allow security

1. Preventing losses – Insurance warns individuals and businessmen to embrace

1. Is a savings and investment tool – Insurance is the best savings and

1.3 LIFE INSURANCE

Life-based contracts tend to fall into two major categories:

1. Protection policies - designed to provide a benefit in the event of specified event,

1.4. ROLES OF THE LIFE INSURANCE

3. Life insurance as tax planning: - Insurance serves as an excellent tax saving

Role of insurance in economic development:

(1) Identifying the exposures to accidental loss;

1.5 IMPORTANCE OF THE LIFE INSURANCE

1. Protection against untimely death: - Life insurance provides protection to the

3. Promotion of savings: - Life insurance encourages people to save money

4. Initiates investments: - Life Insurance Corporation encourages and mobilizes the

5. Credit worthiness: - Life insurance policy can be used as a security to raise

1.6 INSURANCE CYCLE

Description of the cycle:

The next stage is precipitated by a catastrophe or similar significant loss, for

Dealing with the insurance cycle:

The future of the insurance cycle:

1.8 SCOPE OF THE STUDY

 A big boom has been witnessed in insurance sector in Indian Economy in

Step1: Research Methodology:

Step 2: Develop the research plan:

It includes the following methods?

Step 3: Research design

Step 4: Data source:

Step 5: Research instruments: In this, questionnaire is to be filled on the basis of

d. Sample size: The number of elements in the obtained sample.

Area of study: South Delhi

Time of study: 8 weeks

i. Sampling saves time and money

ii. Sampling saves labor

Step 7: Analyzing information:

1.10 LIMITATIONS OF THE STUDY

INTRODUCTION TO INDIAN INSURANCE INDUSTRY

2.1 INDIAN INSURANCE INDUSTRY

2.2 HISTORY OF INSURANCE SECTOR

Table 1: Milestone’s in the life insurance business in India

Year Milestones in the life insurance business in India

Year Milestones in the general insurance business in India

2.3 INDIAN INSURANCE MARKET

Intense Competition In a detariffed environment, competition will manifest itself in

However, with robust reinsurance programes in place, insurers have successfully

How big the insurance market is?

The general insurance industry grew by 16% in 2006-07 as private insurers

2.4 PRESENT SCENARIO OF INSURANCE INDUSTRY

• The rural consumer is now exhibiting an increasing propensity for insurance

2.5 ROLE OF IRDA

(e) promoting efficiency in the conduct of insurance business;

2.6 NAME OF DIFFERENT INSURANCE COMPANIES

Name of the insurance company and the share holding pattern

Name of the life insurance company and share holding pattern

Name of the company Nature of Holding

Name of the player market share (%)

Name of the Player Market share (%)