Reliance Life Insurance

A PROJECT REPORT ON RELIANCE LIFE INSURANCE
CHAPTER 1 INTRODUCTION:
The Business of Insurance is related to the protection of the economic values of the assets. Every human being has the tendency to save to protect him from risks or events of future. Insurance is one form of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against risks or events or losses. People can save their earnings either in the form gold, fixed assets like property or in banking and insurances. All the savings of people of a country account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it. Hence insurance sector is still untapped in India. DEFINITION OF INSURANCE AND OVERVIEW OF CURRENT INSURANCE INDUSTRY 1.1 INSURANCE 1.1.1 WHAT IS INSURANCE? Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future. It is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. It is a protection against financial loss arising on the happening of an
SIDVIN SCHOOL OF BUSINESS
unexpected event. Insurance companies collect premium to provide security for the purpose. Loss is paid out of the premium collected from people and the insurance companies act as trustees to the amount so collected. These companies have proposal forms which are filled to give details of insurance required. Depending upon the answers in the proposal form insurance companies assess the risk and decide on the premium. Insurance companies are risk bearers. They underwrite the risk in return for an insurance premium. the function of insurance is to provide protection, prevent losses, capital formation etc. hence insurance can be defined as a tool in which a sum of money as a premium is paid by the insured in consideration of the insurers bearing the risk of paying a large sum .it may also be defined as a contract wherein one party (insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon a given contingency against which insurance is required. Insurance industry commands massive funds through sales of insurance products to large number of clients. Insurers also create liabilities and commit themselves to compensate for losses occurring to the policyholders on future date. It also plays an important role in process of capital formation. From the above discussion we can find out some of the important characteristics of insurance which are as follows: 1. Pooling of losses 2. Payment of fortuitous losses 3. Risk transfer 4. indemnification
Pooling of losses: Pooling or sharing of losses is the main characteristic of an insurance industry. Pooling means to spread the losses incurred by a few over the entire group, so that in the process, average loss is substituted for the actual loss. Payment of fortuitous losses: A fortuitous loss is one that is unexpected and occurs as a result of chance or in other words it means the loss must be accidental. Risk transfer: It means that a pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position to pay the loss than the insured. Here pure risk means a situation in which there are only the possibilities of loss or no loss. For example premature death, job related accidents, property destroyed by fire, flood, or earthquake. Indemnification: It means that the insured is restored to his or her approximate financial position prior to the occurrence of the loss. Thus in the most basic sense, insurance is compensating a person or business for a loss.
1.1.2 NATURE OF INSURANCE: a) Risk sharing and risk transfer: insurance is used to share the financial losses that might occur to an individual or his family on the happening of specified events. The loss arising from such events are shared by all the insured in the form of premium. Example: suppose in a village, there are 250 houses, each valued at Rs.200000.every year one house gets burnt, resulting into a total loss of Rs 200000.if all the 250 owners come together and contribute Rs.800 each, the common fund would be Rs200000.this is enough to pay to the owner whose house gets burnt. Thus the risk of one owner is spread over 250 house owners of the village. b) Risk assessment in advance: insurance companies are risk bearers. They assess the risk before insuring to charge the amount of premium. c) Its not gambling or charity: The uncertainty is changed to certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling because the uncertainty of loss is always looming. Moreover insurance is not possible without premium. So it is different from charity because charity is given without consideration. d) Huge number of insured people: It is essential to insure larger number of people or property to make cost of insurance less consequently premium would also be less.
e) Assists in capital formation: insurance provides capital to society. Accumulative funds are invested in productive channels. 1.1.3 SEMANTICS: 1. Risk: it is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance of value arising from contingency. 2. Policy: it is the document which embodies the insurance contract 3. Whole life policy: it is the policy under which the amount of policy will be paid only on death of the insured. Premiums may be payable throughout the life or for a limited period. 4. Endowment policy: endowment policies entitle the insured to receive the amount of the policy on his reaching a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that time and payment of premium will also stop at that time. 5. Claim: it is the amount which an insurer has to pay against a policy. 6. Reinsurance: it refers to placing a part of the risk by an insurer with another insurer. The object is to reduce the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the original insurer. 7. Premium: A periodic payment made on an insurance policy.
8. Insurance penetration: it is defined as insurance premium as a share of gross domestic product. 9. Insurance density: insurance density is defined as per capita expenditure on insurance premium i.e. premium per capita. 10.Actuary: the actuary is a specialist who combines an understanding of risks and mathematical technique to develop financial products to manage these risks, price these products. He helps in designing insurance plans and then evaluates the financial risk of the company which it takes while selling an insurance policy. 1.2. TYPES OF INSURANCE: Insurance is broadly divided in two segments, based on the nature of insurance, those are: 1. Life Insurance & 2. Non-Life Insurance or General Insurance. subdivided into the following categories: a) Fire Insurance. b) Marine Insurance. c) Social Insurance & d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc.) It can be again
1.3. HISTORY OF INSURANCE: 1.3.1 GLOBAL: For now we know the meaning of insurance, different types of insurance. Now let us know the history and reasons for and behind different types of insurance. Insurance has existed for thousands of years. The first ever type of insurance was Property Insurance. It became popular about 3000 BC in China. It all started when Chinese merchants, as well as their investors, wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea, an insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was so because, a merchant could not afford to pay for the lost goods or even to buy a ship unless someone invested. Property insurance was also seen in Babylon as well. In Babylon, merchants and investors entered into a contract, in which the supplier of money for a trade agreed to cancel the loan if the trader was robbed of his goods. The trader who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender, collecting these premiums from many traders made it possible for him to absorb the losses of the few. Later this contract was extended to include provisions for a family's home and even the death of the insured, where life insurance came into existence.
Slowly this concept started to spread across other places like Greek, Roman. Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation of Israel to contribute a portion of their produce periodically for "the alien resident and the fatherless boy and the widow." Later the origin of credit insurance, which was included in the Code of Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit insurance means, in ancient times the ship owners obtained loans from investors to finance their trading expeditions. In case, if a ship was lost, the owners were not responsible to pay back the loans to the investors. The risk to the lenders was covered by the interest paid by numerous ship owners, since many ships returned safely. By the middle of the 14th century, marine insurance was one of the most popular types of insurance among nations of Europe. Things changed dramatically in the 17th century in Europe. In 1666, the Great Fire of London bought the need for fire insurance .The Great Fire of London burned for four days and nights. It destroyed 436 acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other public buildings. Only six people were victims in the flames, but hundreds died from shock and exposure. By 1688, Edward Lloyd was running a coffeehouse in London. Where, London merchants and bankers met informally to do business. There financiers who offered insurance contracts to
seafarers wrote their names under the specific amount of risk that they would accept in exchange for a certain payment, called premium. These insurers came to be known as underwriters. Finally, in 1769, Lloyd's became a formal group of underwriters that in time grew as an insurance company. The concept of insurance developed at a fast pace with the growth of British commerce in the 17th and 18th century. The first stock companies to engage in insurance were chartered in England in the year 1720. In 1735, the first insurance company in the American colonies was founded at Charleston. Later in the year 1787, fire insurance corporations were formed in New York. Then later in the year 1759, the life insurance corporation was started in Philadelphia, America. The New York fire which occurred in the year 1835 was the main reason to draw attention to create reserves to meet unexpected losses. In the year 1837, Massachusetts was the first state to require companies by law to maintain such reserves. After 1840, life insurance entered a boom period. The Workmen's Compensation Act of 1897 in Britain required employers to insure their employees against industrial accidents. Public liability insurance, fostered by legislation, made its appearance in the 1880s.It attained major importance with the advent of the automobile. Until the 1950s, most insurance companies in the United States were restricted to provide only one type of insurance, but then legislation was passed to permit fire and casualty companies to underwrite
several classes of insurance. Many firms have since expanded and also were responsible for many mergers. From this brief accounting of history we can see how insurance came into existence. Fortunately for us we no longer have to sell ourselves into slavery if our car is stolen nor we have to be scared of losses due to absence of reserves. However we can be confident that we will be compensated for our loss. Without people wanting to secure their investments and great tragedies throughout history we may not have insurance as we know it today resulting in peace of mind. 1.3.2 HISTORY OF INSURANCE INDUSTRY IN INDIA The insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open competitive market to nationalization and back to a liberalized market again. Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans living in India. Some of the companies that started later did provide insurance for Indians. But, they were treated as "substandard" and therefore had to pay an
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extra premium of 20% or more. The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871. The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first general insurance company was the Indian Mercantile Insurance Company Limited set up in Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies (both life and non-life). After the independence, the industry went to the other extreme. It became a state-owned monopoly. The industry started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems in the industry. After which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of the life insurance business and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign holding.
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1.4. GLOBAL SCENARIO OF THE INSURANCE INDUSTRY If we see the figures in terms of both the premium value and the total market share of some of the leading countries operating in the Insurance sector, the following picture emerges in front of us. Country US Japan UK France Italy Germany China Taiwan India Others Total Life Premium Market Share (%) (in $bn.) 517.0 375.9 194.0 154.0 91.7 90.2 39.5 38.8 20.1 452.8 26.2 19.5 10.11 7.81 4.65 4.57 2.1 1.97 1.02 22.07
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Shares of different countries in Life Insurance
452.8
517
20.1 38.8 39.5 90.2 91.7 154
375.9 194
US Japan UK France Italy Germany China Taiwan India Others
Source: The Economic Times, dated 20th July, 2006. The above figure shows that US is still the leader in Life Insurance sector, closely followed by Japan. Indias share in the global market has doubled since 2000 (0.50%) to 2005 (1.02%), but the growth of china is the maximum from 0.79% in 2000 to 2.10% in 2005. The total premium received in life insurance sector has increased from $ 1,521 bn. in 2000 to $ 1,974 bn. in the year 2005. 1.4.1 CONCERNS IN GLOBAL INSURANCE INDUSTRY INSURANCE FRAUD One of the major problems which is faced by this industry is insurance fraud. Property insurance fraud cost insurers about $30 billion in 2004. Every year more than $100 billion is stolen from Medicare and Medicaid programs across the world in health insurance.
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Fraud may be committed at different points in the insurance transaction by different parties like applicants for insurance, policyholders, third-party claimants and professionals who provide services to claimants in the industry Common frauds include "padding," which means that the one who commits fraud will inflate the actual claims. This is done by misrepresenting facts on an insurance application or submitting claims for injuries or damage that has never occurred. 1.5 INDIAN SCENARIO:
INDIAN INSURANCE INDUSTRY
LIFE INSURANCE
NON LIFE INSURANCE
Public Sector (1)
Private Sector (15)
Public Sector (4)
Private Sector (9)
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1.5.1 LIFE INSURANCE: Insurance business in India is growing at an annual rate of 21.9%.together with banking services, it accounts for 7.1% of GDP. But insurance penetration as compared to other nations of the world is very low in India. In 2004-05 it was 2.53% for life insurance and .65 % for non life insurance. Life insurance penetration in India was less than 1% till 199091.during the 90s it was between 1-2% and from 2001 onwards it is over 2%.this is due to active role played by IRDA in licensing private players and taking steps to increase awareness among masses. Indias insurance sector is poised for explosive growth powered by better penetration into rural and semi urban regions. Gross insurance premiums have been rising. The gross premium collected in the last fiscal year was Rs 27000 crores as compared to that of Rs 25343 crores in the last year. Since liberalization of insurance sector in 2001, 14 life insurance companies have entered the market out of which 13 are joint ventures with international companies. While private players have eaten up a part of LICs market share, PSU behemoth has been witnessing tremendous growth. LICs premium collection was RS 18000 crores as compared to only Rs 200 crores in 1957.LICs premium accretion grew by 42% last year. Among the private players companies like Bajaj-Allianz and ICICI have captured the major portion of the market and others are still trying to establish themselves in the Indian market.
