INTRODUCTION

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 INTRODUCTION OF INSURANCE

Insurance is a means of protection from financial loss.It is a form of risk

management primarily used to hedge against the risk of a contingent, uncertain loss.

An entity which p rovides insurance is known as an insurer, insurance company, or insurance

carrier. A person or entity who buys insurance is known as an insured or policyholder. The
insurance transaction involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's promise to compensate
the insured in the event of a covered loss. The loss may or may not be financial, but it must
be reducible to financial terms, and must involve something in which the insured has
an insurable interest established by ownership, possession, or preexisting relationship.

The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insured will be financially compensated. The amount of
money charged by the insurer to the insured for the coverage set forth in the insurance policy
is called the premium. If the insured experiences a loss which is potentially covered by the
insurance policy, the insured submits a claim to the insurer for processing by a claims
adjuster.

Insurance in India

The insurance sector in India has come 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 two centuries.
Life Insurance is the fastest growing sector in India since 2000 as Government allowed
Private players and FDI up to 26% and recently Cabinet approved a proposal to increase it to
49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation
(LIC) in 1956. All private life insurance companies at that time were taken over by LIC. In
1993, the Government of India appointed RN Malhotra Committee to lay down a road map
for privatisation of the life insurance sector. While the committee submitted its report in
1994, it took another six years before the enabling legislation was passed in the year 2000,
legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and

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Development Authority Act of 2000. The same year the newly appointed insurance regulator
- Insurance Regulatory and Development Authority IRDA—started issuing licenses to private
life insurers.

A BRIEF HISTORY OF THE INSURANCE SECTOR

The business of life insurance in India in its existing form started in India in the year 1818
with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the
important milestones in the life insurance business in India are given in the following :

Years Important milestones in the Indian life insurance business

1912:

The Indian Life Assurance Companies Act came into force for regulating the life insurance
business.

1928:

The Indian Insurance Companies Act was enacted for enabling the government to collect
statistical information on both life and non-life insurance businesses.

1938:

The earlier legislation consolidated the Insurance Act with the aim of safeguarding the
interests of the insuring public.

1956:

245 Indian and foreign insurers and provident societies were taken over by the central
government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC
Act, 1956. It started off with a capital of Rs. 5 crore and that too from the government of
india.

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The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British.Some of the important milestones in the general insurance business in
India are given in the following :

1907:

The Indian Mercantile Insurance Ltd. was set up which was the first company of its type to
transact all general insurance business.

1957:

General Insurance Council, an arm of the Insurance Association of India, framed a code of
conduct for guaranteeing fair conduct and sound business patterns.

1968:

The Insurance Act improved for regulating investments and set minimal solvency levels and
the Tariff Advisory Committee was set up.

1972:

The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance business in India. It was with effect from 1st January 1973.

1996 setting up of (interim) Insurance Regulatory Authority (IRA) Recommendations of the

IRA. 1997 Mukherjee Committee Report submitted but not made public 1997 The
Governmentgives greater autonomy to LIC, GIC and its subsidiaries with regard to
therestructuring of boards and flexibility in investment norms aimed at channeling funds to
the infrastructure sector. 1998 The cabinet decides to allow 40% foreign equity in private
insurance companies-26% to foreign companies and 14% to NRI‟s, OCB‟s and FII‟s . 1999
The Standing Committee headed by Murali Deora decides that foreign equity in private
insurance should be limited to 26%. The IRA bill is renamed the Insurance Regulatory and
Development Authority (IRDA) Bill. 1999 Cabinet clears IRDA Bill. 2000 President gives
Assent to the IRDA Bill.

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INDIAN INSURANCE MARKET (HISTORY)

Insurance has a long history in India. Life Insurance in its current form was introduced in
1818 when Oriental Life Insurance Company began its operations in India. General Insurance
was however a comparatively late entrant in 1850 when Triton Insurance company set up its
base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre
Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to
be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the
operations of various insurance companies. General Insurance followed suit and was
nationalized in 1973. General Insurance Corporation of India was set up as the controlling
body with New India, United India, National and Oriental as its subsidiaries. The process of
opening up the insurance sector was initiated against the background of Economic Reform
process which commenced from 1991. For this purpose Malhotra Committee was formed
during this year who submitted their report in 1994 and Insurance Regulatory Development
Act (IRDA) was passed in 999. Resultantly Indian Insurance was opened for private
companies and Private Insurance Company effectively started operations from 2001.

HOW BIG IS THE INSURANCE MARKET?

The insurance sector was opened up for private participation four years ago. For years now,
the private players are active in the liberalized environment. The insurance market have
witnessed dynamic changes which includes presence of a fairly large number of insurers both
life and nonlife segment. Most of the private insurance companies have formed joint venture
partnering well recognized foreign players across the globe. There are now 29 insurance
companies operating in the Indian market – 14 private life insurers, nine private non-life
insurers and six public sector companies. With many more joint ventures in the offing, the
insurance industry in India today stands at a crossroads as competition intensifies and
companies prepare survival strategies in a detariffed scenario. There is pressure from both
within the country and outside on the Government to increase the foreign direct investment
(FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for
expansion. There are opportunities in the pensions sector where regulations are being framed.
Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the

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first license for a standalone health company in the country as many more players wait to
enter. The health insurance sector has tremendous growth potential, and as it matures and
new players enter, product innovation and enhancement will increase. The deepening of the
health database over time will also allow players to develop and price products for larger
segments of society. Insurance is a Rs.400 billion business in India, and together with
banking services adds about 7% to India's Gap.

INDIAN SCENERIO:-

Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest
in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth,
rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI
inflows, it is on the hinge of an ever increasing growth curve. Indians have a tendency to
invest in properties and gold followed by bank deposits. They selectively invest in shares also
but the percentage is very small--4-5%. This in itself is an indicator that growth potential for
the insurance sector is immense. It’s a business growing at the rate of 15-20% per annum
and presently is of the order of $47.9 billion. India is a vast market for life insurance that is
directly proportional to the growth in premiums and an increase in life density. With the entry
of private sector players backed by foreign expertise, Indian insurance market has become
more vibrant. Competition in this market is increasing with company’s continuous effort to
lure the customers with new product offerings. However, the market share of private
insurance companies remains very low -- in the 10-15% range. Even to this day, Life
Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of
government still dominates the market, with price controls, limits on ownership, and other
restraints. The upward growth trend started from 2000 was mainly due to economic policies
adopted by the then Indian government. This year saw initiation of an era of economic
liberalization and globalization in the Indian economy followed by several reforms and long-
term policies that created a perfect roadmap for the success of Indian financial markets

