SUMMER TRAINING REPORT

on

PROJECT TITLE NAME OF THE COMPANY

Submitted in partial fulfillment of the requirements of Post Graduate Programme

By

Name of the Student

Batch

Roll No. IILM Institute for Higher Education New Delhi

Executive Summary
HDFC Standard Life Insurance is the oldest life insurance company in the world. It is the largest insurer in the UK and is the 28 th largest company in marketing life insurance products and Unit Linked investment plans. From my research at HDFC SLIC, I found that the company faces a lot of compet ition from other private insurers like ICICI, Aviva, and Birla Sun Life and Tata AIG. Its toughest compet itor is LIC. To compete effect ively wit h LIC it could launch cheaper and more reasonable products with small premiums and short policy terms.

Experience of working as an intern in HDFC SLIC was in all a good experience because I got to learn many things over there and got that practical and corporate exposure .In this project I have done a competitive analysis and determined points of parit y and points of differences between HDFC SLIC and TATA AIG. I have also done a detailed study on the insurance industry and determined what is the mind set of consumers and motivating and influencing factors for them to invest in insurance. I have also tried to determine where HDFC SLIC lags behind that is what are the manholes that are prevent in the company and what steps should be taken to avoid it and what further improvements should be brought aboutto progress in future.

The Indian consumer has a false perception about insurance. They feel that it would not benefit them if they do not live through the policy term. The message should be conveyed to potential customers so that they readily invest in insurance.

In the end I have mentioned my learnings which I had received during the course o f my internship process. It was an enthralling experience and a meaningful training that I have undergone under HDFC SL.

Objective
In a professional course like P.G.D.M Summer training is one of the major experiencing components of the practical knowledge and industrial exposure. I am able to understand the customer relationship and got to know how a company measures to resolve their grievances and negotiate with them also service them to the maximum for future prospect and success. My main objective was to gain a practical insight in the corporate world and enhance by knowledge and skills. My objective of study was to compare HDFC SL with other insurance company TATA AIG SL and analyze what are the similarities and differences between the both. I had also conducted a market survey on insurance industry to determine the attitude of consumers towards the insurance products and investment related ULIP policies. My objective was to determine what problems that exist in the industry are and to also determine the probable solutions for the same that can be undertaken currently or in the future for attracting new customers and stand ahead of other insurance companies.

Contents

Introduction

The financial market plays a crucial role in the in the economic development of a country by facilitating the allocat ion of scarce resources. Financialmarkets essentially involve the allocation of resources. This can be thought ofas the brain o f the entire economic system, the locus of central decision-making; if they fail, not only will the sectors profit be lower than wouldotherwise have been, but the performance of the entire economic system may be impaired. The efficiency of financial market however, depends on the existence ofactive and efficient financial intermediaries in the system. Deposit takinginst itutional investor is the important financial intermediaries involved in thetask of allocat ing assets. Structural changes in the financial market haveinduced a reverse trend in financial intermediat ion, i.e. financial disintermediation, in which the central role of banking is being taken over byinvest ment institutions and inst itutional investors. The shift fro m a credit-based system to a financial has init iated the process of

disintermediat ion, andcapital market based factors like insurance, pension funds and mutual fundsare increasingly playing the central role. The reforms have successfully dismant led the entry barriers, wit h the result that today there are domest ic and foreign financial institut ions, like mutual funds, broking firms and insurance companies, operating in the Indian market. The introduct ion of capit al adequacy norms, prudent ial regulat ion and world class regulatory mechanisms to protect the interest of investor, besides the strict requirement of disclosure, have given a boost to the confidence of domest ic and foreign investors. The Indian economy has slowly integrated itself wit h the glo bal econo my and financial market.

Industry background
INSURANCE:

Definition:
Insurance is a contract providing for payment of a sum of money to the person assured or failing him to the person entitled to receive the same on the happening of certain event. Uncertainty of death is inherent in human life. It is this risk, which gives rise to the necessity for some form of protection against the financial loss arising from death. Insurance substitutes this uncertainty by certainty. The objective of insurance is normally to provide: a) Family protection and / or b) Provision for old age. c) Protection against risks

Why Insurance?
Insurance cover is essential because it provides the following benefits:   A lump sum payment to the nominees at the time of the death of the policy holder. A regular payment to the nominees in the event of the death of the policy holder. Tax benefits, as premiums paid reduce the liability of tax.  Relieves economic hardships in the family on the uneventful death of the sole income

holder.  Inculcates the habit of savings.