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1.5.2 GENERAL INSURANCE: General insurance in India has been expecting growth except in some portfolios like motor insurance, fire and engineering. These portfolios are still under tariff- this means that premium depends on a fixed predetermined rate structure. In India, GDS as a proportion of GDP at current prices increased from 26.1% in 2002-03 to 28.1% in 2003-04.house hold sector continued to be the major contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interest rates prevailing in housing sector. General Insurance has low market penetration. It is 1.95% and ranks 51 st. However in collection of premium it is ranked 23 rd. The ratio of the premium collected to that of GDP is 0.58. The main reason for the general insurance industry to perform very poorly was because of the slow settlement of claims. Moreover the rates of claim in India were highest in the world. It was 70 percent compared to 40 percent internationally. This meant that out of 100 people who had insured their commodities 70 claimed for a loss or damage. The main reason for the lack of demand for general insurance is that people consider it as an unnecessary expenditure. However it must be noted that the general insurance has been earning consistent profits and has an efficient dividend paying record accompanied by a steady growth in its financial resources. The industry is recognized as one of the largest financial Institutions in the country. Some of the private players in this sector are- ICICI Lombard, Reliance, RoyalSundaram, Chholamandalam etc. 1.5.3 PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR:
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The different private players in the life insurance sector and their associations with foreign companies are being given below:
COMPANY INDIAN FOREIGN TOTAL (RS MN.) 2,170 4,590 3680 4,000 2,500 10,850 FDI FOREIGN CAPITAL (RS MN.) 0 1193.4 960 1,040 PROMOTER/PARTNER INSURER AMP SANMAR Aviva Life BajajRELIANCE GROUP(ADAG) Dabur Bajaj Auto None Aviva (UK) Allianz (Germany) SunLife (Canada) StandardLife (UK) Prudential (UK) ING (Netherlands) OldMutual (South Africa) Max India J&K Bank Sahara India SBI TATA Group Shriram NewYorkLife (US) Met Life (US) None Cardiff (France) AIG (US) Sanlam Life Ins. 5,000 3,550 1,000 3,500 3,810 26 26 0 26 26 1,300 920 0 910 990 CAPITAL (%) 0 26 26 26
Allianz Birla Sun Aditya Birla Group Life HDFC Standard ICICI Prudential ING Vysya Kotak Mahindra Old Mutual Max Newyork Met Life Sahara Life Ins. I SBI Life TATA AIG Shriram HDFC ICICI Bank Vysya Bank Kotak Mahindra Bank
18.9 470 26 26 26 2,820 680 680
Ins. 4,400 2,600
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Some of the new companies who are waiting to come in to the life insurance sector are: a) IDBI-FORTIS. b) AXA-BHARTI & c) Syndicate Bank.
Source: IRDA Report.
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Source: IRDA Report LIC market share continued to decline in the period up to March, 2006, it declined to 71.44% from 78.23% in the same period last year. On the other hand the market share of the private players is continuously growing up; it increased to 28.56% from 21.77% in terms of insurance premium.
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Source: IRDA Report BAJAJ ALLIANZ BECOMES THE MARKET LEADER AMONG PRIVATE PLAYERS: Bajaj Allianz has taken over from ICICI Prudential as the number one among the private players in the life insurance sector in terms of insurance premium collected by each company. This was mainly possible because of increase in the number of agents in Bajaj Allianz by 1.2 lakh and also an increase in the number of branches (more than 550 branches in total). The increase in the growth rate of Bajaj
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Allianz is 215.76% when compared to the same of the last financial year. The market share of Bajaj Allianz increased to 7.56%, while the same for ICICI is only 7.35%. 1.6 CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY: Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent on any particular sector for its GDP. If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing structure of the economy. We can also come to know the changing contribution of the various sectors like agriculture, manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%, manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus over the years as India became an emerging economy in 2003-04 manufacturing sector contributed for 21.7 %, manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the total GDP. There has been 7.5% growth in the total GDP of the country and is estimated to grow at 7.5% in 2005-06. The Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all the three sectors of the economy, i.e. the agriculture, manufacturing and the service sector. Insurance, together with the
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banking sector, contributes to about 7.1 % of the total GDP of India, and the gross premium collected contributes to about 2% of the total GDP of the country The insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost 200 years. 1.7 GOVERNMENT POLICIES REGARDING LIFE INSURANCE: Some of the important acts which have been passed in India to regulate insurance industry are mentioned here: a) Insurance Act 1938: It was the first comprehensive piece of insurance legislation in the country governing both life and non life insurance business. It was aimed to prevent the growth of mushrooming companies and to prevent misappropriation of funds and to protect assets. This act had a strict control over the insurance business and was amended from time to time. Till 1945, it was amended 6 times. Under the chairmanship of Shri Kavas Ji Jahangir, a committee was appointed to investigate all the misconduct of insurance business. According to this act, the central government had control over the insurance business through the Controller of Insurance. The insurance companies must follow the rules and regulations else they would be penalized. The act of 1938 applied to all types of insurance business-life, fire, marine etc. It also governed the provident companies, mutual offices
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and cooperative societies. According to one of the provisions of this act, there is prohibition of transaction of insurance business by certain persons. To prevent the growth of insurers of small financial resources, this act provided for registration of all insurers and a substantial deposit in the RBI. Further under this act, no person shall, after the commencement of this act, begin to carry any class of insurance business in India and no insurer carrying on any class of insurance business in India shall after the expiry of 3 months from the commencement of this act, continue to carry on any such business unless he obtained the certificate of registration for the particular class of insurance business. b) Life Insurance Corporation Act 1956 Life insurance business in India was nationalized with effect from January 19, 1956.on the date, 16 non Indian insurers operating in India and 75 Provident Societies were taken over by Government of India. This act came into effect from July 1st 1956.Life Insurance Corporation of India commenced its functioning as a corporate body. Under this act, LIC shall be a body having perpetual succession and a common seal with power, subject to the provisions of this act to acquire, hold and dispose of property and may by its name sue and be used. The original capital of the corporation shall be Rs 5 crores provided by the government and the terms and conditions relating to the provisions of capital shall be determined by the central government.
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It is the general duty of the corporation to carry on life insurance business whether in India or outside, and the corporation shall exercise its powers under this act towards the development of life insurance business to the best of the advantage of the community. C) Insurance Regulatory and Development Authority (IRDA) 1999 Reforms in the insurance sector were initiated with the passage of the IRDA bill in December 1999.it was set up as an independent body and it has been able to frame globally compatible legislations. The IRDA was set up to protect the interests of holders of insurance policies ,to regulate ,promote and insure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. This act extends to whole of India. With the establishment of this act, government amended Insurance act 1938, Life Insurance Act 1956 and General Insurance Act 1972. IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of India has set up Malhotra Committee to examine the structure of insurance industry and recommend changes, under R.N Malhotra former governor of RBI. Some of the recommendations made by Malhotra committee were: 1. Raising the capital base of LIC and GIC up to Rs 200 crores, half retained by the government and rest sold to public
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2. Public sector is granted permission to enter insurance industry with a minimum paid capital of Rs 100 crores. 3. Foreign insurance companies may be allowed to enter by floating with an India company preferably by a joint venture. 4. Limited number of private companies to be allowed in the sector but no firm can be allowed to operate in both life and non life sectors with the same entity. 5. Tariff Advisory Commission (TAC) is delinked from GIC to function as a separate body under the supervision of the insurance regulatory authority. 6. All insurance companies to be treated on equal footing and governed by the provisions of insurance act. No special dispensation shall be given to the government companies 7. Setting up of a strong and effective regulatory body with independent source for financing before allowing private companies in this sector On the basis of the recommendations Insurance Regulatory Authority (IRA) bill was introduced in the parliament in 1996.later in 1999 IRA bill was renamed as IRDA and was introduced in the parliament. Under this act a certificate of registration is issued to the applicant to review, modify, withdraw, suspend or cancel such registration. It also specifies requisite qualification and practical training for insurance agents.
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It promotes efficiency in the insurance business and specifies code of conduct for surveyors and loss assessors. It also specifies the manner in which the books of accounts of the insurer and the insurance intermediaries shall be maintained. It regulates investment of funds by insurance companies It regulates the margin of solvency It also controls and regulates the rates, advantages, terms, and conditions that may be offered by the insurer. it also supervises the working of Tariff Advisory Committee, which is related to the regulation of general insurance in India it specifies the percentage of premium income of the insurer to finance schemes for promoting professional organizations. It also specifies the percentage of life insurance business and general insurance business to be undertaken by the insurer in rural or social sector.
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2. ORGANIZATIONAL OVERVIEW
Before talking about Reliance Life Insurance company Limited, lets have a brief introduction about its parent company which is Anil Dhirubhai Ambani Group (ADAG). Reliance is a brand name which was made popular by Mr. Dhirubhai Ambani all over the world and the same tradition is being carried on by his son Mr. Anil Ambani. After splitting with his brother Mr. Mukesh Ambani, Anil Ambani created this ADAG and soon he has started to achieve the success that once was started by his father. 2.1 WHAT IS ADAG? The Reliance Anil Dhirubhai Ambani Group is among Indias top three private sector business houses on all major financial parameters, with a market capitalisation of Rs 100,000 crore (US$ 22 billion), net assets in excess of Rs 31,500 crore (US$ 7 billion), and net worth to the tune of Rs 27,500 crore (US$ 6 billion) Across different companies, the group has a customer base of over 50 million, the largest in India, and a shareholder base of over 8 million, among the largest in the world. Through its products and services, the Reliance - ADA Group touches the life of 1 in 10 Indians every single day. It has a business presence that extends to over 4,500 towns and 300,000 villages in India, and 5 continents across the world.
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The interests of the Group range from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment . 2.1.1 STRUCTURE OF ADAG
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2.1.2 VALUES/ OBJECTIVES OF ADAG:
Shareholder Interest We value the trust of shareholders, and keep their interests paramount in every business decision we make, every choice we exercise People Care We possess no greater asset than the quality of our human capital and no greater priority than the retention, growth and well-being of our vast pool of human talent Consumer Focus We rethink every business process, product and service from the standpoint of the consumer so as to exceed expectations at every touch point Excellence in Execution We believe in excellence of execution in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well. Team Work The whole is greater than the sum of its parts; in our rapidlychanging knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by 29
imbibing the spirit of thinking together -- integration is the rule, escalation is an exception Proactive Innovation We nurture innovation by breaking silos, encouraging crossfertilization of ideas & flexibility of roles and functions. We create an environment of accountability, ownership and problem-solving based on participative work ethic and leading-edge research. Leadership by Empowerment We believe leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence Social Responsibility We believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can Respect for Competition We respect competition because theres more than one way of doing things right. We can learn as much from the success of others as from our own failures. 2.1.2 VISION OF ADAG: To build a global enterprise for all our stakeholders, and A great future for our country, To give millions of young Indians the power to shape their destiny, The means to realize their full potential
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2.2. COMPANIES UNDER ADAG: A) Reliance Capital Reliance Capital (RCL) is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. The company has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services. RCL is registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. RCL has sponsored the Reliance Mutual Fund within the framework of the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996.RCL primarily focuses on funding projects in the infrastructure sector and supports the growth of its subsidiary companies, Reliance Capital Asset Management Limited, Reliance Capital Trustee Co. Limited, Reliance General Insurance Company Limited and Reliance Life Insurance Company Limited. As of March 31, 2005, the companys investment in infrastructure projects stood at Rs. 1071 Crores. The investment portfolio of RCL is structured in a way that realizes the highest posttax return on its investments.
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B) Reliance Communication Ventures Limited : The flagship company of the Reliance ADA Group, Reliance Communication Ventures Limited, is the realisation of our founders dream of bringing about a digital revolution that will provide every Indian with affordable means of communication and a ready access to information. The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of integrated telecom services. These include mobile and fixed line telephony, broadband, national and international long distance services, data services and a wide range of value added services and applications aimed at enhancing the productivity of enterprises and individuals. C) Reliance Energy Limited Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It ranks among Indias top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. It is Indias foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and total assets of Rs 10,700 crore (US$ 2.4 billion). Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai, Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.
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The company is currently pursuing several gas, coal, wind and hydrobased power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 12,500 MW. These projects are at various stages of development. Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and Construction (EPC) through a network of regional offices in India. D) Reliance Health In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated health services that will compete with the best in the world.It also plans to venture into diversified fields like Insurance Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and Consumer Health. Reliance Health aims at revolutionising healthcare in India by enabling a healthcare environment that is both affordable and accessible through partnerships with government and private businesses.