The general insurance industry grew by 16% in 2006-07 as private insurers continued their
robust performance, while public sector players like New India Assurance and Oriental
Insurance improved their show. Despite continuous fall in business of government-owned

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National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in
the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled
by regulator IRDA. New India Assurance collected Rs 4,762 crore in premium and
continued to lead the non-life sector by cornering 23.36% of the market. National Insurance
was at the second spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a
market pie of 17.29%. Oriental Insurance mopped up Rs 3,518 crore in premium income after
logging 16.6% growth in business to corner a market share of 17.26%. Another PSU insurer
United India grew by a modest 6.8% to collect Rs 3,147 crore in premium and had 15.44% of
the market. The eight private players expanded their business by 52% to collect Rs 5,427
crore in premium income and increased their combined market share to 26.6% from 20.2% a
year ago. ICICI Lombard led the private players by logging 80% growth in premium at Rs
1,592crore, followed by Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in
premium. ICICI Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the
market.

Some of the important milestones in the general insurance business in India are: 1907: The
Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general
insurance business. • 1957: General Insurance Council, a wing of the Insurance Association
of India, frames a Code of conduct for ensuring fair conduct and sound business practices. •
1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up. • 1972: The General Insurance Business
(Nationalization) Act, 1972 nationalized the general insurance business in India with effect
from 1st January 1973. 107insurers amalgamated and grouped into four companies’ viz. the
National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a
company.

OBJECTIVES OF THE STUDY

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The objectives mark the right direction to carry out any study. So, the objectives of this study
are as under:-

• To learn and understand the market segmentation of insurance products.

•To identify the insurance needs of the Indian population with respect to their
emotional,physical and financial conditions.

• To study the various factors which influence the purchase of insurance products

• To match the needs of the population with the products in hand or else design a new
product.

• To understand the focus of the competitors.

•To understand the real life situation of the insurer.

RESEARCH METHODOLOGY

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The research is carried on in a proper planned and systematic manner. This methodology
includes:

• Familiarization with the concept of insurance and its various terms

• Thorough study of the information collected.

Conclusions based on findings. The research methodology which is adopted to conduct this
study is both qualitative as well as quantitative.

QUANTITATIVE

In order to understand the market segmentation of insurance products and to study the various
factors which influence the purchase decision of insurance products require the quantitative
study.

RESEARCH DESIGN DESCRIPTIVE RESEARCH

This study is based on a descriptive research design wherein the risks and returns associated
with the various products have been studied and the reasons for customer perception
regarding these products have been found out.

SOURCES OF DATA COLLECTION

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Both the Primary and Secondary sources have been used to collect the desired data for the
study.

Primary data

Collection has been done through the means of Questionnaires In order to get the primary
data, a close ended questionnaire has been design to conduct the study.

Secondary data

These include books, the internet, company brochures, product brochures, the company
website, competitor’s websites etc., newspaper articles etc.

The Role and Importance of Insurance

The following point shows the role and importance of insurance:

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Insurance has evolved as a process of safeguarding the interest of people from loss and
uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life
and property.Insurance contributes a lot to the general economic growth of the society by
provides stability to the functioning of process. The insurance industries develop financial
institutions and reduce uncertainties by improving financial resources.

1. Provide safety and security:

Insurance provide financial support and reduce uncertainties in business and human life. It
provides safety and security against particular event. There is always a fear of sudden loss.
Insurance provides a cover against any sudden loss. For example, in case of life insurance
financial assistance is provided to the family of the insured on his death. In case of other
insurance security is provided against the loss due to fire, marine, accidents etc.

2. Generates financial resources:

Insurance generate funds by collecting premium. These funds are invested in government
securities and stock. These funds are gainfully employed in industrial development of a
country for generating more funds and utilised for the economic development of the country.
Employment opportunities are increased by big investments leading to capital formation.

3. Life insurance encourages savings:

Insurance does not only protect against risks and uncertainties, but also provides an
investment channel too. Life insurance enables systematic savings due to payment of regular
premium. Life insurance provides a mode of investment. It develops a habit of saving money
by paying premium. The insured get the lump sum amount at the maturity of the contract.
Thus life insurance encourages savings.

4. Promotes economic growth:

Insurance generates significant impact on the economy by mobilizing domestic savings.
Insurance turn accumulated capital into productive investments. Insurance enables to mitigate
loss, financial stability and promotes trade and commerce activities those results into
economic growth and development. Thus, insurance plays a crucial role in sustainable growth
of an economy.

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5. Medical support:
A medical insurance considered essential in managing risk in health. Anyone can be a victim
of critical illness unexpectedly. And rising medical expense is of great concern. Medical
Insurance is one of the insurance policies that cater for different type of health risks. The
insured gets a medical support in case of medical insurance policy.

6. Spreading of risk:
Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of
insurance is to spread risk among a large number of people. A large number of persons get
insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated
out of funds of the insurer.

7. Source of collecting funds:

Large funds are collected by the way of premium. These funds are utilised in the industrial
development of a country, which accelerates the economic growth. Employment
opportunities are increased by such big investments. Thus, insurance has become an
important source of capital formation.

FUNCTION OF INSURANCE

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Provide protection: The primary function of insurance is to provide protection against future
risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can
certainly provide for the losses of risk. Insurance is actually a protection against economic
loss, by sharing the risk with others.

Collective bearing of risk: Insurance is an instrument to share the financial loss of few
among many others. Insurance is a mean by which few losses are shared among larger
number of people. All the insured contribute the premiums towards a fund and out of which
the persons exposed to a particular risk is paid.

Assessment of risk: Insurance determines the probable volume of risk by evaluating various
factors that give rise to risk. Risk is the basis for determining the premium rate also.

Provide certainty: Insurance is a device, which helps to change from uncertainty to

certainty. Insurance is device whereby the uncertain risks may be made more certain.

Small capital to cover larger risk: Insurance relieves the businessmen from security
investments, by paying small amount of premium against larger risks and uncertainty.

Contributes towards the development of industries: Insurance provides development

opportunity to those larger industries having more risks in their setting up. Even the financial
institutions may be prepared to give credit to sick industrial units which have insured their
assets including plant and machinery.

Means of savings and investment: Insurance serves as savings and investment, insurance is
a compulsory way of savings and it restricts the unnecessary expenses by the insured's For
the purpose of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange: Insurance is an international business. The country

can earn foreign exchange by way of issue of marine insurance policies and various other
ways.

Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk
free with the help of different types of policies under marine insurance cover.

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INSURANCE CYCLE:

➢ Policy Renewal/Change Options/Application:-

The Insurance Cycle begins each year with the insurance offer. Actuarial documents are
published annually by the Risk Management Agency (RMA). The actuarial documents list
the plan of insurance, crop, type, variety, and practice that may be insured in a state and
county, and show the amounts of insurance, available insurance options, levels of coverage,
price elections, applicable premium rates, and subsidy amounts. The Special Provisions of
Insurance list program calendar dates, and general and special statements which may further
define, limit, or modify coverage.

➢ Sales Closing/Cancellation/Termination Dates:-

Insurance applications must be completed and signed no later than the sales closing date
specified in the crop actuarial documents. Applications signed after the crop sales closing
date may be rejected by the insurance provider.

Insurance coverage is continuous and can be cancelled by either the insurance provider or the
policyholder for the following crop year by providing a written notice to the other party no
later than the cancellation date specified in the crop policy. For a policyholder insured the
previous crop year, any changes he or she wishes to make to the policy coverage must be
made on or before the crop sales closing date. The policy will automatically renew for the
subsequent crop year unless the policyholder cancels the policy in writing on or before the
crop cancellation date. Insurance coverage may be terminated by the insurance provider for
the following crop year for nonpayment of outstanding debt by providing a written notice to
the policyholder no later than the termination date specified in the crop policy. The insurance
provider may terminate coverage on a crop if no premium is earned for three consecutive
years.

➢ Acceptance:-

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Upon receipt of a properly completed and timely submitted insurance application, the
insurance provider will accept and process the application, unless the applicant is determined
to be ineligible under the contract or Federal statute or regulation. The insurance provider
will issue a summary of coverage and the appropriate policy documents to the applicant.
After the application is accepted, the policyholder may not cancel the policy for the initial
crop year.

➢ Insurance Attaches: -
For annual crops, insurance attaches annually when planting begins on the insurance unit.
The crop must be planted on or before the crop's published final planting date unless late or
prevented planting provisions apply. If prevented planting provisions apply, and the crop
cannot be timely planted due to the causes specified in the crop provisions, such acreage may
be eligible for a prevented planting payment.

➢ Acreage Reports:-
The policyholder must annually report for each insured crop in the county the number of
insurable and uninsurable acres planted or prevented from being planted if prevented planting
is available for the crop, the date the acreage was planted, share in the crop, the acreage
location, farming practices used, and types or varieties planted to the insurance provider on or
before the applicable acreage reporting date specified in the crop actuarial documents.

➢ Summary of Coverage:-
The insurance provider will process a properly completed and timely filed acreage report, and
issue to the policyholder a summary of coverage that specifies the insured crop, the insured
acres and amount of insurance or guarantee for each insurance unit. The policyholder may
make changes to the filed acreage report, if permitted by the insurance provider.

➢ Premium Billing:-
The annual premium is earned and payable at the time insurance coverage begins. The
insurance provider shall issue a premium billing based upon the information contained in the
acreage report no earlier than the premium billing date specified in the crop actuarial
documents. The premium billing will specify the amount of premium and any administrative

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fees that may be due. If the premium or administrative fees are not paid by the date specified
in the actuarial documents or policy, the insurance provider may assess interest on the
outstanding premium balance.

➢ Notice of Damage or Loss: -

A written notice of damage or loss for each unit is to be filed by the policyholder within 72
hours of the policyholder's initial discovery of damage or loss but not later than 15 days after
the calendar date for the end of the insurance period unless otherwise stated in the individual
crop policy. The policyholder should refer to the individual crop provisions for additional
requirements in the event of damage or loss. These notifications provide the opportunity for
the insurance provider to inspect the crop and determine the extent of damage or potential
production before the crop is harvested or otherwise disposed of.

➢ Inspection:-
After the insurance provider receives the written notice of damage or loss, it will be
processed and, if necessary, a loss adjuster will be sent to inspect the damaged crop and
gather pertinent information concerning the damage. If the policyholder wishes to destroy or
not harvest the crop,the loss adjuster will gather the appropriate information, conduct an
appraisal to establish the crop's remaining value and complete any forms needed. If the crop
has been harvested or will not be harvested by the end of the insurance period, and the
policyholder wishes to file a claim for indemnity, the loss adjuster will gather the appropriate
information and assist the policyholder in filing the claim for indemnity. It is the
policyholder's responsibility to establish the time, location, cause, and amount of any loss.

➢ Indemnity Claim:-
After the claim for indemnity is processed by the insurance provider, an indemnity check and
a summary of indemnity payment will be issued showing any deductions to the amount of

indemnity for outstanding premium, interest, or administrative fees.

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➢ Contract Change Date:-
Changes to the insurance program may be made by RMA from one year to the next. The
insurance provider will notify the policyholder in writing of any changes to the
policy,actuarial documents, or the Special Provisions of Insurance prior to the calendar date
for contract changes specified in the crop policy. The policyholder will have the opportunity
to review the changes and, if he/she desires, continue the insurance coverage for the
following crop year, change the policy coverage, or cancel the insurance coverage. Any
changes to the policy coverage that the policyholder makes must be made no later than the
crop sales closing date. If the policyholder wishes to cancel the policy, a written notice must
be submitted to the insurance provider on or before the crop cancellation date.

Types of Insurance
The following main types of insurance are :

❖ Health Insurance

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Health insurance generally covers medical expenses for health related issues that an insured
person experienced. Health-related insurance comes in many plans:

- Major Medical Insurance plans cover a hospital, drugs and doctor’s visits bills. Major
medical insurance plans usually comes in the group or individual health plans. Group health
plans are usually provided by a person’s employer. Group health plans are usually cheaper
and cover more expenses. An individual health plan is a private insurance and should be
purchased entirely by a covered individual. Individual health plans are more expensive and
provide less coverage than group health plans.
- Limited benefit plans are designed to cover an insured person for a particular health
caresetting or disease, such as:
1. Basic Hospital Expense Coverage provides coverage for a period usually not less than a
month of continuous in-hospital care and specified hospital outpatient services.

2. Basic Medical-Surgical Expense Coverage provides coverage for a required surgery and
also includes a certain number of days in-hospital care.

3. Hospital Confinement Indemnity Coverage provides a fixed amount coverage for each day
that a person spends in a hospital.

4. Accident Only Coverage provides medical coverage in the event of disability, death, an
accident or dismemberment.

5. Specified Disease Coverage provides coverage to diagnose and treat a specific illness, such
as leukemia, for instance.