Need for insurance:

The need for life insurance comes from the need to safeguard the family. Today insurance has become even more important due to the disintegration of the prevalent joint family system, a

system in which a number of generations co-existed in harmony, a system in which a sense of financial security was always there as they were more earning members. Times have changed and the nuclear family has emerged. Apart from other pitfalls of a nuclear family, a high sense of insecurity is observed in it today besides, the family has shrunk. Needs are increasing with time and fulfillment of these needs is a big question mark. How will we be able to satisfy all those needs? Better lifestyle, good education, long desired house. But again - we just cannot fritter away all our earnings; we need to save a part of it for the future too - a wise decision. This is where insurance helps us. Ambitions etc. are some of the reasons why insurance has gained importance and where insurance plays a successful role.

History:
India Insurance Company:
The concept of insurance is intimately related to security. Insurance acts as a protective shield against risk and future uncertainties. Traditionally, a risk-averse behaviour has been a characteristic feature of Indians who preferred a low & certain disposable income to a high & uncertain one. Hence insurance has become a close associate of Indians since 1818, when Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of their own community. The age was characterized by intense racial discrimination as Indian insurance policy holders were charged higher premiums than their foreign counterparts. The first Indian Insurance Company to cover Indian lives at normal rates was Bombay Mutual Life Assurance Society which was established in the year 1870. By the dawn of the 20 th century, new insurance companies started mushrooming up. In order to regulate the insurance business in India and to certify the premium rate tables and periodic valuations of the insurance companies, the Life Insurance Companies Act and the Provident

Fund Act were passed to regulate the Insurance Business in India in 1912. Such statistical estimates made by actuaries revealed the disparity that existed between Indian and foreign companies. The Indian Insurance Sector went through a full circle of phases from being unregulated to completely regulate and then being partly deregulated which is the present situation. A brief on how the events folded up is discussed as follows: The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state controls over insurance business. In 19th January, 1956, the life insurance in India was completely nationalized through the Life Insurance Corporation Act of 1956. At that time, there were 245 insurance companies of both Indian and foreign origin. Government accomplished its policy of nationalization by acquiring the management of the companies. Bearing this objective in mind, the Life Insurance Corporation (LIC) of India was created on 1st September, 1956 which has grown in leaps and bounds henceforth, to become the largest insurance company in India. The General Insurance Business (Nationalization) Act of 1972 was formulated with the objective of nationalizing nearly 100 general insurance companies and subsequently amalgamating them into four basic companies namely National Insurance, New India Assurance, Oriental Insurance and United India Insurance which have their headquarters in four metropolitan cities. The Insurance Regulatory and Development Authority (IRDA) Act of 1999 deregulated the insurance sector in India and allowed the entry of private companies into the insurance sector. Moreover, the flow of Foreign Direct Investment (FDI) was also restricted to 26 % of the total capital held by the Indian Insurance Companies.

Some of the important milestones in the life insurance business in India are:
1912: The Indian insurance Companies Act enacted as the first statute to regulate the

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: Indian and foreign insurers and provident societies taken over by the central

government were nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crores from the Government of India.

Size:
Insurance is an Rs.400 billion business in India, and together with banking services adds about 7% to Indias GDP. Gross premium collection is about 2% of GDP 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. To tap the vast insurance potential and to mobilize long - term savings we need reforms which include revitalizing and restructuring of the public sector companies, and opening up the sector to private players. A statutory body needs to be made to regulate the market and promote a healthy market structure. Insurance Regulatory Authority (IRA) is one such body, which checks on these tendencies. IRA role comprises of following three functions: a. Protection of consumer's interest. b. To ensure financial soundness and solvency of the insurance industry, and c. To ensure healthy growth of the insurance market.

An insurance policy protects the buyer at some cost against the financial loss arising from a specified risk. Different situations and different people require a different mix of risk-cost combinations. Insurance companies provide these by offering schemes of different kinds. 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 Indias share of world insurance market has shown an increase of 10% from 0.31 in 1996-97 to 0.34% in 1997-98. India's market share in the life insurance business showed a real growth of 11 % thereby outperforming 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. The nationalized insurance industry has not offered consumers a variety of products. Opening of the sector to private firms will foster competition, innovation, and variety of products. It would also generate greater awareness on the need for buying insurance as a service and not merely for tax exemption, which is currently done. On the demand side, a strong correlation between demand for insurance and per capita income level suggests that high economic growth can spur growth in demand for insurance. Also there exists a strong correlation between insurance density and social indicators such as literacy with social development, insurance demand will grow.

COMPANY PROFILE

HDFC Incorporated in 1977 with a share capital of Rs 10 crores, HDFC has since then 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 gross premium income for the yearending March 31st, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs 1,624 Crores. The company has covered over 10, 00,000 lives year ending 31st March, 2010. It operates through almost 450 locations throughout the country with its corporate headquarters in Mumbai, India.