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E) Reliance Media & Entertainment As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Groups foray into the media and entertainment space. Reliance Entertainments core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms. The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV. Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema. Reliance Entertainment has made an entry into FM Radio through Adlabs Radio, having won 45 stations in the recent bidding, which will soon be the Radio station with the largest footprint in India. 2.3 RELIANCE LIFE INSURANCE COMPANY LIMITED: As it has been presented before Reliance Life Insurance Company Ltd. Is a part of Reliance Capital which is again a part of ADAG. Reliance Capital acquired 100% share of an Australian Based life insurance company i.e. AMP SANMAR LTD. In October 2005, to form the Reliance Life Insurance Company. Though the acquisition was made in October, the functioning of Reliance Life has only started from February, 2006. It is one of the two private players (along with Sahara) in the life insurance sector which does not have any foreign collaboration. The basic idea behind the formation of Reliance Life
34
was to provide the people of India with some better investment alternatives as well as to make them aware about the usefulness of life insurance for catering the future needs of them. Reliance life insurance has a range of products which can fulfill the needs of both the individual as well as corporate houses. So, it can be said that Reliance Life is another step forward for Reliance Capital Limited to offer need based financial services (life insurance) to individuals and corporate houses. 2.3.1 GOALS TO ACHIEVE: Reliance Life Insurance has the following goals to achieve in the near future: a) Emerge as a transnational life insurer of global scale and standard. b) Achieve impeccable reputation and credentials through best business practices. c) To become the market leader among the private players in the Indian life insurance sector by the end of the current financial year. 2.3.2 MISSION: Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans. 2.3.3 VISION: Empowering everyone live their dreams
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2.3.4 GUIDING PRINCIPLES: a) Customer care and satisfaction: The foremost responsibility for an organization is to provide its customers utmost care and satisfaction and Reliance Life is no exception in this regard. The main objective of the organization is to provide the customers with best possible financial plans which will match their needs and the expectations. b) Corporate Governance: In todays modern business world corporate governance is utmost essential, because it gives a clear picture of the organization to its shareholders as well to the general public at large. So, it is aim of Reliance Life to maintain ethical practices in all their business transactions, to promote a better picture of themselves. c) Creativity and Innovation: After the IRDA ACT 1999, the private players are also allowed to participate in the life insurance sector, and this has opened a vast area of field to operate for many of the companies and thats why we see that not less than 15 players have entered the market in the last few years. So, to survive in this market, the goal of reliance Life is Creativity and Innovation which is the best way to success for any organization. d) Competitiveness: It provides the base for any organization to operate in any area of business and life insurance is no exception. Competitiveness provides the urge for any company to outperform their competitors in the market and become the leader in that particular sector. It is the competitiveness which has impelled Reliance life to set a goal such as to become the
36
market leader among all the private players by the end of the current financial year. 2.3.5 DEPARTMENTS AND BRANCHES OF RELIANCE LIFE INSURANCE COMPANY LIMITED: Branches: There are more than 200 branches of Reliance life spread all over the country, the head office being situated in Chennai. In the city of Bangalore though there are only three (3) branches of Reliance life and those are situated in: a) Malleswaram b) Jayanagar and c) Indiranagar. They are planning to open new branches at places like Mahatma Gandhi Road and Koramangla very soon. Departments: The various departments that can be seen in an insurance organization and that has been observed by me are as follows: a) Marketing Department: This department mainly deals with the marketing and promotion part of the Insurance Company. They spend most of their time in formulating strategies to make their products known to the common people and to promote the same in a easy and cost effective way. b) Sales Department: This department mainly deals with the sales part of the Insurance Company; the department includes designations like Sales Manager and Financial Advisor who
37
personally contacts with people for performing the task of sales of various products. c) Accounts/ Financial Department: This department has the task of keeping track of the various expenses incurred by the various other departments of the organization and also performs the task of allocating various funds to different departments according to their requirements. d) Human Resource Department: This department is handled by the Human Resource manager of the company. The function of this department involves the well being of the employees of the company, I,e, to see whether there is employee grievance in the organization or not and if it is there what are the possible causes for that and also try to find out solutions for the same if possible. e) Investment Department: This department deals with the task of investing the money of the policy holders in such way that will ensure both safety of the money and also a steady return on the same. The task of this department is very difficult as it deals with the money given by the policy holders, so it requires lot of thinking on the part of the personnel of this department before deciding where to invest the money. Actuarial Department: This department is under the supervision of an Actuary who decides the premiums and charges to be taken from the policy holder on the basis of certain informations (like Age, Annual Income etc.) provided by the prospective customer. The task also involves the calculation of mortality charges which requires high
38
statistical knowledge from ones point of view. So, this department involves in the calculation of various amounts to be charged from the prospective customers. 2.3.6 RELIANCE LIFE INSURANCE PRODUCTS: Reliance Life Insurance has products which can meet the needs of both the individuals as well as the corporate houses. The products of the Reliance Life can be subdivided broadly into two segments, namely: a) Individual Products. & b) Group Products. 2.3.6.1: INDIVIDUAL PRODUCTS: These products are offered by Reliance Life by mainly focusing to the needs of the individual persons, these products will offer them the best solutions possible to their different needs. The products offered under this category are as follows: i) ENDOWMENT PLAN: This plan provides an easy and inexpensive way to protect the needs of the customer, his/her family and the business of the customer. In this plan the customer has the option of choosing the sum assured on the basis of his current financial condition and probable future expenses, he also has the option of choosing the term of the plan. In the event of untimely death, this plan will provide all the support necessary to the beloved ones of the policy holder.
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ii)
SPECIAL ENDOWMENT PLAN: This insurance policy is designed for the people who want to combine savings with extended security. The special feature of this plan is, the customer will get the benefit ( life protection) of the plan even after 5years from the date on which the customer has stopped paying the premium. This policy can also be taken as one which can also be participate in the profit of the company.
iii)
CASH FLOW PLAN: This policy is designed for the people who have a recurring need of reinvestment in the business or look for short-term investment channels. The advantage of policy is in no time the customer has to pay a sizable amount of money as premium and on the other hand he can ensure a periodic return of a lump sum amount which can become a basis for reinvestment at a later period.
iv)
CHILD PLAN: This insurance policy is designed for those people who wish to save money for a future time when there will be a recurring need of substantial amount of money. This is specially true when someone needs money for the higher education of his son or daughter. The unique feature of this policy is that the risk cover continues for the full sum assured even when the periodical payments are being made.
v)
TERM PLAN: This insurance policy is designed for those people who want only life cover for their family and does not
40
want to save anything for themselves. It can also be useful for business house who want to cover their businesses against the sudden loss of partners or key manpower. The premium charged for this policy is comparatively low than the other policy offered by Reliance Life. vi) WHOLE LIFE PLAN: This insurance policy is designed for those people who does not want to avail any benefit for themselves but rather want to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost. The unique feature of this policy is that the risk cover continues throughout the duration of the policy holders life irrespective of the period of premium payment. vii) MARKET RETURN PLAN (ULIP): In this policy one can have the twin advantage of insurance protection as well as reaping the benefits of investment growth. It is a flexible plan which works throughout the life and meets the changing requirements like additional protection, liquidity through cash, option to invest in different asset class and many more. viii) GOLDEN YEAR PLAN: This policy is a flexible package that gives the customer the freedom of choice in choosing the type of investment, life cover, vesting options such as commuting and annuity options. This policy is available for all individuals ranging between the age of 18-65.
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2.3.6.2 GROUP PRODUCTS: These insurance products are mainly designed keeping in mind the needs of the group of people in an organization or any other place. The various plans under this category are as follows: i) TERM ASURANCE PLAN: This policy is a one year renewable term assurance contract. The sum is paid on the happening of the event for which the policy was taken with in the one year. After one year the policy can be further renewed for one more year. ii) RELIANCE EMPLOYEE DEPOSIT LINKED INSURANCE SCHEME (EDLI): All establishments which have at least 10 full time employees and which come under the purview of Employees provident fund and miscellaneous provisions act 1952, have a provision to undertake Employee Deposit linked Insurance Scheme to provide life insurance to their employees. Reliance EDLI has been approved as a substitute for the EDLI scheme 1976 that was provided earlier. iii) RELIANCE GROUP GRATUITY POLICY: It is a policy that offers various services to manage the gratuity obligations of any particular organization. It helps the management to provide all the benefits of gratuity to the employees with out requiring proper control from their behalf.
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iv)
RELIANCE GROUP SUPER ANNUATION POLICY: It is a policy that offers various services to manage the superannuation obligations of any particular organization. It gives a choice to the organizations to tailor the super annuation facilities fir their employees according to their convenience.
2.3.7 SWOT
ANALYSIS
OF
RELIANCE
LIFE
INSURANCE
COMPANY LIMITED: STRENGTHS: a) Impeccable brand name of Reliance. b) Sound financial and infrastructural backup. c) Real urge to become the leader in the market. d) The success in one of the fields in Reliance may create a good feeling with in the customers about Reliance Life Insurance also. WEAKNESSES: a) Unawareness among the people about Reliance Life Insurance. b) Recent split in the top management may have a bad impact on the general people who believe in family bodings even in business matters. c) As they have recently come to the insurance sector, not aware of the pros and cons of the sector.
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OPPORTUNITIES: a) Many people now days are being aware of the benefits of insurance, so there is a vast market to target by the company. b) 80% of the total population in India is still not covered by any Life Insurance Policy, so there is a vast market that can be tapped by Reliance. c) Reliance group already has a huge number of customers in different fields of operation, so there is a possibility that those people may be willing to invest in this area also. THREATS: a) Most of the people still believe on public players like LIC, so it is very hard to shift those customers from LIC to other companies like Reliance. b) The number of players in the private insurance sector is increasing day by day, so the competition is getting tough. c) The failure in one of the fields of Reliance may affect adversely the business opportunities of Reliance Life Insurance.
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2.4. Explanation of the 7-S Framework of McKinsey
2.4.1 What is the 7-S Framework?
The 7-S Framework of McKinsey is a management model that describes 7 factors to organize a company in a holistic and effective way. Together these factors determine the way in which a corporation operates. Managers should take into account all seven of these factors, to be sure of successful implementation of a strategy. Large or small. They're all interdependent, so if you fail to pay proper attention to one of them, this may affect all others as well. On top of that, the relative importance of each factor may vary over time.
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2.4.2Origin of the 7-S Framework : History The 7-S Framework was first mentioned in "The Art Of Japanese Management" by Richard Pascale and Anthony Athos in 1981. They had been investigating how Japanese industry had been so successful. At around the same time that Tom Peters and Robert Waterman were exploring what made a company excellent. The Seven S model was born at a meeting of these four authors in 1978. It appeared also in "In Search of Excellence" by Peters and Waterman, and was taken up as a basic tool by the global management consultancy company McKinsey. Since then it is known as their 7-S model. 2.4.3The Mckinsey 7S Framework In recent years, the 7S framework for management analysis developed by the respected consulting firm of Mckinsey & Company has gained in popularity. The Mckinseys 7S framework essentially looks at seven elements of an organization that must be understood when seeking to work out how it works and how to bring about any sort of change in the organization.
46
These seven elements play a significant role in any organization and the Mckinsey 7S framework gives an insight into the integration of these significant elements. The outstanding feature of the 7S framework is that it has been tested extensively by Mckinsey consultants in their studies of many companies. At the same time this framework has been used by respected business schools such as Harvard and Stanford. Thus, theory and practice seem to support each other in the study of management. a) Style "Style" refers to the management style or the leadership style that is followed by the superiors in an organization to carry out different activities in the organization. Style is basically the way the management behaves and collectively spends its time to achieve organizational goals. There are a lot of different management and leadership styles in use but the most popular ones are: -
47
Exploitive Autocratic Benevolent Autocratic Participative Democratic