- Other Limited Coverage plans include dental or vision plans.

- Additional coverage plans provide extra protection for a person who becomes disabled
and requires long-term care or Medicare enrollment. These additional coverage plans include
disability income, long-term care insurance and medical supplemental coverage.

❖ Property Insurance

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Property Insurance includes homeowners or rental insurance. This type of insurance covers a person
in the even his or her house or a rental apartment has been damaged by fire, flood, earthquake, theft
and etc. Apartment complexes often require their renters to buy rental insurance before they can
move-in day. In societies there are many types of property insurance, among which some are:
● Builder's risk Insurance
● Crop Insurance
● Earthquake Insurance
● Flood Insurance
● Home Insurance etc

❖ Auto Insurance

A car may easily be one of the most expensive items a person owns. If your car is stolen
or damaged in the accident, it may be very costly to repair. Auto insurance will pay to
repair or replace a car if an insured person gets into an accident. Comprehensive motor
vehicle insurance is considered to be the most common insurance policy that covers an
insured person for loss, theft or damage to his/her vehicle. The cost of auto insurance will
vary depending on a driver’s age, claims history, the make and type of car.

❖ Personal Accident Insurance

This insurance policy provides compensation for loss of life or injury (partial or permanent)
caused by an accident. This includes reimbursement of cost of treatment and the use of
hospital facilities for the treatment.

❖ Travel Insurance

The policy covers the insured against various eventualities while traveling abroad. It covers
the insured against personal accident, medical expenses and repatriation, loss of checked
baggage, passport etc.

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❖ Accident, Sickness, and Unemployment Insurance

These insurance if for the disable one’s or for the one’s who have faced accidents with a
major body part loss.
The insurance policies related to Accident, Sickness, and Unemployment is:
● Disability Insurance
● Long-term Disability Insurance
● Disability Overhead Insurance
● Total Permanent Disability Insurance
● Workers' Compensation

❖ Liability Insurance

This type of insurance is a broad superset, which covers the legal claims against the insured.
Liability policies typically cover only the negligence of the insured, and will not apply to
results of willful or intentional acts by the insured. The subtypes of such Liability insurances
are:
● Public Liability
● Directors and Officers Liability Insurance (D&O)
● Environmental Liability Insurance
● Errors and Omissions Insurance (E&O)
● Prize Indemnity Insurance
● Professional liability Insurance or Professional Indemnity Insurance

❖ Credit Insurance

This insurance repays some or all of a loan when certain circumstances arise to the borrower
such as unemployment, disability, or death. Some types of Credit insurances are:

● Mortgage Insurance
● Trade credit Insurance

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❖ Life insurance
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract
between an insurance policy holder and an insurer or assurer, where the insurer promises to
pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon
the death of an insured person (often the policy holder). Depending on the contract, other
events such as terminal illness or critical illness can also trigger payment. The policy holder
typically pays a premium, either regularly or as one lump sum. Other expenses, such as
funeral expenses, can also be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations of the
insured events. Specific exclusions are often written into the contract to limit the liability of
the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil
commotion.

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

● Protection policies – designed to provide a benefit, typically a lump sum payment, in the
event of a specified occurrence. A common form—more common in years past—of a
protection policy design is term insurance.

● Investment policies – the main objective of these policies is to facilitate the growth of
capital by regular or single premiums. Common forms (in the U.S.) are whole
life, universal life, and variable life policies.

ROLES OF THE LIFE INSURANCE

Life insurance as an investment: -

Insurance products yield more than any other investment instruments and it also provides
added incentives or bonus offered by insurance companies.

Life insurance as risk cover: -

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Insurance is all about risk cover and protection of life. Insurance provides a unique sense of
security that no other form of invest can provide.

Life insurance as tax planning: -

Insurance serves as an excellent tax saving mechanism

IMPORTANCE OF THE LIFE INSURANCE

Protection against untimely death: -

Life insurance provides protection to the dependents of the life insured and the family of the
assured in case of his untimely death. The dependents or family members get a fixed sum of
money in case of death of the assured.

Saving for old age: -

After retirement the earning capacity of a person reduces. Life insurance enables a person to
enjoy peace of mind and a sense of security in his/her old age.

Promotion of savings: -

Life insurance encourages people to save money compulsorily. When life policy is taken, the
assured is to pay premiums regularly to keep the policy in force and he cannot get back the
premiums, only surrender value can be returned to him. In case of surrender of policy, the
policyholder gets the surrendered value only after the expiry of duration of the policy.

Initiates investments: -

Life Insurance Corporation encourages and mobilizes the public savings and canalizes the
same in various investments for the economic development of the country. Life insurance is
an important tool for the mobilization and investment of small savings.

Credit worthiness: -

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Life insurance policy can be used as a security to raise loans. It improves the credit
worthiness of business.

Social Security: -

Life insurance is important for the society as a whole also. Life insurance enables a person to
provide for education and marriage of children and for construction of house. It helps a
person to make financial base for future.

List of Life Insurers

Apart from TATA AIA, the public sector life insurer, there are 23 other private sector life
insurers, most of them joint ventures between Indian groups and global insurance giants.

Life Insurer in Public Sector

1. Life Insurance Corporation of India

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Life Insurers in Private Sector

1. SBI Life Insurance

2. PNB Metlife India Life Insurance

3. ICICI Prudential Life Insurance

4. Bajaj Allianz Life

5. Max Life Insurance

6. Sahara Life Insurance

7. Tata AIA Life

8. HDFC Life

9. Birla Sun Life Insurance

10. Kotak Life Insurance

11. Life Insurance Corporation of India

12. Aviva Life Insurance

13. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC

14. ING Vysya Life Insurance

15. Shriram Life Insurance

16. Bharti AXA Life Insurance Co Ltd

17. Future Generali Life Insurance Co Ltd

18. IDBI Fedaral Life Insurance

19. AEGON Religare Life Insurance

20. DLF Pramerica Life Insurance

21. CANARA HSBC Oriental Bank of Commerce

22. Star Union Dia-ichi Life Insurance Co. Ltd

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23.Edelweiss Tokio Life Insurance Company Ltd

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TATA AIA LIFE
INSURANCE

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 TATA AIA LIFE INSURANCE

Type Of Company: Public Limited Company

Tata AIA Life Insurance Company (Tata AIA Life) is a joint venture company formed by
Tata Sons and the AIA Group (AIA). Tata AIA Life combines Tata's pre-eminent leadership
position in India and AIA's presence as the largest, independent listed pan-Asia life insurance
group in the world, spanning 17 markets in Asia Pacific. Tata Sons holds a majority stake of
74 percent in the company and AIA holds 26 percent through an AIA Group company. Tata
AIA Life started operations on April 1, 2001.