Standard Life is Europe's largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 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 originalEdinburgh premises, opening offices in other towns and acquiring other similar businesses. Standard Life currently has assets exceeding over $119 billion under its management and has the distinction of being accorded "AAA" rating consequently for the past six years by Standard and Poor. They have assets under management which are worth more than the market value of Sainsbury's Boots, Tesco, Cadbury Schweppes and Marks and Spencer combined.

Established on 14th August 2000; HDFC Standard Life Insurance Co. Ltd. is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited) - India's leading housing finance institution, and a Group Company of the Standard Life Plc, UK. The Company is one of leading private insurance companies, offering a range of individual and group insurance solutions, in India. Being a joint venture of top financial services groups, HDFC Standard Life has adequate financial expertise to manage long-term investments safely and resourcefully.

HDFC Limited, India's premier housing finance institution has assisted more than 3.4 million families own a home, since its inception in 1977 across 2400 cities and towns through its network of over 271 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRI's and PIO's to own a home back in India. As of December 2009, the total asset size has crossed more than Rs. 104,560 crores including the mortgage loan assets of more than Rs.90, 400 crores. The corporation has a deposit base of over Rs. 23,000 crores, earning the trust of nearly one million depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing finance companies.

MISSION
To be the top life insurance company in the market. This not only means being the largest or most productive company in the market but a combination of several things like:  Customer service of highest order  Value for money for customers  Professionalism in carrying out the business.  Increasing market share.  Use of best technology for improved service standards.  Innovative products to cater different needs of different customers.

VISION AND VALUES

The most successful and admired life insurance company, which means that they are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry. Values that they observe while they work:
 Integrity  Innovation  Customer centric  People Care One for all and all for one  Team work  Joy and Simplicity

MANAGEMENT TEAM:
Mr. Amitabh Chaudhry is the Managing Director and Chief Executive Officer of HDFC Life. Mr. Paresh Parasnis is the Executive Director and Chief Operating Officer of HDFC LIFE. He has been associated with the HDFC Group since 1984. Ms.Vibha Padalkar is the Chief Financial Officer of HDFC Life. Mr. Ashley Rebello is the Chief Actuary and Appointed Actuary of HDFC Life. Mr. Sharad Gangal is the General Manager HR and heads the vertical in HDFC Life. Mr.Vikram Mehta heads the Sales and Marketing function for HDFC Life. Mr. Prasun Gajriis the Chief Investment Officer of HDFC Life.

PRODUCTS OF HDFC LIFE:

Plan Savings series
Endowment Assurance Plan Unit Linked Endowment plan

Benefits
Life Insurance with Savings Life Insurance and savings with choice of investment in funds

Children's plan Money Back plan

Financial Security for your child Life Insurance with Savings

Unit linked young star Investment Series

Single Premium Whole Of Life plan

Life Insurance and savings with choice of investment in funds

Investment with life insurance

Protection series

Term Assurance plan

Life Insurance at an affordable price(i.e. high risk cover with low premium)

Retirement Series
Personal Pension Plan Unit Linked Pension Plan Savings for retirement Retirement savings with choice of investment in funds

MARKETING DETAILS: Speaking on this association, Mr. Sanjay Tripathy, EVP & Head - Marketing and Direct Channels, HDFC Life said, HDFC Life is delighted to share the privileges of sponsoring Rajasthan Royals with the volunteers of Yuva Unstoppable. India is a young country, hence it is very important to motivate such spirited youngsters for their selfless efforts towards the betterment of our society. In line with our motto of Sar Utha ke Jiyo - which empowers people to believe in themselves and live with pride, HDFC Life is proud to present these volunteers with a coveted opportunity to experience an IPL match live in the stadium. This is a stepping stone towards a much larger corporate social responsibility initiative, which we plan to launch in the near future. HDFC Life will be associating with various NGOs across Rajasthan to provide this unique experience for the under-privileged throughout IPL4 for all the matches of Rajasthan Royals held in Jaipur. Pavan Jain, Vice President, Yuva Unstoppable said I would thank HDFC Life for extending this special gift for our volunteers. Such opportunities are a huge boost for our young volunteers and helps imbibing in them positive energy and moral values. The volunteers are all excited to experience this opportunity to see IPL match live in the stadium of Jaipur. ABOUT YUVA UNSTOPPABLE: Yuva Unstoppable is a premier volunteer movement with a force of 60,000 young people across 30 cities of India helping more than 100,000 kids in municipal schools / slums through organizational partnerships with schools, colleges and corporate companies. YUVA Unstoppable is currently the largest volunteer movement of India and growing exponentially. YUVA Unstoppable motivates and fosters Random acts of kindness through its three initiatives like School Unstoppable, College Unstoppable and Corporate Unstoppable.