b) Systems
In an organization, "systems" refer to the procedures and processes such as information systems, manufacturing processes, budgeting and control processes. When taking into consideration the systems of any organization, things such as the customization of the systems, tailoring those systems to individual managers, the setting up of objectives for those systems, economizing those systems, the flexibility of the systems and blending those systems into the organizational environment, come into any managers
mind.
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It is these elements of concern associated with the Systems of the organization that Mckinsey consultants have included this issue of Systems of the organization into their framework. c) Staff The term "Staff" refers to the people in the organization and their socialization into the organizational culture. This includes Staffing that is the filling, and keeping filled positions in the organizational structure through identifying work-force requirements, recruiting, selecting, placing, promoting, appraising, planning the careers, compensating, and training or otherwise developing both candidates and current job holders to accomplish their tasks effectively and efficiently. Plus this also implies towards the chosen culture of the organization and the selection of employees
according to that particular organizational culture and the fact that whether the employees have blended into and accepted the culture or not.
d) Structure
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"Structure" is the organizational structure or the hierarchy of the organization that comprises of the authority and responsibility relationships in the firm. This function of the framework is concerned with the direction of delegation of authority, the organizational structures, whether Flat or Tall and the degree of Centralization or Decentralization. Structure is closely related to Staff as the size of the staff greatly impacts the type of structure that the organization has. It is also dependant upon the Style of management preferred by the superiors in the organization, as it is the preference of the top management that really matters in the real world on the type of organizational structure being applied. e) Strategy The systematic actions and the allocation of resources to achieve the organizational objectives and aims is referred to as "Strategy". There are many predefined strategies but the management can effectively create some other strategy through the use of creative techniques like brainstorming or professional approach such as the Delphi Technique.
50
f) Shared vision "Shared vision" or Super ordinate goals are the values held and shared by the members of an organization. By using the term Shared Values, the 7S theorists emphasize that goal statements are very important in determining the destiny of the organization; they also point out that the organization members must share values equally. Therefore, special attention is given to personal and organizational values in order to increase organizational effectiveness. g) Skills These are the distinctive capabilities of an organization. In traditional management literature the term "skills" refers to the personal skills (e.g. technical, human, conceptual) while in the 7S framework "skills" not only means this but it also points towards the capabilities of the organization as a whole.
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Application of 7s
a) STRUCTURE OF ADAG
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b) Shareholder Interest We value the trust of shareholders, and keep their interests paramount in every business decision we make, every choice we exercise In the copany orgation People Care We possess no greater asset than the quality of our human capital and no greater priority than the retention, growth and well-being of our vast pool of human talent We also gives the different way to focusing the consumer to We rethink every business process, product and service from the standpoint of the consumer so as to exceed expectations at every touch point
Excellence in Execution
We believe in excellence of execution in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well.
Team Work
The whole is greater than the sum of its parts; in our rapidlychanging knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit of thinking together -- integration is the rule, escalation is an exception
Proactive Innovation
We nurture innovation by breaking silos, encouraging crossfertilization of ideas & flexibility of roles and functions. We create an environment of accountability, ownership and problemsolving based on participative work ethic and leading-edge research.
53
A PROJECT REPORT ON RELIANCE LIFE INSURANCE c) Style Reliance insurance have a different working style in different areas those are followings. Leadership by Empowerment
We believe leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence
Social Responsibility
We believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can
Respect for Competition
We respect competition because theres more than one way of doing things right. We can learn as much from the success of others as from our own failures. Generally company use the style to develop the first relianshionship to customer then after the start the business with him. Give the good product .in this way customer can satisfy and second time
d) Strategy
To build a global enterprise for all our stakeholders, and A great future for our country, To give millions of young Indians the power to shape their destiny, The means to realize their full potential Our strategy for insurance is to keep the customer satisfaction as focal point of all our operations, adopt the best international practices in underwriting, claims and customer service, be the most innovative
54
in product development, establish presence all over India, ensure sustained value addition to all stake holders and to uphold Corporate Value & Corporate Governance.
e) Staff
There are more than 200 branches of Reliance life spread all over the country, the head office being situated in Chennai. In the city of Bangalore though there are only three (3) branches of Reliance life and those are situated in a) Malleswaram b) Jayanagar and c) Indiranagar. In organization divided in to different depart on the bases of hiss work like Marketing Department Sales Department Accounts/ Financial Department Human Resource Department Investment Department Actuarial Department. In these department are to train person on the base of his work .because of it more useful to for his work. Sales person fist he pass the exam then after company issue the license .After time by time company arrange the different product train to the agent and other staff member it helps to easy to convenes to customer. f) Skill Skill is most important to all the staff member because of insurance business is Intangible there for very difficult to convenient to the people. In insurance business also skill required for calculation of premium or claims calculation or under writer, In big insurance took by any person or company at this time for reinsurance skill person required. Reliance life insurance company having a very good skill person because we saw the within one years company get good perform.
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g) System The Company recognizes that the security of information requires an ongoing commitment. Towards this end a security program would provide a continuous cycle for assessing risk, developing and implementing effective security procedures, and monitoring the effectiveness of those procedures. We want to guarantee the reliability, confidentiality and availability of critical information. To that end, we will continue implementation of our strategy for enhancing information security management controls. We are in a challenging environment, dealing with all the changes in technology, the insurance industry, the IRDA regulations and the workplace. The expectations of what information technology (IT) can do to benefit the business and its customers continue to grow. We've been working hard to provide day-to-day IT services, while keeping our eye on where the Company is headed strategically, and also transforming the IT organization to meet future requirements.
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3. RESEARCH PROBLEM
3.1. RESEARCH PROBLEM: The problem of research was- To make a study of the consumers perception about Life Insurance sector (I.e. how they perceive about life insurance and what criterias they consider before taking a life insurance policy) and to study the brand awareness of Reliance Life among them. The study was carried out with the following objectives in mind: a) To know about the various Investment alternatives that is mostly preferred by the people. b) To find out the important criterias that people think are important before investing in a life insurance policy and c) To find out the brand awareness of Reliance Life Insurance among the people. 3.2. RESEARCH METHODOLOGY: To analyze the problem
given and to conduct the study among the people, the surveying was done with the help of a Questionnaire (which is attached as a part of the annexure in the report) was adapted. To know the consumers perception about what they think is important before taking a life insurance policy, eight (8) main criterias were listed out to them, those are: a) Premium b) Charges taken by company, c) Policy Term d) Rider Benefits provided by the company
57
e) Bonus and interest paid by the company f) Services provided by company (pre and post sales), g) Accessibility of the company & h) Company Image. 3.3. SAMPLE SIZE: After due consultation with the company supervisor as well as with the college guide, also keeping in mind the requirements of the company for the research, the sample size that was found to be appropriate for the study was 100. 3.4. SAMPLING TECHNIQUE: The sampling technique that adapted to conduct the survey was Simple Random Sampling and the area of the research was concentrated in the city of Bangalore only. The survey was conducted by visiting different Reliance web world branches in places like koramangala and Jayanagar in the city of Bangalore. 3.5 RESEARCH FINDINGS: Various Investment Alternatives Available to consumers: To begin with the analysis, let us see what are the various investment alternatives that are available to the people and among that which are the most preferred one. Now, from the data collected from the 100 respondents which were surveyed through the questionnaire, the following representation can be made:
58

