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INDEX:
Acknowledgement . . 2 Declaration ..... 3 Introduction 4 Existing literature 5 Industry reforms.. 13 Present scenario.. 13 About reliance 16 ULIP 23 Financial instruments.. 34 Significance of study... 40 Research methodology 41 Analysis ...42 Findings... 48 Conclusion... 49 Bibliography 49 Questionnaire.. 50
Comparative study on insurance vs financial instruments
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ACKNOWLEDGEMENT:
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A Few typewritten words of thanks can-not really express the sincerity of my gratitude. But I am still trying to put into words my gratefulness towards all who have helped & encouraged me in carrying out this project.
I would like to thank Mr. K. C. Mishra (Dean,GBS) to give me guidelines and my worthy thanks to my teacher Mr. Shanthan Prasad (faculty member) for their valuable contribution during the academic session and guidance in preparation of this project report.
This report conveys my heartiest thanks to Mr.RAJ GHOSH, Branch Manager of RELIANCE LIFE INSURANCE CO. LTD. for giving me this project & helping me in completion of this project. No praise is ample for the never tiring efforts of my colleagues whose constant support feedback, guidance & practical suggestions helped me in completing this Project successfully.
DECLARATION
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I hereby declare that the project COMPARITIVE STUDY ON INSURANCE VS FINANCIAL INSTRUMENTS for RELIANCE LIFE INSURANCE is original and bon-a-fide work done by me.
The project is being submitted in partial fulfilment requirements for the award degree of PostGraduation Diploma in Management, Gurunank Business School, Hyderabad.
The contents of this project are based on the field work and analysis done by me during my tenure at RELIANCE LIFE INSURANCE, Himayath Nagar, Hyderabad.
INTRODUCTION: In todays corporate and competitive world, I find that insurance sector has the maximum growth and potential as compared to the other sectors. Insurance has the maximum growth rate of 72-86% while as FMCG sector has maximum 14-17% of growth rate. This growth
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potential attracts me to enter in this sector and RELIANCE LIFE INSURANCE has given me the opportunity to work and get experience in highly competitive and enhancing sector.
The success story of good market share of different market organizations depends upon the availability of the product and services near to the customer, which can be distributed through a distribution channel. In Insurance sector, distribution channel includes only agents or agency holders of the company. If companies like RELIANCE LIFE INSURANCE, TATA AIG, and MAX etc. have adequate agents in the market they can capture big market as compared to the other companies.
Agents are the only way for a company of Insurance sector through which policies and benefits of the company can be explained to the customer.
EXISTING LITERATURE: MEANING OF INSURANCE. Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance is a collective bearing of risk. Insurance is a financial device to spread the
Comparative study on insurance vs financial instruments Page 5
risks and losses of few people among a large number of people, as people prefer small fixed liability instead of big uncertain and changing liability. Insurance can be defined as a legal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event, which may be certain or uncertain. The other party called insured pays in exchange a fixed sum known as premium. Insurance is desired to safeguard oneself and ones family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events. Mankind is exposed to many serious perils such as property losses from fire and windstorm and personal losses from disability and premature death. Although it is impossible for an individual to foretell or completely prevent their occurrence but it is possible to provide against their financial effect the loss of property and earnings.
From the point of view of the individual the life Insurance may be defined as a contract whereby for a Consideration amount called the premium, one party (the insurer) agrees to pay to the other (the insured) or a beneficiary a particular amount upon the occurrence of death or any other agreed event. \
Insurance is the method of spreading and transfer of risks Losses of few unfortunate are shared by and spread over to many exposed to the same risk.
Assets created by the owner in expectation of future needs have a value. Losses of assets for any reason deprive the owner of the expected benefits. It acts as a form of a safeguard against misfortunes.
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From the point of view of community life insurance may be defined as a social device to make accumulations to meet uncertain losses resulting from premature death or disability.
Purpose and need of insurance: As said earlier that the making is exposed to many serious perils which risk the security of their belongings. The risk here means that there is a possibility of occurrence of loss or damage to the property, it may happen or may not happen. Insurance is relevant only in the contingency of uncertainty. If there is no uncertainly about the occurrence of the loss it cant be insured against: Assets are likely to be destroyed or made non-functional due to perils like firefloods, breakdowns, lightning and earthquake. Damage to assets caused by any perils is the risk that assets are exposed to. Insurance become relevant only if there is uncertainly of occurrence of event leading to loss. No uncertainty No insurance. We can say that the human life value is an ongoing generating asset, which can be lost on early death or disability caused by accidents. Insurance doesnt protect the assets but only compensates the economic or financial loss. Basically insurance covers tangible assets but the concept can be extended to intangible also.
IMPORTANCE OF INSURANCE:
Insurance constitutes one of the major segments of the financial market. Insurance services play predominant role in the process of financial intermediary. Today insurance industry is
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one of the most growing sectors in India. There is lot of potential in the Indian Insurance Industry.
There are many issues, which require study. The scope of the study of insurance industry of India would be very great as there are on-going developments in the industry after the opening of the sector.
The major issue right now is the hike in FDI (Foreign Direct Investment) limit from 26% to 49% in the insurance sector. Government may in near future allow 49% FDI in Insurance. This would lead to more capital inflow by foreign partners.
Another major issue is the effects on LIC after the entry of private players in the market. Though market share of LIC has been affected, it has improved in terms of efficiency.
There are number of other hot topics like penetration of Health Insurance, Rural marketing of insurance, new distribution channels, new product ranges, insurance brokers regulation, incentive scheme of development officers of LIC etc. So it offers lot of scope for studying the insurance industry.
Right now the insurance industry has great opportunities in a country like India or China which huge population. Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped.
Before starting the discussion on insurance industry and related issues, we have to start with the basics of insurance. So first we understand what is insurance? How the word insurance is different from the word assurance? etc.
DIFFERENCE BEETWEN INSURANCE AND ASSURANCE:
Assurance is older in history and it was used to describe all types of insurances. From 1826, the term assurance came to be used only for the risks covered by life insurance and the term insurance was exclusively used to denote the risks covered by marine, fire, etc.
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The word assurance indicated certainty. In life insurance, there is an assurance from the insurance company to make payment under the policy either on the maturity or at earlier death. On the other hand the word insurance was used to denote indemnity type of insurances where the insurance company was liable to pay only in case of the loss damage the property.
The insured event was bound to happen sooner or later under assurance but the event insured against may or may not happen under insurance.
HISTORY OF INSURANCE:
The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives.
The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies.
Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920s and 1930s sullied insurance business in India. By 1938 there were 176 insurance companies.
The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create
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the much needed funds for rapid industrialization. This was in conformity with the Governments chosen path of State led planning and development.
The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).
KEYMILESTONES: 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 by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.
The functions of Insurance can be bifurcated into two parts:
1. Primary Functions 2. Secondary Functions
The primary functions of insurance include the following:
Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can
certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.
Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.
The secondary functions of insurance include the following:
Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.
Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. Benefits of Insurance: Insurance not only serves the ends of individuals or of special groups of individuals but also is advantageous to the society as a whole.
Benefits To The Individual:

Superior to any other saving plans:
Unlike any other saving plan, a life insurance policy affords full protection against risk of death. In the event of death of a policy holder, the insurance company makes available the full sum assured to the near and dear of policy holder. In comparison, any other saving plan would amount the total saving accumulated till date. If the death occurs prematurely, such saving can be much lesser than sum assured. Evidently, the potential financial loss of the family of the policy holder is sizable. Encourages and forces thrift: A saving deposit can easily be withdrawn. The payment of Life insurance premiums, however, is considered sacrosanct and is viewed with the same seriousness as the payment of interest on a mortgage. Thus, a life insurance policy in effect brings about compulsory saving. Easy Settlement And Protection Against Creditors: A life insurance policy is the only financial instrument, the proceeds of which can be protected against the claims of a creditor of the assured by affecting a valid assignment of the policy.
Ready marketing and suitability for quick borrowing : A life insurance policy can, after a certain period (generally Three years), is surrendered for a cash value. The policy is also acceptable as a security for commercial loans, for example, a student loan.
Disability benefits : Death is not only hazard that is insured; many policies may include disability benefits. Typically, these provide for waiver of future premiums and payment of monthly installment periods. Accidental death benefits : Many policies can also provide for an extra sum to be paid (typically equal to the sum assured) if death occurs as a result of accident.
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Tax relief : Under the Indian income tax act, the following tax relief is available 1. 20% of premium can be deducted from total income tax liability. 2. 100% of the premium paid is deductible from your total taxable income. When these benefits are factored in, it is found that most Policies offer returns that are comparable /or even better than other saving modes such as PPF, NSC etc. moreover, the cost of insurance is a very negligible. Benefits to business : Insurance results in business continuation and welfare of employees. Uncertainty of business losses is reduced by insurance. Benefits of society : The welfare of the society is protected. Insurance results in economic growth of the country and reduction in inflation.
INDUSTRY REFORMS:
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations.
The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.
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PRESENT SCENARIO: 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 de tariffed 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. The 17 private insurers increased their market share from about 15% to about 19% in a years time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 per cent, while the private players have grabbed over 24 per cent. With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a companys ownership. Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance companies have been
granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than any one expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. Some of these products include investment plans with insurance and good returns (unit linked plans), multi purpose insurance plans, pension plans, child plans and money back plans. (www.wikipedia.com) 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 countrys largest life insurer, Life Insurance Corporation of India (LIC), had a share of 74.82% in new business premium income in November 2005.
Major Players in the Insurance Sector:
There are many reputed companies in the market which provide the Insurance for living being and non living beings. The companies in life Insurance are as follows:-
Life Insurer in Public Sector Life Insurance Corporation of India
Life Insurer in Private Sector Reliance life Insurance Company Limited ICICI Prudential Life Insurance
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Bajaj Allianz Life Insurance Tata AIG Life Insurance corporation Limited HDFC Standard Life Insurance Birla Sun Life Insurance SBI Life Insurance Kotak Mahindra old Mutual Life Insurance Aviva Life Insurance MetLife India Life Insurance ING Vysya Life Insurance Max New York Life Insurance Shriram Life Insurance Bharti AXA Life Insurance Co. Limited IDBI Forties Life Insurance Co. Limited Argon Religare Life Insurance Co. Limited
ABOUT THE COMPANY: Reliance Life Insurance offers you products that fulfil your savings and protection needs. Our aim is to emerge as a transnational Life Insurer of global scale and standard. Reliance Life Insurance is an associate company of Reliance Capital Ltd., a part of Reliance Group. Reliance Capital is one of Indias leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services. Reliance Group also has presence in Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and Infrastructure.
Vision & Mission Vision Empowering everyone live their dreams. Mission Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans. Our Goal Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:

Emerge as transnational Life Insurer of global scale and standard Create best value for Customers, Shareholders and all Stake holders Achieve impeccable reputation and credentials through best business practices
Achievements:

3rd largest private player in a span of just 4 years, moved from 11th position to 3rd Amongst the fastest growing Companies for 4 years in a row Continuous increase in market share over 4 years; from 1.9% in 2005-06 to 10.26% in 2009 -10
RLIC has achieved a growth rate of 21% while the private industry has grown at 13% Fastest to reach the 5 million policy mark Largest private insurer in terms of policy count in 2009-10 1145 branches 1,95,000 Advisors and over 16,000 employees
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RLIC continues to be amongst the foremost Life Insurance companies in India to be certified ISO 9001:2000 for all the processes.
Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair Business Practices (CFBP).
The Company has also won the DL Shah Quality Council of India Commendation Award in the services category in feb 2008 for its work on promoting 'self help channels for service'
Reliance Capital Limited (RCL) is a Non-Banking Financial Company(NBFC) registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.
Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services.
Reliance Life Insurance is another steps forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate. Reliance Life Insurance, a part of the Reliance - Anil Dhirubhai Ambani Group is Indias fastest growing life insurance company and among the top 4 private sector life insurers. Reliance Life Insurance has a pan India presence and a range of products catering to individual as well as corporate needs. Reliance Life Insurance has over 700branches and 1,80,000 agents. It offers 26 products covering savings, protection & investment requirements. Reliance Life Insurance will endeavour to attain a leadership position in the market over the next few years, by further expanding and strengthening its distribution network and offering a diverse array of products to suit the varied and specific needs of individual customers. JOURNEY SO FAR 2005
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August: Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100 per cent shareholding in AMP samara Life Insurance Co Ltd. 2006 January 17: Mr. Nandgopal participates in a one-day conference on Optimising growth opportunities through Distribution Matrix: Emerging Banc assurance organized by the Asia Insurance Post at the Taj President, Mumbai.
February 1: Reliance Life Insurance officially launched.
February 16, 17, 18: Strategy meet at the Reliance Management Institute. Amongst those who participate are the CEO, COO, Functional Heads, Regional Managers and Regional Sales Managers.
February 26: A Puja held at the Church gate office situated in Express Building, 4th Floor, 14 E Road, Mumbai.
March 1: Church gate office inaugurated by Mr. Amitabh Jhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal.
March 6: Shifting to the new premises at Churchgate commences.
March 7: The new office at Chennai, at the Trapezium, First Floor, #39, Nelson Manickam Road, inaugurated by their CEO Mr. Nandagopal, Mr. KV Srinivasan and Mr. Sureshbabu also graced the occasion.
KEY FEATURES OF LIFE INSURANCE:
1) Nomination: When one makes a nomination, as the policyholder you continue to be the owner of the policy and the nominee does not have any right under the policy so long as you are alive. The
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nominee has only the right to receive the policy monies in case of your death within the term of the policy.
2) Assignment: If your intention is that your policy monies should go only to a particular person, you need to assign the policy in favour of that person.
3) Death Benefit: The primary feature of a life insurance policy is the death benefit it provides. Permanent policies provide a death benefit that is guaranteed for the life of the insured, provided the premiums have been paid and the policy has not been surrendered.
4) Cash Value: The cash value of a permanent life insurance policy is accumulated throughout the life of the policy. It equals the amount a policy owner would receive, after any applicable surrender charges, if the policy were surrendered before the insured's death.
5) Dividends: Many life insurance companies issue life insurance policies that entitle the policy owner to share in the company's divisible surplus
6) Paid-Up Additions: Dividends paid to a policy owner of a participating policy can be used in numerous ways, one of which is toward the purchase of additional coverage, called paid-up additions.
7) Policy Loans: Some life insurance policies allow a policy owner to apply for a loan against the value of their policy. Either a fixed or variable rate of interest is charged. This feature allows the policy owner an easily accessible loan in times of need or opportunity.
8) Conversion from Term to Permanent: -
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When in need of temporary protection, individuals often purchase term life insurance. If one owns a term policy, sometimes a provision is available that will allow her to convert her policy to a permanent one without providing additional proof of insurability.
9) Disability Waiver of Premium Waiver of Premium is an option or benefit that can be attached to a life insurance policy at an additional cost. It guarantees that coverage will stay in force and continue to grow.
BENEFITS OF LIFE INSURANCE:
1) Risk cover: Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future.
2) Tax Deduction: Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees. Life Insurance policies thus decrease the total taxable income of an individual.
3) Loans: An individual can easily access loans from different financial institutions by pledging his insurance policies.
4) Retirement Planning: What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years. Moreover the cash value can be used as an additional income in the old age.
5) Educational Needs: Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children.
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ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY:
The Life Insurance Industry has an enviable track record among public sector units. It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources. Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nation's development. The industry is recognized as one of the largest financial Institutions in the country. The ventures initiated by the industry in the areas of Mutual Fund, Housing Finance has done exceedingly well in recent years. To protect the country's foreign exchange reserves, the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders. Classification of Life Insurance Products We can classify insurance plan in two categories. Traditional ULIP
Traditional Term Insurance : Under term insurance plan, sum assured is payable only if death occurs during the specified pre-determined term. If death does not take place during such term the amount of premium stands forfeited. Thus it can be seen that the term insurance is nothing but the cost of pure protection. It is a contract, which provides financial protection if death should occur within a specified period. No survival benefits are provided under the contract. Whole life insurance: Whole life insurance provides for the payment of the face value upon the death of the insured, regardless of when it may occur. This policy furnishes permanent protection to the insured at he moderate cost. This is highly important for the average man or woman of moderate salary, who require considerable family protection and whose limited income does not enable him or her both to pay premiums and to accumulate a large savings fund. The whole life policy provides a capital sum of money in the event of death of the assured whenever that may occur.
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Endowment Policy: Endowment is a product, which includes Risk cover and saving also. In the pure endowment policy the sum assured is payable in the event of death or definitely on maturity. In an endowment sum assured is for sure given to the policyholder on completion of the term. Endowment plans are very popular in developing nations since they serve a dual purpose of life cover and savings. Many a people in our country go for endowment products because of the compulsory saving aspect. An endowment plan on the other hand is not a cheap plan since the insurer has a dual liability of providing life cover and on maturity giving the entire sum assured. Annuities: Annuities refer to income or other financial provision usually for retirement or old age. An Annuity may be defined as a periodic repayment made during a fixed period or for the duration of a designated life or lives. In one sense the life annuity may be described as the opposite of insurance protection against death in its pure form a life annuity may be defined as a contract whereby for a premium consideration one party (the insurer) agrees to pay the other (the annuitant) a stipulated sum (the annuity) periodically throughout life. The purpose of the annuity is to protect again a riskthe outliving of ones income.