(Source:http://www.business-standard.com/india/news/hdfc-life-cheersyuva-unstoppable-tosupportrajasthan-royals/433582/)

HDFC LIFE LAUNCHES MOST IMPORTANT DOCUMENT FOR CUSTOMERS: HDFC Life, one of Indias leading private life insurance companies, has taken yet another significant step as part of its Customer Centric Approach. The company has rolled out Most Important Document (MID), an one-page questionnaire on HDFC Lifes key product features to be mandatorily filled by customers in full and sign across, acknowledging full understanding of the product features at the time of filling up proposal forms. The MID has been rolled out across all its main Distribution Channels with effect from April 8, 2011. The roll out of MID is a proactive initiative from HDFC Life to ensure that customers understand products well before making a decision to purchase it. HDFC LIFE'S OTHER KEY CUSTOMER CENTRIC INITIATIVES INCLUDE:  Grievance handling system with comprehensive investigations/counseling to customers in case of complaints  A Strict Malpractices Matrix in place to address mis-sell (including termination)  All to customers to get a first-hand feel of their expectations, to gauge satisfaction with the companys sales process and if the right product has been sold based on customer needs ENVIRONMENT: HDFC LIFE benefited a lot when it merged with the UK based Company Standard Life. HDFC Standard life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Each of the JV player is highly rated and been conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. The joint venture of these two companies increased the profit, brand image and more reliable to the customers as well as increased the market share. FINANCIAL DETAILS (2010-2011) Robust growth of 29% in total premium income to Rs. 9004 crores from Rs. 7005 crores in 2009-10 26% growth in individual new business (regular and single) to Rs. 3488 crores from Rs. 2753 crores in 2009-10 High quality of existing policies & continuous focus on persistency lead to 36% increase in renewal premium of Rs. 4924 crores from Rs. 3627 crores last year Strongest market share gain of 4.2%* in private space in 2010-11 over same period last year; Market share increased to 12.9% in private space in 2010-11 from 8.7% in 2009-

10;Overall market share increased to 5.9% in 2010-11 from 4.6% in 2009-10.Stood first in the industry in individual business; Stood 3rd in the private space in 2010-11 in total premium Conservation ratio (individual business) improved substantially to 81% in 2010-11 from 72% in 2009-10 31% growth in Assets Under Management over March 31, 2010 to Rs. 27,177 crores from Rs. 20,767 crores same period last year Solvency ratio as on March 31st, 2011 was 172% as against regulatory requirement of 150% Claim repudiation ratio for FY 2010-11 is 3.97%, which means we have settled 96.03% claims Distribution mix - 66% from Ban assurance, 31% from Agency and rest from others including Direct Sales. (Source:IIFL)

SWOT ANALYSIS OF HDFC LIFE

STRENGTHS:  HDFC Standard life insurance offers a range of individual and group insurance solutions.  HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently.  Rated AAA by CRISIL and ICRA for the 10th consecutive year for High service standards.  Uses the most aggressive marketing strategies  Free switching options online informing customers about the performance of their investment by sending monthly reports and statements  Training provided to all people  First private company to get registered under IRDA  First one to hit IPO  HDFC Standard Life was one of the first private life insurers to disclose the embedded value of
its business

WEAKNESSES:  LIC is prevalent and sustains even today a major source of population.

 Low number of offices and network and number of life insurance agents.  Lack of knowledge and expertise.  They are unable to target rural areas as compared to LIC  Poor awareness of products in the minds of customers  Negligence to customers after the investment is sold  Sometimes right advice is not given to the customers

OPPORTUNITIES:  Life insurance has captured its mere15 20% growth therefore a wide open untapped market is open to the company to develop, grow and measure its success.  Still the number of companies are few and company has every capabilities to grow and forward its performance areas to the widest  Strong brand helps to boost up the sales  No.1 in adapting new technologies like online search THREATS:  People are hesitant to invest and put their hard earned money to the private life insurance company with the fear of getting lost.  Belief towards LIC as it is a government corporation phobia is continue to surmount the people of India despite lots of flaws and development and liberalization of life insurance.  Alternative financial services such as mutual fund, banking services, share and securities also pose problems and threats to the working of the life insurance sector.  Illiteracy and unemployment also pose threat.