HISTORY

Tata AIG Life To Become Tata AIA Life

Renaming comes following the exit of American International Group (AIG) from the Hong
Kong-based insurer AIA Group

Tata AIG Life Insurance has been rechristened as Tata AIA Life Insurance Company
following the exit of American International Group (AIG) from the Hong Kong-based insurer
AIA Group.

AIA separated from the group in 2009 after it was finalised that AIA as well as ALICO
(another AIG subsidiary) were placed under the administration of a Special Purpose Vehicle
in exchange for the Federal Reserve.

The rechristened Tata AIA Life will continue to focus on building a "Premier Agency" sales
force to meet the savings and protection needs of the customers in India with protection-
centric products, he said in a statement.

Meanwhile, the life insurer posted a net profit of Rs 260.31 crore during 2011-12.

27
 The total premium income declined at Rs 3,630 crore as against Rs 3,985 crore in 2010-
11.Of this, the new business premium collection stood at Rs 940 crore. The renewal premium
for the same period was at Rs 2,690 crore as against Rs. 2,653 crore in the last fiscal.

The total assets under management of the company has increased by 15% to Rs 14,519
crore from Rs 12,622 crores in the last fiscal. The paid-up capital of the company stood at Rs
1,954 crore at the end of March 2012.

Tata AIG Life Insurance Company, the life insurance joint venture formed by Tata Sons
and AIA Group (AIA), today announced that it has changed its name to Tata AIA Life
Insurance Company (Tata AIA Life).

The company was set up as a joint venture between the leading Indian conglomerate Tata
group and the leading international insurance organisation American International Group
(AIG). It was licensed to operate in India on February 12, 2001, and started operations on
April 1, 2001. Since its inception, Tata Sons owns 74 percent stake in joint venture, with the
remaining 26 percent share held by AIA, a 100 percent owned subsidiary of AIG at that time.

In 2010, AIA went public in Hong Kong and raised $20.51 billion through an initial public
offering (IPO). The IPO was the third largest globally at the time of listing, after which AIA
emerged as the largest independent publicly listed Pan-Asian life insurance group in the
world. AIA has a strong heritage and fundamentals of over 90 years in the Asian insurance
market. It has wholly-owned main operating subsidiaries or branches in 14 markets in Asia
Pacific.

To create a uniform identity of AIA owned companies post this IPO, the two promoters of
this joint venture have chosen to change the company‟s name to Tata AIA Life. However, the
company makes this transition just in its name; its single-minded focus in protecting the
financial well-being of its customers remains unchanged.

Commenting on the occasion, Farrokh K Kavarana, chairman, Tata AIA Life, said, “The
Tata group, along with our valued partner AIA, continue to remain committed to the Indian
market and our valued customers and partners through our renamed entity Tata AIA Life.
Over the past 11 years, we as a company have strived to build a solid foundation of providing
financial protection to our customers. We are confident that this strong foundation will enable
us to stand unwaveringly in good stead and realise full potential of the vast Indian market.”

28
 Huynh Thanh Phong, executive vice president and regional chief executive, AIA, said,
“In order to reflect the true brand identity of AIA and communicate its unique market
position, history and its ongoing commitment to customers and partners in Asia Pacific
region, the promoters of the joint venture have chosen to change the name of the company
from Tata AIG Life Insurance to Tata AIA Life Insurance. The rechristened Tata AIA Life
will continue to focus on building a premier agency sales force to meet the savings and
protection needs of the customers in India with protection-centric products.”

Suresh Mahalingam, managing director, Tata AIA Life, elaborated, “While we make this
transition in our name, nothing else will change. The promoters, the distribution network, the
teams, the products, the technology and more importantly, our commitment towards putting
the customers at the centre of everything we do, remain unchanged. The foundation of trust
that our company has been built upon will continue to be strengthened with the vast expertise
that AIA brings with over 90 years of leadership in the life insurance business in the Asia
Pacific region.”

TATA AIA Life Insurance Ltd.

Tata AIA Life Insurance Company Limited (Tata AIA Life) is a joint venture company,
formed by Tata Sons and AIA Group Limited (AIA). Tata AIA Life combines Tata's pre-
eminent leadership position in India and AIA's presence as the largest, independent listed
pan-Asia life insurance group in the world spanning 15 markets in Asia Pacific. Tata Sons
holds a majority stake (74%) in the company and AIA holds 26% through an AIA Group
company. Tata AIA Life Insurance Company Limited was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001.lines. The Company's products are
available through various channels of distribution like agents, brokers, banks (through bank
assurance tie ups) and direct channels like Telemarketing, Digital Marketing, worksite etc.

29
Integrity

Are consistently honest, follows through on commitments, stand up for their convictions, act
responsibly, take accountability for their actions.

Direction setting

Communicate a clear vision, implement strategies and plans, manage strategic objectives,
control expenses, hold others accountable for results, and achieve objectives with limited
resources.

Customer focus

Gather information from customers to understand their needs, anticipate customers'

challenges, take action to meet customers' needs, establish goals with the customer in mind.

Operating style

Pursue initiatives with energy and urgency, change course when appropriate, are
entrepreneurial, make timely decisions, are resilient, work effectively under pressure,
demonstrate a drive to win, attend to details.

Working across boundaries

Build relationships with people in different parts of TATA AIA, communicate effectively
with people at all levels, collaborates with internal and external resources to get the job done.

30
TATA GROUP IN INSURANCE:

TATA AIA General Insurance Company Ltd, and TATA AIA Life Insurance Company Ltd.,
(collectively "TATA AIA") are joint venture companies between the Tata group India's most
trusted industrial house and American International Group, Inc. (AIA), the leading U. S.
based international insurance and financial services organization. The Late Sir Dorab Tata,
was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated
way back in 1919. Government of India took over the management of this company as a part
of nationalization of general insurance companies in 1972. Not deterred by the move, Tata
group have ventured into risk management services having tied up with AIA group, back in
1977, with the incorporationbusiness conglomerates, with revenues in 2006-07 of $28.8
billion (Rs129,994 crore), the equivalent of about 3.2 per cent of the country's GDP, and a
market capitalization of $72.2 billion as on December 6, 2007. Tata companies together
employ some 289,500 people.