UNIT LINKED INSURANCE PLAN (ULIP) Unit linked insurance plan (ULIP) is a life insurance solution that provides the client with the benefits of protection and flexibility in investment. It is a solution which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time . The investment is denoted as unit and is represented by the value that it has attained called as Net Asset Value (NAV).
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UNIT LINKED INSURANCE POLICIES
UNITS
UNDERLYING
IN
INVESTMENT
ULIP came into play in 1960s and became very popular in Western Europe and America. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers to the clients. As time progressed the plans were also successfully mapped along with life insurance needs to retirement planning.In todays times ULIP provides solution for all the needs of a client like insurance planning, financial needs, financial planning for childrens future and retirement planning. Structure Of Ulip
PREMIUM
LESS CHARGE
INVESTMENT REPRESENTED AS UNITS
LIFE COVER
Benefits of unit linked plan : ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one stop solution providing 1. Life protection
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2. Investment and Savings a. Market linked fund based on risk profile b. Switch option c. Premium redirection d. Automatic transfer plan(ATP) 3. Flexibility of cover continuance 4. Transparency 5. Extra protection with riders a. Death due to accident b. Disability c. Critical illness 6. Liquidity a. During the term partial withdrawals b. At Maturity 7. Tax planning Charges Under Ulip Contribution related charges: These are the charges that are represented as a percentage of the regular or single contribution paid. In case of a regular contribution plan, it is usually high in the first year to pay for the distribution cost. This charges pays for the issuance and for distribution commissions. This charges are running for the policy. Administrative charges:
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These are charges that are levied for the administration of the policy and the related cost of administration of the insurance company,itself. They are more related to the cost like IT , operational, etc cost of continuing the policy. Fund management charges: These are the charges for buying and selling debt and equity. These are the charges are adjusted in NAV it self. Mortality charges: This covers the cost of providing life protection for the insured and may be paid once at the start of the policy for a recurrent manner for example this charges levied to provide the insurance cover under the plan . normally these charges are one year charges as per the age of the holder. Rider charges: Rider charges are similar in nature to the mortality charges as they are levied to pay for the other protection benefits that the policy holder has choosen for- like the critical illness benefit or the accident benefit,etc. Surrender charges: When the policy holder decides to surrender the policy or partially withdraw some of the units for cash , a surrender charge may be apply. Surrender charges are used to cover initial expenses that have been incurred by the company but not yet recovered from the policyholder yet. Bid offer charges: In ULIP specifically certain insurers might create a difference in the price at which they sell the unit and the price at which they buy the units. Investors contribution are used to buy units in the investment fund at the offer price and are sold when benefits are required at the bid price. The difference between the offer and bid prices Is known as the bid-offer spread", this is used to cover expenses when setting up the policy. Transactional specific charges:
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These charges are levied when the client does some specific transaction like changing funds, topping up the investment component or withdrawals . Investment Option For Your Money Maximiser: If high growth is your priority, this is the plan for you. You can enjoy long-term capital appreciation from a portfolio that is invested primarily in equity and equity-related securities Protector: - If on the other hand, your priority is steady returns, you can opt for the protector Plan. Plan, you can accumulate a steady income at a low risk across a medium to long-term period from a portfolio, which is primarily invested in fixed income securities. Balancer:-If you prefer a balance of growth and steady returns, choose our balancer plan. This would ensure that your portfolio is invested in equity-linked securities, as well as in fixed income securities. Preserver: The objective of this plan is not ensuring capital protection by investing in very low risk investments like the cash and call money markets. However, the returns generated may also be on the lower side due to the investment pattern. At inception, investments up to 20% can be allocated to this fund.
FUND TYPE
ASSET MIX
POTENTIAL RISK /REWARD
Equity& Related securities: Max 100% Maxi miser Debt, Money market & Cash: Max 25% Debt. Money market & Cash: Balancer Min 60% Equity & Related securities: High
Moderate
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Max: 40% Debt Instruments, Protector Money market & Cash: Max 100%: Debt Instruments: Max 50% Preserver Capital Money market & Cash: Min 50% preservation Low
COMPARISION OF ULIP WITH TRADITIONAL PLAN Unit Linked Insurance Product: ULIPs have gained high acceptance due to attractive features they offer. These include: Flexibility o Flexibility to choose Sum Assured. o Flexibility to choose premium amount. o Option to change level of Premium /Sum Assured even after the plan has started. o Flexibility to change asset allocation by switching between funds Transparency o Charges in the plan & net amount invested are known to the customer o Convenience of tracking ones investment performance on a daily basis. Liquidity o Option to withdraw money after few years (comfort required in case of exigency) o Low minimum tenure. o Partial / Systematic withdrawal allowed Fund Options o A choice of funds (ranging from equity, debt, cash or a combination)
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o Option to choose your fund mix based on desired asset allocation Traditional Plans : These are the oldest types of plans available. These plans cater to customers with a low risk appetite. Some of the common features of traditional plans are: Steady Investment o Major chunk of investible funds are in debt instruments o Steady and almost assured returns over the long term Features o Death benefit is Sum Assured + guaranteed & vested bonus o Helps in asset creation as they are for a long tenure o Premium to Sum Assured ratios are fixed for each plan and age. o Generally withdrawals are not allowed before maturity. Point of difference ULIP Traditional Policy
Investment
Market related (May be stock IRDA? Determined market or debt market) Yes Yes No No investments No No Yes Yes
Transparency in costs Flexibility in payment Assured Bonus Assured Sum on survival Option to increase investment/premium
Yes
No
ULIPs better traditional policies Until a couple of years ago, when ULIPs were a rare commodity, nobody knew how life
Page 29
insurance companies charged policyholders for expenses. And nobody seemed to want to know either. Then came the ULIPs with good intentions to make policyholders aware of how much they would pay as expenses. But that move backfired. Policyholders were taken aback by the high amount of fees that ULIPs charged. While the charge structure on ULIPs is something that is open to debate, the issue is that ULIPs alone cannot be isolated. Traditional policies too charge high administrative and management expenses. In ULIPs, the first year charges range from 20-70%, one does not know how much traditional policies charge. This can have a bearing on returns as well. A ULIP may charge you upfront but thereafter, all the returns on the fund are yours while a traditional policy may charge less but share a smaller portion of returns with you. So if you were substituting a traditional endowment with a ULIP, you would be better off with the latter since you would know your charges and your returns. We recommend traditional policies: Where the objective is only Risk cover and not savings and cost has to be minimum.
We recommend Unit Linked products where: .