 Rising real estate industry also pose threat as people are investing a bulk of their money over to that industry.  Entry of more of Private Players in the market  Faster rate of employee attrition

Organization Structure

ALL INDIA HEAD

REGIONAL MANAGER OF CHANNEL DEVELOPMENT

TERRITORY MANAGER OF CHANNEL DEVELOPMENT

AREA MANAGER OF CHANNEL DEVELOPMENT

CHANNEL DEVELOPMENT MANAGER

CHANNEL DEVELOPMENT EXECUTIVE

RECRUITMENT CONSULTANT

FINANCIAL CONSULTANTS

Departments

MARKETING DEPARTMENT

TRAINING DEPARTMENT

SALES DEPARTMENT

ADMINISTRAT ION DEPARTMENT

CHANNEL DEVELOPMENT DEPARTMENT

OPERATIONS DEPARTMENT

Organizational Structure of the branch I worked in:

Business Development Manager Branch Manager Operational officer

Sales Develop ment Manager Agency Support Officers

Financial Consultants

Branch manager is the head of the branch under whom the whole branch office is dealt with. Next to the branch manager is the business development managers of 1 or 2 of them. The sales development manager falls under business development manager but is accountable to branch manager only. Below the business development manager and sales development manager are the financial consultants who are not the employees of the company but the agents who give the business. Operational officer and the agency support officers are the staff members employed to maintain the inner transactions and to keep account of all the receipts and payments. Even they are accountable to the branch manager only.

Research Design
Introduction
A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completion of the study. The basic objective of research cannot be attained without a proper research design. It specifies the method and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods.

Title of the study

To conduct a survey on the Life Insurance Industry of India

Statement of the Problem

This study was undertaken to identify which type of insurance plans HDFC SLIC should market to beat Tata AIG LIC in India. A Survey was undertaken to understand the preferences of Indian consumers with respect to insurance. The plan should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the types of company, the amount of annual premium payable ( capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data.

Objectives of the study

 To analyze the product details of HDFC SLIC Limited and Tata AIG Life Insurance Company Limited.  To find Points of Parity and Point of Differences of HDFC SLIC Limited and Tata AIG Life Insurance Company Limited.  To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.

Research Methodology

Type of Data collected

There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is collected from indirect sources. (Source: Research Methodology, By C.R. Kothari)

Primary sources
These include the survey or questionnaire method, telephonic interview as well as personal interview methods of data collection.

Secondary Sources
These include books, the internet, company brochure, product brochure , the company website , competitors website , newspaper articles etc.

Sampling
Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about the universe. A Sample is a representative of the universe selected for study.

Sample Size
The Sample size for the survey conducted was 270 respondents. This sample size was taken on 95% confidence level and 6 significant levels. Data universe for this sample is 10, 00,000 which is approx. population of Lucknow excluding people below age of 18 years.

Sampling Technique
Random Sampling technique was used in survey conducted.

Plan of Analysis
Tables were used for the analysis of the collected data . The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.

TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction
TATA AIG Life Insurance Company, Limited is a joint venture company, formed by the TATA Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata groups pre-eminent leadership position in India and AIGs global presence as the worlds leading international insurance and financial services organization. The TATA Group holds 74% stake in the insurance venture and AIG holding balance 26%. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG was licensed to operate in India on February 12, 2001 and started operation on April 1, 2001. Note: A recent survey conducted by the voluntary organization in interest of Consumer education reverted Tata AIG Life as the clear winner in terms of consumer satisfaction in the life insurance category. The survey also revealed that TATA AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer- focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other insurance companies but also appealed to consumers.

Products and Services

Corporate Life insurance products
y y y y Employee Benefits Credit Life Group Pensions Workplace Solutions

Individual Life Insurance product

y y y y Health First Health Protector Mahalife Invest Assure II, Invest Assure Gold

HDFC SLIC AND TATA AIG Points of Parity Funds Available with ULIP Plans

General Description Equity Funds

Income, Fixed Interest and Bond Funds

Cash Funds

Balanced Funds

Nature Of Investments Primary invested in company stock with the general aim of capital appreciation Invested in corporate bonds, done in the securities and other fixed income instruments Sometimes known as Money Market Funds-invested in cash, bank deposit and money market instruments. Combining equity investment with fixed interest instrument.

Risk Category High

Medium

Low

Medium

Generally all Life Insurance Companies have three types of fund which are Equity fund, Debt fund and Balance Fund. These funds have different risk profile. Equity fund has high risk and gives high return, Debt fund has low risk so it gives low return and balanced fund is combination of both Equity and Debt fund so risk is medium and return is low. Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of Debt-Equity Fund. These are liquid fund, stable managed fund, secure managed fund defensive managed fund, stable managed fund, and secure managed fund defensive managed fund, balanced managed fund, equity managed fund, growth fund.