Investm A ent lternatives Preffered by People
19, 7% 21, 8%
10, 4% 50, 18% Insurance M utual Fund PPF Real Estate 41, 15% Bank Deposits Equity Post Office G and Silver old
26, 10%
31, 12% 33, 13% 33, 13%
Bonds and Debntures
So, from the above representation it can be seen that 18% of the people think that Insurance is the most preferred investment alternative that is available to them, followed by alternatives such as Mutual Fund (15%), PPF (13%), Real Estate (13%) etc. The reason that can be attributed for the liking of people towards insurance may be because of that insurance provides both life cover as well as security to the holder of the policy and also to the family members of the insurance holders. As well as now a days insurance are also providing option to invest in the markets through plans like ULIP, which gives the holder both the life cover as well as an opportunity to earn income at the market rate. So, these are the reasons why people like to invest in the insurance in comparison to others.
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SEGMENTATION OF THE RESPONDENTS ON THE BASIS OF CERTAIN IMPORTANT CRITERIAS: Now, let turn our attention towards the respondent who were covered under this study. These respondents can be categorized on the basis of certain important criteria like age group, annual income, have previous life insurance policy and awareness about Reliance Life Insurance in the following way: Age group:
age group Frequency 58 31 7 3 1 100 Percent 58.0 31.0 7.0 3.0 1.0 100.0 Valid Percent 58.0 31.0 7.0 3.0 1.0 100.0 Cumulative Percent 58.0 89.0 96.0 99.0 100.0
Valid
< 30 yrs. 31 - 40 yrs. 41 - 50 yrs. 51 - 60 yrs. > 60 yrs. Total
age group
70 60
50
40 30
Frequency
20 10 0 < 30 yrs. 301- 40 yrs. 41 - 50 yrs. 51 - 60 yrs. > 60 yrs.
age group
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From this representation we can see that 58% of the respondent belonged to the age group of below 30 years, followed by 31% who belonged to the age group between 31-40 years and the other persons were who belonged to other age groups were small in number. Annual income
annual income Frequency 17 27 23 31 98 2 100 Percent 17.0 27.0 23.0 31.0 98.0 2.0 100.0 Valid Percent 17.3 27.6 23.5 31.6 100.0 Cumulative Percent 17.3 44.9 68.4 100.0
Valid
< Rs. 1 lakh Rs. 1.01 - 3 lakh Rs. 3.01 - 5 lakh > Rs. 5 lakh Total
Missing Total
System
annual income
40
30
20
Frequency
10 0 < Rs. 1 lakh Rs. 1.01 - 3 lakh Rs. 3.01 - 5 lakh > Rs. 5 lakh
annual income
From the above representation we can see that 31% of the respondents belonged to a group which has an annual income of more than 5 lakh, followed by 27% who belonged to the group of annual income between 1-3 lakh and 23 % who have an annual income between 3-5 lakh. Among the 100 respondents, two of them were unwilling to express their annual income to us, which represents the missing system in the chart presented above.
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Hold life insurance policy