The intention is to provide security for a goal. The purpose is to make the savings grow at a better rate seeking the best solution. It is a market linked investment where the premia paid is invested in funds Different options are available, like 100% Equity, Balanced, Debt, Liquid etc and according to the fund selected, the risks and returns vary.
The costs are upfront and are transparent, the investment made is known to the investor (As he is the one who decides where his money should be invested).
There is a greater flexibility in terms of premium payments ie. A premium holiday is possible.
You can also invest surplus money by way of top ups which will increase your investment in the fund and thereby provide a push to returns as well.
There is no assured Sum on survival, the higher of the Sum Assured or Fund Value is paid at the maturity or incase of death. Financial planning and tax planning:
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(i) (ii)
Give the best possible return and Be available to us when we require it.
Financial planning makes this possible. Financial planning is an attempt to maximize returns keeping in mind the liquidity and security of our investment. The three basic principles (guiding factors) of financial planning are: Setting realistic financial goals Starting investments early Thinking long term while allowing for short-term needs that may arise.
One can invest money only when one possesses it, which is possible by saving systematically. Selecting a good saving scheme can do this. Feature of a Good Saving Plan:\ (a) Safety (b) Flexibility (c) Should have incentive to save continuously without default. (d) Tax saving (e) Should fulfill financial objective even in case of death.
Features of an ideal Investment Scheme: (a) Safety (b) Liquidity (c) Higher Yield (d) Capital growth (e) Tax saving Safety: refers to financial soundness of investment. Liquidity: means quickness with which an assets can be converted into cash whenever required.
Yield: is the amount of money that an investment is expected to earn. Capital growth: Any return, which is not taxable, will be preferred to those on which taxes have to be paid. A good investment is that which earns decent returns after providing for taxes and inflation. However, there is no single wonder investment, which can have all the above features. A prudent person should look for those investments, which offer the ideal solution to his personal needs under his own set of circumstances. High Returns and Best Returns; (i) These are not necessarily the same. (ii) High returns may be offset by risk to capital. (iii) Best returns should be determined by the advantage an investment offers. The Investors Approach: Investors approach can be conservative (safety is of utmost importance), enterprising (willing to take some risks) or speculative (willing to take high risk in order to gain high returns). The investors approach is related to a host of personal factors such as: a) Age and family b) Future responsibilities
Tax Benefits Under Life Insurance Policies Qualifying premium amount: a) Premiums paid to effect or keep in force an insurance policy on the life of The assesse; or The spouse of the assesse; or Any child (minor or major) of the assesse.
b) Premiums paid to effect or keep in force a contract for a deferred annuity on the life of
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The assesse; or The spouse of the assesse; or Any child (minor or major) of the assesse provided that such contract, does not contain a provision for exercise by the assured of an option to receive a cash payment in lieu of the annuity.
Tax relief for savings through life insurance An aggregate amount of savings including those paid towards life insurance premium up to Rs. 1 lakh not to be included in the income liable for tax. Premiums paid under an approved pension plan up to Rs. 10,000/- per year of various insurance companies are deductible from the total income up to a maximum Rs. 10,000/- under section 80 CCC. The amounts received as claims whether on maturity or death including the bonus, if any, are not taxable, being capital receipt under section 10(D) What makes ULIP a total financial planning package?