CHARGES, FEES AND DEDUCTIONS IN ULIP

y Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the remainder is invested to buy units. The allocation charges are guaranteed for the entire duration of policy term.

y Mortality Charge
The Mortality Charge will apply on the Sum at Risk (Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of account from the accommodation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.

y Fund Management Charge

1% p.a. on with Profits Fund 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on growth Fund, FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA. Rs. 60 p.m., which will increase by 5% p.a. on the 1st of January each year PAC will be deducted monthly by cancellation of the charge applicable for the premium paying policies.

y Policy Administration Charge

y Surrender Charge
This is the charge that applies when the policy is surrendered. It is different in HDFC SLIC; there is no surrender if policy is surrendered after 5th policy anniversary.

y Service Tax Deduction

The Government of India levies a Service Tax & Education Cess on the amount to risk charges and Fund Management Charges deductedfrom your policy. We collect this tax along with the charges. The tax rate will be as notified by the government from time to time.

Tax Benefits
Tax Benefits will be as per section 80c Section 10(10D) of the Income Tax Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are also tax free.

RIDER AND BONUSES HDFC SL

Free Look Period Reversionary Bonus Terminal Bonus Top Up 15 Days Based on performance of company Based on companys performance Minimum Rs. 5000

TATA AIG LI
15 Days Based on companys performance Based on companys performance
Minimum Rs. 5000

Riders Critical Illness Benefit Additional Term Benefit Additional Death Benefit Double Benefit Triple Benefit Waiver of premium

Given on diagnosis of anyone of 6 critical illness Provides Provides Provides Does not Provides Provides

Given on diagnosis of anyone of 12 critical illness Provides Provides Does not Provides Does not Provides Provides

Points of Difference
Grace Period Policy Administration Charge Guaranteed Bonus HDFC SLIC 15 days Rs 60 per month 50% of 1st year premium after 10 year & 100% of 1st year premium after 11 year. 0.1% every year Total 24 free switches in a policy after this Rs. 100 per switch 1.25% per annum on the fund value Total 12 free premium redirection in a policy after this Rs. 250 per Premium Redirection TATA AIG LIFE 31 days Rs. 55 per month 10% on sum assured after 10 year 0.25% after every 4th year 4 free switches per year after this Rs. 250 per switch. 1.75% per annum on the fund value First 2 Premium Redirection in a year is free after this Rs. 1000 per Premium Redirection.

Loyalty Bonus Fund Switching Charge

Fund Management Charge Premium Redirection Charge

We see that both 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 companys overall performance and return given to its consumer.

Analysis and Interpretation

A Survey on the Life Insurance Industry In India

Age group of surveyed respondents:

Table 1:

Age group 18-25 years 26-35 years 36-45 years 46-55 years More than 60 years
Chart 1:

No of respondents 127 67 46 24 6

2% 9% 17% 47% 18-25 yrs 26-35 yrs 36-45 yrs 25% 46-55 yrs more than 60yrs

Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18-25 years, 25% fall in the age group of 18-25 years, 25% fall in the age group of 26-35 years and 17% fall in the age group of 36-49 years. Therefore most of the respondents are relatively young (below 26 yrs of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns. Individuals at this age are trying to buy a house or car insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for the people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.

Gender classification of surveyed respondents

Table 2:

Particulars Male Female

Chart 2:

No. of respondents 193 77

No of respondents
250 200 150 100 50 0 Male Female 77 No of respondents 193

Customer profile of surveyed respondents

Table 3: Customer profile Students Housewife Working Professional Business Self Employed Government Service employee No of respondents 62 5 116 49 24 14

Chart 3:

No. of respondents
5% 9% 18% 23% 2% Students Housewife Working Professional Business 43% Self Employed Govt Service Employee

Analysis: From the chart above it can be clearly seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18-25 years having surplus income, interested in good returns on their investment and saving income tax.

No. of Respondents who have Life Insurance policy in their name

Table 4: Particulars Yes No No of Respondents 103 167

Chart 4:

no of respondents

38% Yes 62% No

Analysis: This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policies in their name. Rest all doesnt have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurance can grow further and cover life of people.

Market share of Life Insurance Companies:

Table 5: Life Insurer HDFC SL BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG Number of Policies 4 3 6 7 55 6

ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS Chart 5:

12 6 2 2

No of Policies
HDFC SL 6% 2% 2% 4% 3% BIRL LIFEA SUN 6% 7% AVIVA LIFE INSURANCE BAJAJ ALLIANZ 53% LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA

11% 6%

Analysis: In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown up to 2048 offices serving 18 crores policies and has a corpus of over 340000 crores INR.