ABOUT TATA-AIA:

TATA AIA Insurance Solutions is one of the leading insurance companies that provide both
life insurance as well as general insurance. This pioneer company is a joint collaboration
between the American International Group, Inc. (AIA) and Tata Group. They own the
company in the ratio of 26:74. It is a leading financial institution that has carved a niche for
itself all over the world.

TATA AIA Insurance provides facilities to both corporate and individuals. Starting its
operations on April 1, 2001, it seeks to serve different categories of people. It acquired its
license for carrying out operations in India on February 12, 2001. TATA AIA Insurance
Solutions is one of the most prestigious organizations in the business world. It employs
thousands of employees and offers various opportunities to people to build a prospective
career. As a leading name in the financial world, it identifies the potential and experience of
the individual. This insurance and opening of new markets. It believes in new economy and
latest Internet technology. TATA AIA Insurance offers a number of products for the General
Insurance holders. General insurance products include:

31
Individual insurance

Small business insurance

Corporate insurance

TATA AIA Insurance offers flexible life insurance to the individuals, business organization
and other association. For the corporate, there are various insurance products like group
pensions, employee benefits, work place solutions and credit life. For the individuals, TATA
AIA Insurance offers various products for adults, children and for retirement planning.

Change leadership

Develop creative solutions to address business problems, encourage innovation and original
thinking, support risk-taking, monitor progress toward goals, make persuasive presentations,
express optimism about the future, balance multiple priorities, learns from mistakes and
encourage others to do so.

Business acumen

Solve problems by addressing root causes, identify critical information, work toward bottom-
line goals, understand current issues facing TATA AIA, consider the business overall when
making decisions.

TATA AIA Life Insurance

Has a deep rooted commitment to improve the quality of life of its customers, employees and
stakeholders.We do this by our efforts which strive to make TATA AIA Life Insurance a
corporate with values.

Increase Customer Value.

Integrated efforts

32
THE JOINT VENTURE:

TATA AIA Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has
been brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr.
George Oommen has been named managing director of TATA AIA Life. TataAIA plans to
provide broad array of life insurance plans to cover to both individuals and groups. The
company headquartered in Mumbai, with branch operations in Delhi, Chennai, Hyderabad,
Bangalore Calcutta, Pune and Chandigarh. Tata Enterprises with 82 companies, spread over
seven sectors and with an annual turnover exceeding US $ 8.8 billion, employs more than
262,000 people. Tata Group has shown over years that it is a value driven company and has
pioneering contributions in various fields including insurance, aviation, iron and steel. In
terms of capital market performance as many as 40 listed Tata companies account for nearly
5% of the total market capitalization of all listed companies. The Group has had a long
association with India's insurance sector having been the largest insurance company in India
prior to the nationalization of insurance.

33
 THE TATA GROUP

Tata is a rapidly growing business group based in India with significant international
operations. Revenues in 2007-08 are USD 62.5 billion (around Rs. 251,543 crores), of which
61% was from business outside India. The Group’s Net Profit for 2007-08 is USD5.4 billion
(around Rs. 21,578 crores). The Group employs around 350,000 people worldwide. The
business operations of the Tata Group currently encompass seven business sectors -
Communications and Information Technology, Engineering, Materials, Services, Energy,
Consumer Products and Chemicals. The Group's 28 publicly listed enterprises have a
combined market capitalization of around $60 billion, among the highest among Indian
business houses, and a shareholder base of 2.9 million. The major companies in the Group
include Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata
Chemicals, Tata Tea, Indian Hotels, Tata Teleservices and Tata Communications. Tata
Group remains a family-owned business, as the descendants of the founder (from the Tata
family) own a majority stake in the company. The current chairman of the Tata group isCyrus
Pallonji Mistry, who took over from Ratan Tata in 2012. Tata Sons is the promoter of all key
Tata companies and holds the bulk of shareholding in these companies. The chairman of Tata
Sons has traditionally been the chairman of the Tata group. About 66% of the equity capital
of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. Tata
Group is an Indian multinational conglomerate company headquartered in Mumbai,
Maharashtra, India. It encompasses seven business sectors: communications and information
technology, engineering, materials, services, energy, consumer products and chemicals. Tata
Group was founded in 1868 by Jamsetji Tata as a trading company. It has operations in more
than 80 countries across six continents. Tata Group has over 100 operating companies each of
them operates independently. Out of them 32 are publicly listed. The major Tata companies
are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals,
Tata Global Beverages, Tata Teleservices, Titan Industries, Tata Communications and Taj
Hotels. The combined market capitalization of all the 32 listed Tata companies was INR 6
Trillion ($96.87 billion) as of Sep 2013.[6] Tata receives more than 58% of its revenue from
outside India.Tata Group remains a family-owned business, as the descendants of the founder
(from the Tata family) own a majority stake in the company. The current chairman of the
Tata group is Cyrus Pallonji Mistry, who took over from Ratan Tata in 2012. Tata Sons is the
promoter of all key Tata companies and holds the bulk of shareholding in these

34
companies.The chairman of Tata Sons has traditionally been the chairman of the Tata group.
About 66% of the equity capital of Tata Sons is held by philanthropic trusts endowed by
members of the Tata family. The Tata Group and its companies & enterprises is perceived to
be India's best-known global brand within and outside the country as per an ASSOCHAM
survey. The 2009, annual survey by the Reputation Institute ranked Tata Group as the 11th
most reputable company in the world. The survey included 600 global companies. The Tata
Group has helped establish and finance numerous quality research, educational and cultural
institutes in India. The group was awarded the Carnegie Medal of Philanthropy in 2007 in
recognition of its long history of philanthropic activities.

AIA GROUP

AIA Group Limited and its subsidiaries (collectively "AIA" or "the Group") comprise the
largest independent publicly listed pan-Asian life insurance group in the world. It has wholly-
owned main operating subsidiaries or branches in 14 markets in Asia Pacific – Hong Kong,
Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan,
Vietnam, New Zealand, Macau and Brunei and a 26 per cent joint venture shareholding in
India. The business that is now AIA was first established in Shanghai over 90 years ago. It is
a market leader in the Asia Pacific region(ex-Japan) based on life insurance premiums and
holds leading positions across the majority of its markets. It had total assets of US$114,461
million as of 30 November 2011. AIA meets the savings and protection needs of individuals
by offering a range of products and services including retirement planning, life insurance and
accident and health insurance. The Group also provides employee benefits, credit life and
pension services to corporate clients. Through an extensive network of agents and employees
across Asia Pacific, AIA serves the holders of more than 24 million individual policies and
over 10 million participating members of group insurance schemes. AIA Group Limited is
listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code
"1299" with American Depositary Receipts (Level 1) traded on the over-the-counter market
(ticker symbol: "AAGIY"). The AIA Group exists to provide our customers with financial
protection, security, and a comfortable future.