hold life insurance policy Frequency 23 77 100 Percent 23.0 77.0 100.0 Valid Percent 23.0 77.0 100.0 Cumulative Percent 23.0 100.0
Valid
no yes Total
hold life insurance policy

100
80
60
40
Frequency
20
0 no yes
hold life insurance policy
Among the 100 respondents that were taken as a sample size, 77 of them had life insurance policy that was either taken by him/her self or it was taken by their parents on their name, while 23 of them did not have any kind of Life insurance policy from any company. Awareness about-Reliance Life
awareness-RIL Frequency 64 36 100 Percent 64.0 36.0 100.0 Valid Percent 64.0 36.0 100.0 Cumulative Percent 64.0 100.0
Valid
no yes Total
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awareness-RIL
70 60 50 40 30 20
Frequency
10 0 no yes
awareness-RIL
Now coming to the point of awareness among the people about Reliance Life Insurance, the response was very disappointing from the point of view of the company. Out of 100 respondents not less than 64 respondents did not have the knowledge that Reliance has also come to the life insurance sector by overtaking the Australia based life insurance company AMP SANMAR, while the rest 36 had knowledge of the acquisition of AMP SANMAR by Reliance. IMPOPRTANT CRITERIAS BEFORE TAKING AN LIFE INSURANCE POLICY: Now, let us see what criterias people consider most important before taking a life insurance policy (the criterias for the study have been mentioned before). Here, the most important criteria as perceived by the people are being rated as 1 and the least important criteria is being rated as 8, (as there are 8 criterias that have been suggested under the research study). Here the number
63
of respondent is only 77, because those people who do not have any life insurance policy have been excluded from the purview of the study. PREMIUM:
PREMIUM Frequency 42 6 6 6 11 5 1 77 23 100 Percent 42.0 6.0 6.0 6.0 11.0 5.0 1.0 77.0 23.0 100.0 Valid Percent 54.5 7.8 7.8 7.8 14.3 6.5 1.3 100.0 Cumulative Percent 54.5 62.3 70.1 77.9 92.2 98.7 100.0
Valid
Missing Total
1 2 3 4 5 6 7 Total System
PREMIUM
50
40
30
20
Frequency
10
0 1 2 3 4 5 6 7
PREMIUM
Now if we consider one of the criteria we can see that 54.5% of the respondent has rated it as the most important thing that they consider before taking any insurance policy from any company, while no body has rated it as the least important criteria. So, it can be clearly
64
interpreted that premium that the policy holder has to pay to continue his/her policy plays a very important role before selecting the terms and conditions of the policy and also the company from which the policy is to be taken. CHARGES:
CHARGES Frequency 6 7 17 20 12 9 3 3 77 23 100 Percent 6.0 7.0 17.0 20.0 12.0 9.0 3.0 3.0 77.0 23.0 100.0 Valid Percent 7.8 9.1 22.1 26.0 15.6 11.7 3.9 3.9 100.0 Cumulative Percent 7.8 16.9 39.0 64.9 80.5 92.2 96.1 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
CHARGES
30
20
10
Frequency
0 1 2 3 4 5 6 7 8
CHARGES
Now if we consider the charges the customer has to pay to the insurance company like Fund Management charges, administration charges etc. most of the people consider it as a important criteria
65
which can dictate the terms before deciding on whether to take the policy or not. But very few people (only 7.8% of the total respondents), considers that it can be the most important criteria before taking the decision on life insurance policy. POLICY TERM:
policy term Frequency 17 9 8 17 14 5 2 4 76 24 100 Percent 17.0 9.0 8.0 17.0 14.0 5.0 2.0 4.0 76.0 24.0 100.0 Valid Percent 22.4 11.8 10.5 22.4 18.4 6.6 2.6 5.3 100.0 Cumulative Percent 22.4 34.2 44.7 67.1 85.5 92.1 94.7 100.0
Valid
1 2 3 4 5 6 7 8 Total System
Missing Total
policy term
20
10
Frequency
0 1 2 3 4 5 6 7 8
policy term
The tenure of the policy i.e. the policy term depends on the policy holder but sometimes the insurer can also influence the policy term by giving some additional benefits on policies taken for a longer period of time or vice versa. In the study that was conducted by us, we found out that nearly 22% of the respondents thinks that policy
66
term offered by the company is the most important thing that one should consider before taking any life insurance policy while 5.3% of the respondents think that it is the least important thing that one should consider before taking any life insurance policy. RIDER BENEFITS:
rider benefits Frequency 14 5 13 12 15 12 3 3 77 23 100 Percent 14.0 5.0 13.0 12.0 15.0 12.0 3.0 3.0 77.0 23.0 100.0 Valid Percent 18.2 6.5 16.9 15.6 19.5 15.6 3.9 3.9 100.0 Cumulative Percent 18.2 24.7 41.6 57.1 76.6 92.2 96.1 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
rider benefits
16 14 12 10 8 6 4 2 0 1 2 3 4 5 6 7 8
Frequency
rider benefits
Rider benefits are the additional benefits that the insurer company provides to its customers for attracting them. Things like accidental benefit, critical illness benefit, and permanent disablement benefit are provided as arider with the original policy with a payment of some
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additional premium from the point of view of the customers. According to the study nearly 18% of the respondents think that it is the most important criteria before selecting an insurance policy, while on the other hand 4% of the respondent feels it is the least important criteria. BONUS AND INTEREST PAID:
BO NUS Frequency 30 5 7 11 9 13 1 1 77 23 100 Percent 30.0 5.0 7.0 11.0 9.0 13.0 1.0 1.0 77.0 23.0 100.0 Valid Percent 39.0 6.5 9.1 14.3 11.7 16.9 1.3 1.3 100.0 Cumulative Percent 39.0 45.5 54.5 68.8 80.5 97.4 98.7 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
BONUS
40
30
20
Frequency
10
0 1 2 3 4 5 6 7 8
BONUS
Bonus and interest are paid by the companies to the policy holder for the policies which are with profit policy. I.e. if a person takes a with profit policy, he/she also becomes liable to get a certain percentage of the profit that the company makes in a certain financial year. 39%
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of the respondent considers it as the most important criteria before taking a life insurance policy. SERVICES (PRE AND POST SALES):
SERVICES Frequency 19 4 10 6 15 12 5 6 77 23 100 Percent 19.0 4.0 10.0 6.0 15.0 12.0 5.0 6.0 77.0 23.0 100.0 Valid Percent 24.7 5.2 13.0 7.8 19.5 15.6 6.5 7.8 100.0 Cumulative Percent 24.7 29.9 42.9 50.6 70.1 85.7 92.2 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
SERVICES
20
10
Frequency
0 1 2 3 4 5 6 7 8
SERVICES
While conducting the study we have met many respondents who things that many of the companies provide them satisfactory services only till the policy is being taken by the respondent, but after that if there is any requirement from the point of view of the customer, the company does not pay the same attention to them as they had paid earlier. So, nearly 25% of the respondents feel that services (both pre
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and post sales) provided by the company is the most important thing to consider before undertaking any kind of life insurance policy. ACCESSIBILITY:
accessibility Frequency 9 6 10 8 13 17 7 7 77 23 100 Percent 9.0 6.0 10.0 8.0 13.0 17.0 7.0 7.0 77.0 23.0 100.0 Valid Percent 11.7 7.8 13.0 10.4 16.9 22.1 9.1 9.1 100.0 Cumulative Percent 11.7 19.5 32.5 42.9 59.7 81.8 90.9 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
accessibility
20
10
Frequency
0 1 2 3 4 5 6 7 8
accessibility
The term accessibility here refers to the easy availability of the facilities that the company provides to its customers. The facilities can be regarding information about the company and the various products offered by them, which can be made available through internet. According to the study nearly 12% of the respondents thing it is the most important thing, while 9% of them feel that it is the least
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important thing that one may consider before taking any life insurance policy. COMPANY IMAGE:
company image Frequency 25 10 5 9 2 9 10 7 77 23 100 Percent 25.0 10.0 5.0 9.0 2.0 9.0 10.0 7.0 77.0 23.0 100.0 Valid Percent 32.5 13.0 6.5 11.7 2.6 11.7 13.0 9.1 100.0 Cumulative Percent 32.5 45.5 51.9 63.6 66.2 77.9 90.9 100.0
Valid
Missing Total
1 2 3 4 5 6 7 8 Total System
company image
30
20
10
Frequency
0 1 2 3 4 5 6 7 8
company image
Company image also plays an very important role in influencing the decision of a prospective customer while taking the final decision. From the study it has been found out that nearly 33% of the people feel that it is the most important thing that influences ones decision regarding taking of life insurance policy, while for 9% of people it does not provide any significant importance in their decision making.
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So, to conclude from the above representations, it can be said that the premium that the policy holder has to pay for taking any life insurance policy, plays the most important role in influencing their decision, followed by the factors like bonus and interest paid by the company, company image and so on. So, those companies who are charging the least premium as well as providing all other complementary services, has a better chance of succeeding in the life insurance sector in comparison to other companies who are also operating in the same field. Now to further analyze the perception of the respondents about what they think as the important criteria before taking an insurance policy. I have taken two independent parameters, namely: a) Age of the People. b) Annual Income of the People. After taking these two independent parameters, the analysis is being made to see which age group people think what criteria is important or what is difference in perception among the people who have annual income which are significantly different from each other. The number of respondents here is taken as 77 (76 in case of annual income, as one of the respondents did not disclose his income) only as those people who are not having any life insurance policy have been excluded from the purview of the study.. AGE OF PEOPLE CRITERIAS BEFORE TAKING AN LIFE INSURANCE POLICY: For conducting the study the ages of respondents are divided into five categories, those are as follows:
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a) Less than 30 years. b) Between 31- 40 years. c) Between 41 50 years. d) Between 51 - 60 years. e) More than 60 years. i) Age Group Premium: 1 28 66.7 % 13 50% % 1 33.3 % 42 54.5 % 2 3 7.1% 2 7.7% 1 20% 6 7.8% Premium 3 4 2 4.8 % 3 11.5 % 1 20 % 6 7.8 % 3 7.1% 2 7.7% 1 20% 6 7.8% 5 5 11.9% 2 7.7% 1 20% 2 66.7% 1 100% 11 14.3% 6 1 2.4% 3 11.5 % 1 20% 5 6.5% 7 1 3.8% 1 1.3% 8 -
Age total grou p. <30 42 yrs 100 % 3126 40 100 yrs % 415 50 100 yrs % 513 60 100 yrs % >60 1 yrs 100 % Total 77 100 %
Now, from the above representation we can see that nearly 67% of the people who belong to the age group of less than 30 consider premium as the most important criteria in comparison to only 50% of the people who belong to an age group of 30-40. So, people who have started their professional life consider more about the money
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that have to spend on the insurance policy in comparison to the people who are working for a relatively longer period of time. Again, if we consider those people who have come to the end of their working life, we can see that those people also thing that the expense regarding the premium to be paid is the most important criteria for them. ii) Age Group Charges: 1 5 11.9 % 1 3.8% 6 7.8% 2 4 9.5% 2 7.7% 1 33.3% 7 9.1% Charges 3 9 21.4% 6 23.1% 1 20% 1 33.3% 17 22.1% 4 10 23.8% 7 26.9% 3 60% 20 26% 5 6 14.3 % 5 19.2 % 1 33.3 % 12 15.6 % 6 5 11.9 % 3 11.5 % 1 100% 9 11.7 % 7 2 4.8 % 1 3.8 % 3 3.9 % 8 1 2.4% 1 3.8% 1 3.8% 3 3.9%
Age total grou p. <30 42 yrs 100 % 3126 40 100 yrs % 415 50 100 yrs % 513 60 100 yrs % >60 1 yrs 100 % Tota 77 l 100 %
Now, if we consider the different charges (like Fund management charges, administration charges etc.) that the companies take from their policy holders, we can see that people who are having age less
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than 30 years and those who belong to the group of 30 -40 years think in the same way in this matter. They consider these charges important, but not as much as they consider the cost relating to the premium they have to pay to the company. iii) Age Group Policy Term: Policy Term 2 3 4 5 11.9% 3 12% 1 33.3% 9 11.8% 3 12 7.1 28.6 % % 4 3 16% 12% 2 40% 8 10.5 % 1 33.3 % 17 22.4 %