Annual Premium paid by individuals for Life Insurance

Table 6: Premium Paid(p.a.) Rs. 5000- Rs.10000 Rs.10001- Rs. 15000 Rs. 15001- Rs.24900 Rs.25000-Rs.50000 Rs.50001-Rs.60000 Rs.60001-Rs.80000 Rs.80001-Rs.100000 No. of respondents 40 26 18 10 4 2 3

Chart 6:

No. of respondents
2% 4% 10% 39% 17% Rs.50001-Rs.60000 Rs.60001-Rs.80000 25% Rs.80001-Rs.100000 3% Rs. 5000- Rs.10000 Rs.10001- Rs. 15000 Rs. 15001- Rs.24900 Rs.25000-Rs.50000

Analysis: From the chart above we find that 39% of respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than 25000. Hence we can safely say that HDFC SLIC would be able to capture better market better if it introduces products/plans where the premium starts from Rs 5000 p.a. Only 19% of the respondents pay more than Rs.25000 as premium and most of the products sold by HDFC SLIC have Rs. 12000 as the minimum annual premium amount. They should introduce more products where the minimum premium should start from Rs. 5000 p.a. This would definitely increase their market share as more individuals would be able to afford the policies/plan offered.

Popular Life Insurance Plans

Table 7: Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans No. of Respondents 105 122 16 8 19

Chart 7:

No. of Respondents
6% 3% 39% Term Insurance lans Endowment lans ension lans 7%

Child lans Tax Saving lans

Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes- life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual not die during the policy term.

Awareness of Unit Linked Insurance Plans

Table 8: Awareness of Unit Linked Plans Yes No No. of Respondents 154 116

45%

Chart 8:

No. of Respondents

43% 57% Yes No

Analysis: From the chart given above we find that 57% of respondents are aware of Unit Linked Life Insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company canadvertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its product more effectively. Unit Linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would depend on the unit price when they pay the premium. When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

Consumer Willingness to spend on Life Insurance premium:

Table 9: Willingness to spend on premium Less than Rs.60000 Rs.6001- Rs.10000 Rs.10001- Rs.25000 Rs.25001- Rs.50000 Rs.50001-Rs.100000 No. of Respondents 41 73 110 41 5

Chart 9:

No. of Respondents
2%

15%

15% 27%

Less than Rs.60000 Rs.6001- Rs.10000 Rs.10001- Rs.25000 Rs.25001- Rs.50000 Rs.50001-Rs.100000

41%

Analysis: From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001- Rs. 25000 for life insurance, 27% would be willing to spend between Rs. 6001- Rs.10000 p.a. Only 15% would be willing to spend more that Rs. 25000 p.a. as life insurance premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI prudential, Birla Sun Life, Bajaj Allianz etc. HDFC SLIC is faced with a large amount of competition there are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.

Chart showing ideal policy term:

Table 10: Ideal policy term 3-5 years 6-9 years 10-15 years 16-20 years 21-25 years 26-30 years More than 30 years Whole Life Policy Chart 10: No. of respondents 51 41 95 38 24 5 3 13

No. of respondents
3-5 years 9% 14% 35% 2% 1% 5% 19% 15% 6-9 years 10-15 years 16-20 years 21-25 years 26-30 years More than 30 years

Analysis: From the chart it is clear that for 35% of respondents ideal policy term is 10-15 years and for 19% the ideal policy term is 16-20 years which clearly shows that for most of the respondents the ideal policy term lies between 10- 15 years which can be a strong point for HDFC SLIC because for ULIP policies the term is 10 years but for other conventional policies the term is greater. Customer does not prefer their money to be locked in for such a long period therefore 10-15 years is the ideal policy term.

hole Life olicy

Motivating factor to purchase insurance Table 11: Factors Advertisements High Returns Advice from friends Family Responsibilities Others No. of Respondents 40 52 68 97 13

Main Problems Discovered

The old and outdated techniques of tele marketing are used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue.

Some of the main problems that I feel are present are:

 Large amount of competition HDFC SL faces competition from:
 Life Insurance Corporation Of India  ICICI Prudential  Birla Sun life  LIC  Bajaj Allianz  Max New York Life  Met Life India Insurance  Reliance Life Insurance  SBI Life Insurance  Tata AIG Life Insurance  Kotak Mahindra  Aviva Life Insurance

 Other brands are well advertised and have higher recall value.  LIC is considered a safer option.  Faces competition from Banks and Mutual Funds.

 High premium policies are difficult to market.  People hold incorrect perception about insurance.  Sometimes interested prospects have lack of time and they postpone investments  Usually customer gets defensive if you cold call.  Short term plans are available only at large premium.  Customers do not have risk appetite to invest in shares.  Some prospects have already invested and are not interested in further investments.  Consumers dont want to undertake medical examinations.  Large amount of documentation is required.  Customers do not like their money to be locked up for so many years.  Lack of awareness about the Unit Linked Funds in the market.