Potential for Superior returns by switching between Equity & Debt. Liquidity and Flexible Insurance Cover. No Long Term Commitments. 100% Tax Free Returns on Withdrawals & Maturity.
Comparison of ULIP with other Investment Modules
OTHER INSTRUMENT
RATE OF RETURN
TIME PERIOD
RISK
MIN. INVEST MENT
MAX INVEST MENT
TAX FREE RETU RN
TAX BENE FIT
NSC PPF
8% 8%
6years 15years
No No
100 500
No limit 70000
No Yes
Yes Yes
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ELSS
Market Return
3years
Risky
500
No limit
Yes
Yes
ULIP
Market Return
5years
Risky Modu le
500
No limit
Yes
Yes
FD
9.5% Market
5years Open Ended
No High
10000 500
No limit No limit
No Capital gain @10% for time less than 1year
Yes Only in ELSS Funds
MUTUAL FUND
Return
STOCK
Variable
No time frame
Very high
Variable
No limit
Capital gain @10% for time less than 1 year
No
ANALYSIS OF INSTRUMENTS:
Types of Investments / various instruments
There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for aparticular investing objective.
Debt Market Public Provident Fund Fixed Deposits Bonds Mutual Funds Banks Deposits Equity Market Initial Public Offer Insurance Forex Cash Gold Real Estate
FEATURES OF DIFFERENT TYPES OF INVESTMENTS: Keeping above in mind, the study has been done to see the INTEREST of investors which provides understanding to readers about the various factors which should be keep in mind at the time of investment. The study is useful to company in providing the understanding about the choice of investors to devise the suitable product/marketing strategies, which would helps it in making their policies or strategies in order to attract them. Further. Financial planner get advent to make portfolio according to response given by respondents, which belong to different occupations, having different income level, different age level or which instrument is mostly like by the investors for investment.
1. DEBT INSTRUMENTS instruments protect your capital, therefore the importance of a solid debt portfolio. This not only gives stability, but also offers you optimal returns, liquidity and tax benefits. Debt
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products, besides safeguarding your capital, can be used to meet short, medium and long-term financial needs.
1.1) SHORT TERM INVESTMENT: They are good for short term goals, you can look at liquid funds, floating rate funds and short-term bank deposits as options for this category of investments. Liquid funds have retuned around 5% post-tax returns as compared to 5.6% post-tax that your one-year 8% bank fixed deposit gives you. So, if you have funds for investment for over a period of one year, it is better to go in for bank deposits. However, liquid funds are better, if your time horizon is less than one-year, say around six months. This is because the bank deposit rates decrease proportionately with lower periods, while liquid funds will yield the same annualized returns for any period of time. Short-term floating rate funds can be considered at par to liquid funds for short term investments. a) Fixed Maturity Plan (FMP): If you know exactly for how much time you need to invest your surplus, a smarter option is to invest in FMPs. They are shorter-tenured debt schemes that buy and hold securities till maturity, thereby eliminating the interest rate risk. Try and opt for FMPs that offer a double indexation benefit. Fund houses usually launch double-indexation FMPs during the end of the financial year so that they cover two financial year closings. 1.2. Medium & Long-Term Options: These options typically offer low or virtually no liquidity. They are, however, largely useful as income accumulation tools because of the assured interest rates they offer. These instruments (small savings schemes) should find place in your long-term debt portfolio.
2. BONDS: 2.1. Overview It is a fixed income instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fixed rate of interest
Page 36
on a specified date, called the Maturity Date. The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities. 2.2. Tax Saving Bonds These are those bonds that have a special provision that allows the investor to save on tax. Examples of such bonds are: a) Infrastructure Bonds b) Capital Gains Bonds a. Rural Electrification Corporation (REC) Bonds b. National Highway Authority of India (NHAI) c. National Bank for Agriculture & Rural Development 3. MUTUAL FUNDS: 3.1. Overview A mutual fund is a body corporate registered with SEBI that pools money from the Individuals/corporate investors and invests the same in a variety of different financial Instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual fund units are issued and redeemed by the Asset Management Company (AMC) based on the funds net asset value (NAV), which is determined at the end of each trading session. Mutual funds are considered to be the best investments as on one hand it provides good Returns and on the other hand it gives us safety in comparison to other investments avenues.
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4. EQUITY: 4.1. Overview Equities are often regarded as the best performing asset class vis--vis its peers over longer time frames. However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. There are a number of factors, which affect the performance of equities ad studying and understanding all of them on an ongoing basis, can be challenging for most. Stock markets have always been a draw for investors for their ability to generate wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles that frustrate the investor from achieving his/her investment goals. You need to keep in mind the risk associated with the stocks. You also need to diversify your equity portfolio i.e., include more stocks and sectors. This helps you diversify your investment risk, so even if something were to go wrong with a stock/industry in your portfolio, other stocks/industries should help you shore up your portfolio. 5. Fixed deposits: The same as a term or time deposit. Money may be placed with a bank, merchant bank, building society or credit union for a fixed term at a fixed rate of interest which remains unchanged during the period of the deposit. Depositors may have to accept an interest penalty if they break the deposit, ie, ask to take the money out before the agreed period has expired.Few points which FD investors must consider at the time of investment, 1. Safety FDs have conventionally been the premier choice for investors with a low risk appetite; assured returns is the key factor which attracts investors towards deposits. Stick to FDs of the highest credit rating i.e. those with a AAA rating even if their rates seem modest vis--vis those offered by company deposits. 2. Tenure Short tenured fixed deposits continue to be your best bet. With interest rates on the ascent, a further hike in rates offered by fixed deposits cannot be ruled out. Locking your investments in longer tenured instruments may lead to an opportunity loss.
3. Liquidity Find out how FD fares on the pre-mature encashment front i.e. how easily can your investment be liquidated. Also enquire about the penalty clauses, e.g. do you suffer a loss of interest and/or principal amount. Compare how various FDs rank on this parameter and pick the best deal; thereby try to minimise the impact of illiquidity which is typically associated with FDs. 4. Additional benefits Fixed deposits from reputed entities offer additional benefits, e.g. they can be used as collateral against which loans can be raised. Select a fixed deposit scheme which scores favourably on such parameters
Features of different types of instruments:
Page 39
SIGNIFICANCE OF THE STUDY: The present financial market is flooded with a lot investment instruments, viz., Shares, Bonds, Mutual funds, Insurance plans, Fixed Deposits, other money and capital market instruments and also various options of investment in Real Estate and Commodity Market etc. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has its own positives and negatives and ultimate decision of investment is influenced by the individual investors perception regarding the risk and return of concerned investment opportunity available in the market. Further, the investment decisions is full of complexity because of volatility of market conditions, Inflation rate fluctuations, impact of Global environment, Cash reserve ratio, and
Page 40
Repo rates. Therefore, it is imperative to analyze these factors while taking an investment decision. FOCUS OF THE PROBLEM: The present financial environment provides ample opportunities of investment to the investors. The decision to invest in right instrument is too complex which can meet their expectations perfectly. So a study has been done which explain about the interest of respondents what they exactly see at the time of investment which includes their tendency, preference and factors through which an investor influenced when compared with insurance and other financial instruments The study also focuses on analysing the investment patterns of the investment. OBJECTIVES OF STUDY: 1. To study the various financial opportunities available for investment. 2. To study about the investors perception regarding various investment opportunities available in the market 3. To analyse the investment patterns of the investment. 4. To examine the investors changing behaviour regarding various investment opportunities.
Scope of the study: The present financial environment provides ample opportunities of investment to the investors. The decision to invest in right instrument is too complex which can meet their expectations perfectly. So a study has been done on insurance and financial instruments.And seen what exactly the investor prefer at time of investment which includes their tendency, preference and factors through which an investor influenced. The study also focuses on analysing the investment patterns of the investment.
Page 41
Research methodology: The research methodology is descriptive in nature. It is descriptive because as it describes about the existing financial instruments available in the market. It is analytical as it analyses opinion of investor towards insurance or financial instruments. Research design: Research design is comparative because the existing information has been used to analyze and make evaluation. And the comparison is being done among insurance and financial instruments. Sampling: 1. Hyderabad has been taken as universe of the study. 2. Convenient sampling technique is used and a sample of 50 investors has been taken for the purpose of the study Limitations: 1. The study is restricted to Hyderabad. 2. The time period of the study in June-July 2011. 3. The sample size comprised of 50 respondents from different fields and income group.
ANALYSIS: Q.1 What is the annual income of the investor?