Age total grou p. <30 42 yrs 100% 3140 yrs 4150 yrs 5160 yrs >60 yrs Tota l 26 100% 5 100% 3 100% 1 100% 77 100%
1 8 19% 9 36% 17 22.4%
5 9 21.4 % 1 4% 2 40% 14 18.4 %
6 1 2.4% 1 4% 1 20% 1 33.3% 1 100% 5 6.6%
7 1 2.4% 1 4% 2 2.6%
8 3 7.1% 1 4% 4 5.3%
The policy term mainly depends on the wishes of the policy holder, so here we can see that only 19% of the people whose age is below 30 years, think this is an important criteria, but people who are little bit more experienced know that insurer companies sometime provide extra benefits for longer policies in comparison to policies which have a shorter span of life, thats why nearly 36% of people belonging to
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the age group of 31-40 years think that it is an very important criteria which affects the decision regarding insurance. iv) Age Group Rider Benefits: Rider Benefits 2 3 4 3 7.1% 2 7.7% 5 6.5% 11 26.2% 2 7.7% 13 16.9 8 19%
Age grou p. <30 yrs 3140 yrs 4150 yrs 5160 yrs >60 yrs Total
total 42 100% 26 100% 5 100% 3 100% 1 100% 77 100%
1 7 16.7 % 5 19.2 % 1 20% 1 33.3 % 14 8.2%
7 2 7.7% 1 33.3% 3 3.9%
8 1 2.4% 1 3.8% 1 20% 3 3.9%
5 7 11.9% 16.7% 2 7.7% 2 40% 1 33.3%
3 9 11.5% 34.6% 1 20% -
1 100% 12 15 12 15.6% 19.5% 15.6%
Out of 14 respondents who think that rider benefits is the most important criteria in taking an decision regarding life insurance policy, 7 belong to the age group of less than 30 and 5 belong to the age group of 30 -40 years. So, most of them think that rider benefits are not so important and it does not influence their decision in a broad way.
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v)
Age Group Bonus and Interest Paid: Bonus and interest paid 2 3 4 2 4.8% 3 11.5% 5 6.5% 4 9.5% 2 7.7% 1 20% 7 9.1% 4 9.5% 5 19.2 % 1 33.3 % 1 100% 11 14.3 %
Age total grou p. <30 42 yrs 100% 3140 yrs 4150 yrs 5160 yrs >60 yrs Tota l 26 100% 5 100% 3 100% 1 100% 77 100%
1 17 40.5% 10 38.5% 2 40% 1 33.3% 30 39%
5 8 19% 1 3.8% 9 11.7 %
6 7 16.7 % 3 11.5 % 2 40% 1 33.3 % 13 16.9 %
7 1 3.8% 1 1.3%
8 1 3.8% 1 1.3%
In this scenario we can see that the thinking of the people belonging to different age group is quite similar, as nearly 40% of the respondents belonging to three different age groups, namely: <30, 30 40 and 40 50, think that it is the most important criteria which influences the decision regarding life insurance policy and only 1.3% of the total respondent think that it is the least important criteria among all.
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vi)
Age Group Services ( both pre and post sales): Services (pre and post sales) 1 2 3 4 10 23.8% 8 30.8% 1 20% 19 24.7% 3 7.1% 1 33.3% 4 5.2% 4 9.5% 4 15.4 % 4 9.5% 2 40%
Age grou p. <30 yrs 3140 yrs 4150 yrs 5160 yrs >60 yrs Tota l
total 42 100% 26 100% 5 100% 3 100% 1 100% 77 100%
5 5 11.9 % 8 30.8 % 2 40% 15 19.5 %
6 9 21.4 % 3 11.5 % 12 15.6 %
7 4 9.5% 1 3.8% 5 6.5%
8 3 7.1% 2 7.7% 1 33.3 % 6 7.8%
1 33.3 % 1 100% 10 6 13% 7.8%
In this case, we can see that the people who belong to the age group of less than 30 years and may be taking an life insurance policy for the first time ( on their own), do not give much importance on services in comparison to the people belonging to the age group of 30 40 , who put more emphasize on the services provided by the company, the percentage is almost 31.
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vii)
Age Group Accessibility: Accessibility 3 4 6 14.3%
Age grou p. <30 yrs 3140 yrs 4150 yrs 5160 yrs >60 yrs Total
total 42 100% 26 100% 5 100% 3 100% 1 100% 77 100%
1 7 16.7 % 2 7.7% 9 11.7 %
2 2 4.8% 3 11.5% 1 20% 6 7.8%
6 4 9.5% 11 42.3% 1 20% 1 33.3% 17 22.1%
7 5 11.9% 2 7.7% 7 9.1%
8 5 11.9 % 1 3.8% 1 33.3 % 7 9.1%
6 7 14.3 16.7% % 1 3.8% 2 4 7.7% 15.4% 1 20% 1 33.3% 1 100% 10 13% 8 10.4 % 2 40% 13 16.9%
Here, we can see that not much importance is given to the accessibility criteria by any group of respondents. Most of them consider accessibility as an criteria which will not affect the decision of a prospective customer, when he/she decides to take an life insurance policy.
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viii) Age Group Company Image: Age total grou p. <30 42 yrs 100% 3140 yrs 4150 yrs 5160 yrs >60 yrs Tota l 26 100% 5 100% 3 100% 1 100% 77 100% 1 10 23.8% 12 46.2% 2 40% 1 100% 25 32.5% Company Image 2 3 4 6 14.3% 3 11.5% 1 33.3% 10 13% 3 7.1% 1 3.8% 1 33.3 % 5 6.5% 7 16.7 % 1 3.8% 1 33.3 % 9 11.7 % 5 1 2.4% 1 3.8% 2 2.6% 6 3 7.1% 3 11.5 % 3 60% 9 11.7 % 7 6 14.3% 4 15.4% 10 13% 8 6 14.3% 1 3.8% 7 9.1%
In the case of company image also, we see a significant difference between the opinions of respondents who belong to different age groups. Only 24% of people belonging to the age group of less than 30 years think that it is very important and almost 14% think that it is not at all important. On the other hand, nearly 46% of the people belonging to the age group of 30 40 years think it is very important and only 4% think that this criteria is not at all important. People belonging to the age group of more than 60 years also consider company image as the most important criteria. So, to conclude it can be said that the thinking of people belonging to different age group are quite different in most of the aspects whole it
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comes to decide the important criteria regarding life insurance, it may be due to the fact that they have started their career, so they worry about the money they have to spend on insurance or it may be related to the fact that for many of the newcomers it is the first time that they are taking a life insurance policy on their own, so they do not have experience when it comes to life insurance in comparison to others who are having their own policy or those who are working for a longer span of time and are quite settled in their respective area of operation, ANNUAL INCOME OF PEOPLE CRITERIAS BEFORE TAKING AN LIFE INSURANCE POLICY: For conducting the study the annual income of respondents is divided into four categories, those are as follows: a) Less than rs. 1 lakh. b) Between rs 1.01 3 lakh. c) Between rs. 3.01 5 lakh. d) More than rs. 5 lakh. Now, let us see the perception of people about the important criterias before taking a life insurance policy who belong to different income groups.
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i)
Annual Income Premium: 1 2 Premium 3 4 5 6 2 12.5% 3 10.7% 5 6.6% 7 1 3.6% 1 1.3% 8 -
Annl total . Inc (rs.).. <1 14 lakh 100% 1.013 lakh 3.015 lakh >5 lakh Total In
12 1 1 85.7 7.1% 7.1% % 18 8 3 3 1 3 100% 44.4 16.7% 16.7% 5.6% 16.7% % 16 7 1 2 4 100% 43.8 6.3% 12.5% 25% % 28 14 2 7.1% 2 3 3 100% 50% 7.1% 10.7% 10.7% 76 41 6 6 6 11 100% 53.9 7.9% 7.9% 7.9% 14.5% % this scenario a clear difference in opinion can
be seen, people
who have annual income of less than 1lakh, think premium to be paid in a policy is the most important criteria ( nearly 86%), but as the income increases, less importance is given on the premium decreases. So, people having less income put more emphasize on the money to be spent in comparison to people who have relatively higher income.
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ii)
Annual Income Charges: 1 2 14.3 % 1 6.3% 3 10.7 % 6 7.9% 2 2 14.3 % 1 5.6% 2 12.5 % 1 3.6% 6 7.9% Charges 3 4 5 6 7 2 2.5% 1 3.6% 3 3.9% 8 1 7.1% 1 6.3% 1 3.6% 3 3.9%
Annl total . Inc (rs.).. <1 14 lakh 100% 1.0118 3 100% lakh 3.0116 5 100% lakh >5 28 lakh 100% Total 76 100%
1 3 3 2 7.1% 21.4% 21.4% 14.3% 6 33.3 % 4 25% 6 21.4 % 17 22.4 % 6 3 2 33.3% 16.7% 11.1% 3 18.8% 1 6.3% 2 12.5%
8 5 3 28.6% 17.9% 10.7% 20 12 9 26.3% 15.8% 11.8%
As the charges taken by the companies is very less as compared to the premium they take, so here we can see that people pay less importance on it. Bit, here also we can see that nearly 14% of the people who are having annual income of less than 1 lakh, thing this is the most important criteria, while on the other hand people who are having income between 1.01 3 lakh, dont thing at all that this is the most important criteria. So, here also difference in income generates difference in opinion.
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iii) Annl total . Inc (rs.).. <1 14 lakh 100% 1.0118 3 100% lakh 3.0116 5 100% lakh >5 28 lakh 100% Total 76 100%
Annual Income Policy Term: 1 4 28.6% 2 11.1% 5 31.3% 6 22.2% 17 22.7% Policy Term 2 3 1 5.6% 1 6.3% 6 22.2% 8 10.7% 4 5 6 1 7.1% 1 6.3% 7 2 7.4% 2 2.7% 8 3 21.4 % 1 6.3% 1 3.6% 5 6.7%
4 2 28.6% 14.3%
3 6 6 16.7% 33.3% 33.3% 1 6.3% 4 25% 3 18.8%
4 3 3 3 14.8% 11.1% 11.1% 11.1% 8 17 14 5 10.7% 22.7% 18.7% 6.7%
In case of policy term we can see that there is no such difference in opinion among the people who belongs to different income groups. As. 22.7% of the total respondents thinks it is the most important criteria and on the other hand 22.7% of the respondents think it is moderately important. The reason for the same can be that, people who are having less income now, may have a feeling that as the time goes on the income of them will increase, so they dont put so much emphasis on policy term as compared to the other criterias.
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iv) Annl . Inc (rs.).. <1 lakh 1.013 lakh 3.015 lakh >5 lakh Total total
Annual Income Rider Benefits: 1 2 14.3% 4 22.2% 4 25% 4 14.3% 14 18.4% Rider Benefits 2 3 4 1 7.1% 1 5.6% 2 12.5% 1 3.6% 5 6.6% 5 6 7 8 1 7.1% 1 6.3% 1 3.6% 3 3.9%
14 100% 18 100% 16 100% 28 100% 76 100%
5 2 1 2 35.7% 14.3% 7.1% 14.3% 3 1 6 3 16.7% 5.6% 33.3% 16.7% 1 6.3% 3 18.8% 1 6.3% 7 25% 4 25% 3 10.7%
4 5 14.3% 17.9%
3 10.7 % 13 11 15 12 3 17.1% 14.5% 19.7% 15.8% 3.9%
Here, we can see that people who are having relatively greater income think that rider benefits are very important criteria in comparison to people who are having less income. The reason for the same may be as the income of a person increase he/ she will be liable to get more rider benefits in comparison to people who are having lesser income, so they put less importance on rider benefits. But, one thing is clear very few people (3.9% of the total respondents) from all income class think that rider benefits do not carry any importance.
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v) Annl . Inc. (rs).. <1 lakh 1.013 lakh 3.015 lakh >5 lakh Total
Annual Income Bonus and Interest Paid: total 14 100% 18 100% 16 100% 28 100% 76 100% 1 5 35.7% 8 44.4% 8 50% 9 32.1% 30 39.5% Bonus and interest paid 2 3 4 2 11.1 % 2 7.1% 4 5.3% 5 6 7 8 1 6.3% 1 1.3%
1 2 1 5 7.1% 14.3% 7.1% 35.7% 2 2 3 1 11,1 11.1% 16.7% 5.6% % 1 2 2 2 6.3% 12.5% 12.5% 12.5%
3 5 3 5 1 10.7 17.9% 10.7% 17.9% 3.6% % 7 11 9 13 1 9.2% 4.5% 11.8% 17.1% 1.3%
In case of bonus and interest paid by the insurer company, we can see that people who belong to the income groups of 1.01 3 lakh and 3.01 5 lakh puts more emphasis on this, in comparison to the people who have income less than 1 lakh or those who are having income of more than 5 lakh. The reason for the same may be due to the fact, that people who belong to the range of 1- 5 lakh as annual income, have an tendency to earn more than what they are earning and thats why they thing it as important criteria, on the other hand people who have income less than 1 lakh, does not have such income to invest in the company ( more emphasis is given by them on the safety of the money) and those who are having income of more than 5 lakh, does not crave for more money and that is why
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they dont put so much importance on bonus and interest paid by the company. vi) Annl total . Inc (rs.).. <1 14 lakh 100% 1.0118 3 100% lakh 3.0116 5 100% lakh >5 28 lakh 100% Total 76 100% Annual Income Services ( Both pre and post sales): 1 2 14.3 % 5 27.8 % 4 25% 7 25% 18 23.7 % Services (pre and post sales) 2 3 4 5 1 7.1% 3 10.7% 4 5.3% 2 2 14.3% 14.3% 2 11.1% 5 31.3% 1 5.6% 2 14.3%0 6 1 7.1% 7 2 14.3% 3 10.7% 5 6.6% 8 2 14.3% 4 14.3% 6 7.9%
4 22.2% 6 33.3% 3 18.8% 4 25% 1 3.6% 12 15.8%
1 3 6 21.4% 3.6% 10.7% 10 6 15 13.2% 7.9% 19.7%
Now if we consider the services provided by the company we can see that the people who are having less income put less emphasis on this criteria (14.3%) and on the other hand people having income of more than 1 lakh put more emphasis on this criteria ( on an average 26%), the reason may be due to the fact people who are earning more have more job responsibilities, so they have to depend on the services provided by the company personnel when compared to others.
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vii) Annl. Inc .(rs). <1 lakh 1.01-3 lakh 3.01-5 lakh >5 lakh Total