Suggestions for improvement:

 Advertise about the company and its product- it motivates individuals to purchase insurance.  Create a positive perception about insurance.  Speak about the good features a plan offers like high returns, life cover, tax benefits, and indexation accident cover while prospecting customers.  Try to sell the product/plan which the consumer requires or which benefits the consumer and not the plan where the companys benefit is higher.  Improve the efficiency of the operations department.  Bring out policies with small premiums payable for short periods of time e.g.: Rs 5000- Rs 10000 per annum for 10 years.  Attract the youth of India with higher returns on investment as returns are the motivating factor which influence the purchase of insurance.  Promote insurance in colleges and corporate houses.  Promote HDFC SLIC as an Indian company to build trust.  HDFC SLIC could have a brand ambassador or a mascot to promote its services.  Should have partial withdrawals from the first year onwards.  Tap the rural market where there is large potential.  Diversify product portfolio.  Make products more straight forward-reduce complexities.  There are no specific policies to the students and retired people.
 The reasons for not buying insurance policy or satisfaction in customers show that the company should make effort to convenience people of their reliability and long-term existence which also satisfies the existing customers.

 Most of the customers have purchased the policy for the tax benefit, this perception have to be changed by educating them and offering them beneficial short investment plans where the returns are known to them at the time they purchase the policy.

 The ECS mode of payment is available only in corporation cities, and not in any other districts.  HDFC standard life can come up with new policy for younger that is also for the students and for retired people.  Company can target various sub-urban and rural population by coming up with policies for farmers.  HDFC standard life can bring awareness of Life insurance among college students by organizing seminars on life insurance at colleges.  Insurance agents (financial consultants) are best salesmen. Companies should train them to build and sell the products because they are the one who makes policyholder to pay regularly by trying to fulfill their needs and demands.  Tie-ups with corporate companies and institutions to provide policies to their employees would create a better recognition & profit in the market.  It should advertise about all its product features in all the available media based on the consumer target group.

Learning
As per the study many customers are unaware of the returns on their investments and also since in the current market we notice that lot of fly-by operators exist in the market, the customers are normally worried about their investments as well as the companys existence for a longer period. To subside these worries the HDFC Standard life has to assure its customers of their existence or stability in the market and its also very much necessary to inform the customers about the returns they generate on their investments year on year. The company should also actively take measures to ensure the customers have enough knowledge about the products offered by HDFC Standard life insurance. Understanding the customers mindset and customization of some of the product features or the mode of payments with respect to individual customers focus would benefit the company in the long run.

Summer Training in HDFC Standard Life really helped me in gaining immense experience and knowledge. I learned in general how an insurance industry like HDFC Standard Life uses various marketing skills to market their range of products. I learned: y y y How they take care of their customers. What is the work of the financial consultants? What value addition to be done for the products in order to survive in fiercely competitive and rapidly changing scenario?

Being in HDFCSL, I gained certain practical experiences of Financial Industry. I have also learned the rate of commission given to the agents; I elicited certain motivational scheme which motivates insurance agents to increase their customer base. Customers are the key aspect of any business and its applicable for the insurance sector too. For any insurance company, to get a new customer is 10 times costlier then to retain an existing one.

Hence a sales person or insurance agent shouldconvince more customers in less time to significantly increase company efficiency to deal with more customers. Except these, I got the experience that how the private sector insurance companies are working in the market and what is the procedure of attracting the customers.

Some of the basic learnings were:

 After my field study I come to know customer usually prefer government insurance company other than private insurance companies due to its reliability.  Customers are more brand oriented rather than product oriented.  Customers are less aware about the private insurance companies.  Private Players in order to encase maximum number of customers are introducing new and innovative scheme for their FC.  Customers like to invest in other investment zones due to the hectic rules and regulations associated with, entering into a contract with insurance companies.  Customers do not feel secure with private insurance companies.  The central problem with the insurance companies is having that they are trying to convince customers for a product which do not have any present relevance, i.e. each policy which the customer is going to purchase will have a future set of action and benefits. Due to which most of the people like to invest in those securities or investment, which will give them a fruitful return in short period of time?  Life insurance Corporation has completed more than three decades and thats where counts, inters of brand name, different number of policies for differed class and age group of customers.  The Private players are on the way, but they need a lot of time investment for creating a favorable brand image.  So by this I want to conclude that insurance sector is one of the booming sector, But they can sustain only when they provide product relevant to customer benefit.

Limitations of the study

(a) (b)

The study is confined to the city of Lucknow in Uttar Pradesh.. The findings of the study are based on the assumption that respondents have

disclosed accurate information. (c) (d) The study was limited to 100 respondents of the company. The information, data collected and analysed is restricted to the researchers

knowledge and ability.