NO. OF RESPONDENT 20 10 8 6 6 50 SHARE % 40 20 16 12 12 100 Page 42
RESPONSE 3lakhs 4lakhs 5lakhs 6lakhs 6 and above Total
0.12, 12% 0.12, 12% 0.16, 16% 0.4, 40%
1 2 3 4 5
0.2, 20%
Q.2 Whats your expected return on investment?
RESPONSE 10 to 20% 20 to 30% 30 to 40% 40% and above
NO. OF RESPONDENT 7 13 10 20 50
SHARE% 14 26 20 40 100
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14%
40% 26%
1 2 3 4
20%
Q.3 Which type of instrument do you prefer for your investment?
RESPONSE fixed deposits real estate mutual funds share market ULIPS
NO. OF RESPONDENT 20 7 8 9 6 50
SHARE% 40 14 16 18 12 100
Page 44
12% fixed deposits 18% 40% real estate mutual funds share market ULIPS 16% 14%
Q.4 What is your purpose of the investment?

RESPONSE liquidity returns tax benefits safety others
SHARE% 6 14 20 60 0 100
0% 6% 14% liquidity returns tax benefits 60% 20% safety others
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Q.5 Where do you prefer for investment?

RESPONSE government banks insurance NBFCs public sector private sector
SHARE% 40 16 10 24 10 100
10% government banks 40% 24% insurance NBFCs public sector 10% 16% private sector
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Q.6 How do you take Financial Decisions?