35
As a company, we understand that life is unpredictable. It has its highs as well as its
challenges - and everyone is on a different journey. That’s why our starting point has always
been understanding people. By being genuinely engaged with people’s real lives, we gain
deeper insights that enable us to offer a range of insurance and wealth management products
that fit the needs of the individual. Over the last 90 years, we’ve built our business upon
serving the ever-changing needs of people and companies in Asia. Our personal, relationship-
based approach has made us part of the fabric of life here. And we will continue to protect
generations of people, for many years to come, whatever life brings them. So whether you
need support in achieving your ambitions, supporting a family, enjoying retirement, or
anything else: we understand where you’re coming from, because we’ve been there
ourselves.

36
 TATA AIA PRODUCT DETAILS
There are two types of products:

1. Traditional.

2. Ulips.

❖ TATA AIA Life Comprehensive Superannuation Scheme Policy

Meaning Our traditional Superannuation product acts as valuable tool to enhance the
company’s image whilst providing for a dignified retired life for the employees.

Key Features

1) Plan design and advice on Trust Formation/Deed of Variation.

2) Actuarial valuation for Defined Benefit Scheme as per internationally accepted practices
once in a year.

3) Scheme registration and ongoing legislative compliance.

4) Investment management and reporting to trustees.

5) Administration services and benefit payments.

Superannuation Schemes can be of two types:

1)Defined Benefit (DB)

This defines the amount of benefit that an employee receives at retirement. Actuarial
valuation is conducted to determine the funding rate. A pooled fund is maintained for all
members of the scheme. Upon retirement of a member, the amount required to secure the
benefit is drawn from the pooled fund. The pooled fund should achieve the required funding
level to enable the employer to meet the benefit obligations.

2) Defined Contribution (DC)

This defines the annual contribution that the employer wills deposit into the scheme for each
employee. Contributions are usually fixed as a percentage of the employee’s salary.
Individual employee accounts reflecting the contributions and the interest accumulations are

37
maintained. Upon retirement, the individual account is released to provide funds to secure the
benefits under the scheme.

Benefit Payments:

Upon the retirement of the member from employment or on cessation of employment,

benefits, subject to the provisions of the company’s rules, can be utilized in the following
manner:

1) Upon Retirement

To provide for payment of the commuted value relating to the portion of the pension which
the member may, in accordance with the Rules, elect to commute; and / or to purchase an
annuity in accordance with the company’s Rules.

2) Upon Death

To provide for payment of annuity/pension on the life of the beneficiary, in accordance with
the Trust rules as framed by the company.

3) Upon Withdrawal

1. To transfer the value of vested benefits to another Superannuation Scheme, if permissible

by Trust rules framed by the respective Trustees.

2. To retain the value of the vested benefits under the policy and provide for a pension from
the normal retirement date to the member or to the beneficiary in the event of death of the
member prior to his retirement date.

3. To provide for immediate payment of the pension benefit in accordance with Trust rules as
framed by the company.

38
Tax Benefits under Income Tax Act, 1961:

For the employer

1. Annual contributions are treated as deductible business expenses/s 36(1)(iv)

2. Maximum ordinary annual contribution an employer can make is27% (Provident Fund +
Superannuation) of employees annual salary - Rule 87

3. Entire income of the fund is tax free u/s 10(25)(iii)

❖ TATA AIA Life Retirement Assure Group Gratuity Scheme Policy

Meaning As per the Payment of Gratuity Act 1972, an employer is obliged to pay gratuity to
an employee after he/she has rendered continuous service of at least 5 years. Gratuity is
payable to such an employee on:

1) Normal retirement

2) Resignation/early retirement

Death or disablement due to accident or disease (completion of 5 years of service is not

necessary in such cases).

How will the Employer/Trustee contribute to the Gratuity Scheme?

Employer/Trustee of the Gratuity Scheme shall fund for gratuity liability by:

1) Remitting the recommended contribution for the past service and an annual contribution
for the future service

2) Transferring existing assets if any to TATA AIA Life based on mutually agreed asset
valuation.

How does the Unit Linked Gratuity Plan Structure work?

1) The Fund will be managed on a unitized basis.

39
2) Any contribution received will be converted into units based on the applicable fund unit
price.

3) The fund value of the Gratuity Fund at any given time is based on the unit price declared at
the close of business on the date on which the units are allocated.

Tax Benefits for the Employer

1) Employers contribution to approved gratuity fund is an deductible business expenditure

U/s 36(1)(v) as under:

2) Initial Contribution is allowed as deductible business expense to the extent of 8.33% of the
member's salary for each year of employee’s past service. (Rule 104)

3) Ordinary annual contributions are allowed to the extent of 8.33% of the employee’s salary.
Interest Income on the fund is nontaxable in the hands of the Trustees u/s 10(25) (IV). Tax
Benefits for the Employee* Gratuity received is exempt from tax up to half a month’s salary
for every completed year of service or Rs. 3.5 lakhs, whichever is less u/s 10(10).

Tax benefits are available as per the provisions of Income-tax Act, 1961 and subject to
amendments thereof from time to time. To know whether you are eligible for
abovementioned tax benefits, please not responsible in case you do not get any tax benefits
stated above. Please note that the prevailing andapplicable tax laws shall be final and
conclusive on the matter and TATA AIA Life Insurance Company Limited is not responsible
for the same at any time.´

In Built Death Benefit

1) As part of the scheme, an additional benefit of Life Insurance Cover is included.

2) In the unfortunate event of a serving employee's death, the coverage would provide for a
lump sum payment equal to sum assured depending on the life cover opted by the Trustees
with a minimum of Rs. 1,000/-.

➢ TATA AIA Life Assure Golden Years Plan

40
Meaning TATA AIA Life Assure Golden Years (Assure Golden Years) is an endowment
policy that provides both safety and steady returns. In the unfortunate event of your death,
your dependents will receive the sum assured; otherwise your savings will continue to
grow.Should you live past the term of the policy, you will receive both the sum assured as
well as a host of bonuses.

Key Features 1) A guaranteed addition of 10% of the sum assured if the policy has been in
force for 10 years or more, is payable on death or maturity.

2) A reversionary bonus is payable on death or maturity.

3) A Terminal bonus paid on maturity or death if the policy has been in force for a minimum
10 years.