Annual Income Accessibility: total 14 100% 18 100% 16 100% 28 100% 76 100% 1 3 21.4 % 3 16.7 % 1 6.3% 2 7.1% 9 11.8 % Accessibility 2 3 4 2 12.5% 4 14.3% 6 7.9% 3 21.4 % 3 16.7 % 1 6.3% 2 7.1% 9 11.8 % 2 14.3 % 1 5.6 % 4 25% 1 3.6 % 8 10.5 % 5 6 7 8 1 7.1% 1 5.6% 4 25% 1 3.6% 7 9.2%
2 2 1 14.3% 14.3% 7.1% 0 4 3 3 22.2% 16.7% 16.7 % 1 3 6.3% 18.8% 6 9 3 21.4% 32.1% 10.7 % 13 17 7 17.1% 22.4% 9.2%
If we consider the accessibility as one of the criteria for taking insurance policy, we can see that as the income of the person increases , they put less importance on the accessibility criteria ( 21.4% of people having income less than 1 lakh, 16.7% for 1.01 3 lakh, 6.3% for 3.01 5 lakh and 7.1% for more than 5 lakh). But the same trend can not be seen when they consider it as the least important criteria in taking a decision regarding life insurance. So, most of the people thing it, as a criteria which is not so important while taking their decision (22.4% of the total respondents).
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viii) Annual Income Company Image: Annl . Inc .(rs). <1 lakh total 14 100% 1 5 35.7 % 5 27.8 % 7 43.8 % 8 28.6 % 25 32.9 % Company Image 2 3 4 2 14.3% 3 16.7% 2 12.5% 3 10.7% 10 13.2% 2 2 14.3% 14.3% 1 5.6% 2 7.1% 5 6.6% 1 5.6% 5 17.9% 8 10.5% 5 1 5.6% 1 3.6% 2 2.6% 6 1 7.1% 7 1 7.1% 8 1 7.1% 2 11.1% 1 6.3% 3 10.7% 7 9.2%
1.0118 3 100% lakh 3.0116 5 100% lakh >5 28 lakh 100% Total 76 100%
4 1 22.2% 5.6% 2 12.5% 2 7.1% 4 25% 4 14.3%
9 10 11.8% 13.2%
Here, also a fluctuating trend can be seen in which people who are having income less than 1 lakh and people who are having income of 3.01 5 lakh are putting more emphasis on company image in comparison to others. The reason for the same may be people who have less income want to see their money in a secured hand, so they consider the company profile before taking any life insurance policy. So, to conclude it can be said that in most of the aspects the opinion of the people belonging to different income groups differ from each other. The reason for the same can be the importance that they give on the sum they invest in taking a life insurance policy I.e. a person who is having income of less than 1 lakh will put more emphasis on a
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sum of rs, 10000, in comparison to a person who is having an income of more than 5 lakh. So, the difference in income does show difference in opinion also.
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5. CONCLUSION:
The conclusions that can be drawn from the survey that was conducted by us can be summarized in the following way: a) Insurance is the most preferred investment alternative which is available to people followed by alternatives such as Mutual Fund, PPF, Real Estate etc. b) Only 36% of the total respondents are aware of the fact that Reliance has recently come into the Life insurance sector. Those people who are aware of the fact that Reliance has come into the life insurance sector are willing to invest in Reliance because of the brand name and growth potential that reliance has. c) According to the survey Premium to be paid for taking an life insurance policy is the most important criteria which people consider before taking an life insurance policy followed by factors like Bonus and Interest paid by the company, Company Image etc. d) People who belong to different age groups have different perception regarding the most important criteria before taking the decision on a life insurance policy. e) People who belong to different income groups also have different perception regarding the important criterias concerned with the life insurance.
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LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I conducted in relation to the problems that were given to me by Reliance Life Insurance Company Limited: a) The sample size chosen for the questionnaire was only 100 and that may not represent the true picture of the consumer perception about the Life Insurance sector. b) The research got confined to the city of Bangalore and there also it was conducted in places like Reliance Web World. So, the respondent only belong to a particular group who only go to places like Reliance web world and could not get the responses of people who do not go to places like that. c) Nearly 90% of the respondent belonged to the age group of 20-50 years and only 10% were above 50 years old. So, in collecting the responses the opinion of the experience and aged people were not available. So, the findings may not be correct when we think about the opinion of the elderly people about the life insurance. d) The people who were selected for the questionnaire was done on the basis of simple random sampling, so, there
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were certain cases in which the person selected did not have any life insurance policy, so he could not gibe any positive feedback regarding the important criteria to be considered before taking an life insurance policy. So, this further reduced the actual number of respondents to 75 from 100. e) For conducting the comparative analysis I had to depend mostly on secondary data about the company products as primary data about the same was not available. The problem pf this is that many useful information about the products is not readily available in sources like internet, so it made the job of comparison a little bit difficult for me.
f) The plan offered by different companies had different options in them, so at times the comparison became very difficult. The parameters for the comparison were also different in the selected companies. g) As Reliance has just entered the Life Insurance sector, it did not have any financial statement so far, so no analysis could be done on the basis of financial statements between the companies as well as of Reliance life. h) One of the important criteria that were selected by the respondents which they consider before taking an
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insurance policy was Company Image, but there were no parameters available to compare criterias like this between the companies. i) The changes that have come into the ULIP products recently were not taken into consideration for the comparative study. j) The products for comparison was also only four, due to lack of information as well as time constrain. LEARNING OUTCOME: In this time span of eight (8) weeks, many aspects have come to my knowledge both from the perspective of academic as well as corporate world. Those aspects of my learning can be summarized in the following way: a) Initially we had a training of 8 days, which was helpful in giving a broader perspective of the total life insurance scenario prevailing in India, which was helpful in conducting the study. It explained all the pros and cons about the insurance industry and the different practices followed by insurance companies. Some aspects of Insurance like Premium Calculation. Unit calculation was explained to us. b) The comparative analysis part helped to know about the different products offered by different companies as well as the
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different benefits that they are offering with their respective products. c) Then I came to know about the operations that go on in an organization in the daily routine. It helped us to prepare our self for the future when we have to join a organization and work under similar conditions. d) The concept of ULIP which was not known to me was explained briefly as well as the difference between ULIP and Mutual Fund was also made clear. e) The skill of how to approach a person for convincing him/her to do a particular thing was learned by us at the time of filling up the questionnaire. So, finally it can be said that although my intended specialization is Finance, this internship gave me the opportunity to learn the various aspects of Marketing which can help me in the future as when I enter the corporate world, I should be able to handle any job that is being offered to me by the company in which I am doing my job. So, from that point of view it was a great learning experience for me to know the various aspects of customer handling that are being adapted by modern business houses as well as to have the knowledge about the total Insurance sector which is an integral part of the total finance industry in this little time span. This will help me immensely in the
95
future as Insurance sector is growing at a rapid speed and there will be lots of job opportunities in this sector in the future time to come.
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BIBLIOGRAPHY:
WEBSITES: 1) www.irda.org 2) www.relianceadagroup.com 3) www.reliancecapital.com 4) www.reliancelife.co.in 5) www.bimaonline.com 6) www.iciciprulife.com 7) www.hdfcinsurance.com 8) www.birlasunlife.com 9) www.allianzbajaj.com 10) 11) 12) BOOKS: 1) Life Insurance (IC-33) published by Insurance Institute of India. www.site.securities.com www.anandrathi.com www.indiainfoonline.com
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8.0 ANNEXURE
Consumer Perception about Life Insurance Questionnaire Dear respondent, This questionnaire is aimed at understanding your perception about life insurance .Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill this questionnaire. 1. Name: Contact No: 2. Age Group: Below 30 Above 60 3. Educational Qualification: Under Graduate 51-60 Gender: Male Female
31-40
41-50
Graduate
Post Graduate
Others (Specify). 4. Profession: Student
Employed
Self-Employed
Others (Specify). 5. Annual Income: Below 1 Lakh Above 5 Lakh 6. What percentage of your Salary do you usually save? Less Than 15% 15-20% 20-25% Greater Than 25% 1.01-3 Lakh 3.01-5 Lakh
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7. What kind of investment do you prefer? Short Term Long Term Both
8. What are your various investment alternatives? Bonds & Debentures Equity/Shares PPF Insurance Post Office Scheme Bank Deposits Gold & Silver
Mutual Fund Real Estate Others (Specify).
9. State your preference among the following investment alternatives and Rate them on a 6 Point Scale. ( 6 Most important, 5- Very important, 4- Quite important, 3- important, 2- Less important, 1- Least important ) Safety Return Capital Growth Tax Benefit Liquidity Company Profile & Brand Name
10.Do you have life Insurance Policy? ( If NO then please go to question no. 14) Yes No 11.If Yes Which Insurance Company Policy do you have? LIC ICICI Prudential Bajaj Allianz HDFC Standard Birla Sun life Others (Specify)..
12.What kind of Insurance Policy have you taken? Term Insurance Endowment Child Plan Annuity/Pension Others (Specify).
Money Back Market Return Plan (ULIP)
13.What parameters do you look into before you take up a life insurance Policy? Please rank them between 1-8. (1-most important, 8-Least important) Premium Charges Policy Term Rider Benefits Bonus & Interest Services (Pre & Post Sales) Paid 99 SIDVIN SCHOOL OF BUSINESS
Accessibility
Company Image
14.Are you aware about the take over of AMP SANMAR by Reliance Group to form Reliance Life Insurance in October 2005? Yes No
15.Would you like to invest in Reliance Life Insurance? No Yes 16.If, YES what will make you to invest in Reliance Life Insurance? Brand image Diversity Growth Potential Transparency Utmost Good Faith
Others (Specify).
17. Among the following Life Insurance Companies in which company you will be Willing to take a life insurance? Bajaj Allianz SBI Life Reliance Sahara HDFC Standard Life Prudential ICICI Met Life ING Vysya Shriram Birla Sunlife TATA- AIG Max Newyork Aviva Dabur
OM- Kotak Mahindra .
Thank you
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A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

Shares of different countries in Life Insurance

20.1 38.8 39.5 90.2 91.7 154

US Japan UK France Italy Germany China Taiwan India Others

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

INDIAN INSURANCE INDUSTRY

NON LIFE INSURANCE

Public Sector (1)

Private Sector (15)

Public Sector (4)

Private Sector (9)

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

18.9 470 26 26 26 2,820 680 680

Ins. 4,400 2,600

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

Source: IRDA Report.

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

2.1.2 VALUES/ OBJECTIVES OF ADAG:

SIDVIN SCHOOL OF BUSINESS

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

A PROJECT REPORT ON RELIANCE LIFE INSURANCE

SIDVIN SCHOOL OF BUSINESS