RESPONSE independently advise from others advise from banks financial advisor others
SHARE% 50 16 14 16 4 100
4% 16% independently advise from others 14% 50% advise from banks financial advisor others 16%
Q 7 If independently, then what do you see while investing?

risk factor fixed returns history of instrument future growth trend of other investors 4 25 13 5 3 50 8 50 26 10 6 100
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6% 10%
8% risk factor fixed returns history of instrument
26% 50%
future growth trend of other investors
Page 48
FINDINGS: Investors changing behaviour towards various investment instruments In present era the behaviour of investment is changed as past. Previously, the investor looks for the safest or very low risk instruments. As there mean to just keep their money along with the some returns which they thought as the premium what they could not get if they keep it in homes. So they look for the schemes like fixed deposits, post office schemes, and very nominal looks towards insurance. But now there behaviour is getting changed. Now they want high returns on their savings which they can get only if they take high or moderate risk, so now they prefer more investment in equity, mutual funds, real estate, forex, insurance etc. which provides more returns in comparison to fds, and post office schemes Reasons for their changing behaviour: 1) More awareness: now the investors have more awareness about the benefits of various instruments like insurance benefits, so investors behaviour is changed towards insurance 2) More income level: After globalization the incomes of the people in India has risen, so they have more money in their hands. To which they want to invest where they can get good returns and they are ready to take risk for that. 3) Changing mind set: due to more income level their mind set up is changed as they are ready to take higher risks in order to get returns. Now they invest their money not only to keep, also they want good returns from that.
Page 49
Conclusion:
As it could be seen from the above factors that investors are showing more interests to other types of financial instruments than insurance.People are having low saving potential, growth of capital acts as a primary objective behind investments, investors taking financial decisions independently, which depicts that there is a need of financial planners to approach these investors in a proper manner so as to provide value additions to the saving potential and portfolio when compared to insurance.
Bibliography:
www.Reliancelife.com www.scribd.com http://en.wikipedia.org/wiki/Insurance_in_India http://www.economywatch.com/indianeconomy/india-insurance-sector.html www.lifeincouncil.org
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QUESTIONNAIRE:
Name of the Investor Education Contact No. occupation of the investor age of the investorQ.1 What is the annual income of the investor? a) 3 lac b) 4 lac c) 5Lac d)6 lac e)more than 5 lac
Q.2 Whats your expected return on investment? a) 10 % to 20 % b) 20 % to 30 % c) 30 % to 40 % d) More than 40 %
Q.3 Which type of instrument do you prefer for your investment? a) Fixed Deposits b) Real estate
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c) Mutual Funds d) share market e) ULIPS Q.4 What is your purpose of the investment? a) Safety b) Returns c) Tax Benefits d) Liquidity e) Others Q.5 Where do you prefer for investment? a) Government banks b) Insurance c) NBFC's d) Public sector e) Private sector
Q.6 How do you take Financial Decisions? a) Independently b) Advise from Friends/Relatives c) Advise from banks d) Financial advisor e) Others
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Q 7 If independently, then what do you see while investing? a) Risk Factor b) Fixed returns c) History of instrument d) Future growth e) Trend of other investors
Q8. Which Tendency do you prefer the most? a) Low risk, low return b) Moderate risk, moderate return c) High risk, high return
Q.9 Which factors do you considered the most at time of investment? a) Global Economy/prices b) Inflation rates c) Others Q10 mutual funds gives high returns than insurance a) strongly agree b) agree c) neutral d) Disagree e) Strongly disagree
Q 11 financial instruments can be consider as risky than insurance like shares, real estate a) strongly agree b) agree c) neutral d) Disagree e) Strongly disagree
Q12 Lock in period is high in insurance, does this hinder you from investing in insurance a) strongly agree b) agree c) neutral d) Disagree e) Strongly disagree
Q13 What are your expectations From investing either in insurance or financial instruments?
Q14 IRDA is regulating the ULIP plans and ensures that yours money is safe does this increase your confidence level on ULIP
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INDEX:

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

DIFFERENCE BEETWEN INSURANCE AND ASSURANCE:

Comparative study on insurance vs financial instruments

The functions of Insurance can be bifurcated into two parts:

1. Primary Functions 2. Secondary Functions

The primary functions of insurance include the following:

The secondary functions of insurance include the following:

Benefits To The Individual:

Superior to any other saving plans:

Major Players in the Insurance Sector:

Life Insurer in Public Sector Life Insurance Corporation of India

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

February 1: Reliance Life Insurance officially launched.

March 6: Shifting to the new premises at Churchgate commences.

KEY FEATURES OF LIFE INSURANCE:

Comparative study on insurance vs financial instruments

8) Conversion from Term to Permanent: -

Comparative study on insurance vs financial instruments

BENEFITS OF LIFE INSURANCE:

Comparative study on insurance vs financial instruments

ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY:

Comparative study on insurance vs financial instruments

UNIT LINKED INSURANCE POLICIES

INVESTMENT REPRESENTED AS UNITS

Comparative study on insurance vs financial instruments

POTENTIAL RISK /REWARD

Comparative study on insurance vs financial instruments

We recommend Unit Linked products where: .

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparison of ULIP with other Investment Modules

MIN. INVEST MENT

MAX INVEST MENT

TAX FREE RETU RN

TAX BENE FIT

Comparative study on insurance vs financial instruments

5years Open Ended

No Capital gain @10% for time less than 1year

Yes Only in ELSS Funds

Capital gain @10% for time less than 1 year

Types of Investments / various instruments

Features of different types of instruments:

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

Comparative study on insurance vs financial instruments

ANALYSIS: Q.1 What is the annual income of the investor?

RESPONSE 3lakhs 4lakhs 5lakhs 6lakhs 6 and above Total

Comparative study on insurance vs financial instruments

0.12, 12% 0.12, 12% 0.16, 16% 0.4, 40%

Q.2 Whats your expected return on investment?

RESPONSE 10 to 20% 20 to 30% 30 to 40% 40% and above

Comparative study on insurance vs financial instruments

Q.3 Which type of instrument do you prefer for your investment?

Comparative study on insurance vs financial instruments

Q.4 What is your purpose of the investment?