4) Reversionary and Terminal bonuses are non-guaranteed and are dependent on Company
performance.

Tax Benefits, Riders and Age Eligibility 1) Premiums paid under this plan are eligible for tax
benefits under Section 80C of the Income Tax Act, 1961. Any sum received under this plan is
exempt from tax under section 10(10D) of the Income Tax Act, 1961.*

2) Term, Accident, Disability and Critical Illness riders are available for added protection.

3) Policy duration runs from the time of purchase up to age 60.

4) Policy is available for persons between 18 to 50 years of age.

➢ TATA AIA Life Maha Life Gold Plan

41
Meaning This unique policy is an ideal planning vehicle to fund your retirement. It provides
a steady income and insurance coverage for life. Premiums are payable only for the first
15years, and can be used to cover the future expenses of your children.

Key Features

1) A guaranteed annual coupon of 5% of the sum assured every year for the rest of the
insured’s term from the 10th policy anniversary.

2) Yearly cash dividends are available from the 6th policy anniversary onwards (depending
on Company performance).

3) The entire sum assured is paid tax-free as per current Income Tax Laws.

Tax Benefits, Riders and Age Eligibility

1) The guaranteed 5% coupon and non-guaranteed cash dividends are tax free as per current
Income Tax Laws.

2) Premiums paid under this plan are eligible for tax benefits under Section 80C of the
Income Tax

Act, 1961. Any sum received under this plan is exempt from tax under section 10(10D) of the
Income Tax Act, 1961.*

3) Disability, Accident, Term and Critical Illness riders are available for added protection at a
nominal extra cost. (For juveniles, only Payer Benefit Rider is available).

4) Policy available for persons between 0 years and 60 years of age.

➢ TATA AIA Life Nirvana plus Plan

Meaning

42
The TATA AIA Life Nirvana Plus (Nirvana Plus) policy is Indian’s first and only pension
policy with a guaranteed addition of 10% of the sum assured every 5 years. You can choose
from three levels of cover, which is your amount of Sum Assured: Rs. 1 lakh, 2 lakhs & 4
lakhs. You can also decide the age you want to retire: 55, 58 or 60 years of age.

Key Features

1) 10% of sum assured is added to your sum assured for every 5 years of paid premiums.

2) Rs. 1 lakh will be paid directly to you should you be diagnosed with a covered critical
illness (after a 30 day survival period) for first 3 years of the policy.

3) Deaths that occur during the period of the policy will result in an immediate payment of
the full sum assured to your beneficiary, plus guaranteed additions and bonuses (if any).

4) Deaths that occur due to accidental causes during the plan period will result in an
immediate payment of double the sum assured, plus guaranteed additions and bonuses (if
any).

5) Payment of up to one third of your Sum Assured as lump sum cash upon reaching your
chosen retirement age. The remainder is used to buy a monthly income plan that will generate
a monthly cash income.

6) A reversionary bonus will be declared and credited from the 6th policy anniversary
onwards.

7) A terminal bonus will be paid upon maturity or death if the policy has been in force for 10
years.

8) Bonus is not guaranteed and will depend on the performance of the company.

43
 CLAIMS PROCESS IN LIFE INSURANCE
Filing a Life Insurance Claim Claim settlement is one of the most important services that an
insurance company can provide to its customers. Insurance companies have an obligation to
settle claims promptly. You will need to fill a claim form and contact the financial advisor
from whom you bought your policy. Submittal relevant documents such as original death
certificate and policy bond to your insurer to support your claim. Most claims are settled by
issuing a cheque within 7 days from the time they receive the documents. However, if your
insurer is unable to deal with all or any part of your claim, you will be notified in writing.

Types of claims

1) Maturity Claim On the date of maturity life insured is required to send maturity claim
/discharge form and original policy bond well before maturity date tenable timely settlement.
Most companies offer/issue postdated cheques and/ or make payment through ECS credit on
the maturity date. In case of delay in settlement kindly refer to grievance redressal.

2) Death Claim (including rider claim) In case of death claim or rider claim the following
procedure should be followed.

Follow these four simple steps to file a claim:

Claim intimation/notification The claimant must submit the written intimation as soon as
possible tenable the insurance company to initiate the claim processing. The claim intimation
should consist of basic information such as policy number, name of the insured, date of death,
cause of death, place of death, name of the claimant. The claimant can also get a claim
intimation/notification form from the nearest local branch office of the insurance company or
their insurance advisor/agent. Alternatively, some insurance companies also provide the
facility of downloading the form from their website.

Documents required for claim processing The claimant will be required to provide a
claimant's statement, original policy document, death certificate, police FIR and post mortem
exam report (for accidental death), certificate and records from the treating doctor/hospital
(for death due to illness) and advance discharge form for claim processing. Based on the sum
at risk, cause of death and policy duration, insurance companies may also request some
additional documents.

44
Submission of required documents for claim processing For faster claim processing, it is
essential that the claimant submits complete documentation as early as possible. A life insurer
will not be able to take a decision until all the requirements are complete. Once all relevant
documents, records and forms have been submitted, the life insurer can take a decision about
the claim.

Settlement of claim As per the regulation 8 of the IRDA (Policy holder's Interest)
Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all
documents including clarification sought by the insurer. However, the insurance company
can set a practice of settling the claim even earlier. If the claim requires further investigation,
the insurer has to complete its procedures within six months from receiving the written
intimation of claim.

45
 TATA AIA LIKE KEY BUSINESS STRATEGY

Sound underwriting process is important to ensure long term sustenance.

Life insurance is a long term business.

Regular persistent business is the key to profitable business.

Pricing rightly is another key for profitable business.

At TATA AIA life, we believe in persistent regular business, year on year.

TATA AIA life wants to be the best in the business.

This is only possible when our customers rank us as the best

We are on the right track. Market of different private players of 2009

Distribution Channels in Bank & Insurance

Traditionally, insurance products have been promoted and sold principally through agency
systems in most countries. With new developments in consumers behaviors, evolution of
technology and deregulation, new distribution channels have been developed successfully
and rapidly in recent years. Bank& insurance make use of various distribution channels:

1. Career Agents

2. Special Advisers

3. Salaried Agents

4. Bank Employees / Platform Banking

5. Corporate Agencies and Brokerage

6. Firms Direct

7. Response

46
8. Internet

9. E-Brokerage

10. Outside Lead Generating Techniques

The main Characteristics of each of these Channels are

1.Career Agents

Career Agents are full-time commissioned sales personnel holding an agency contract. They
are generally considered to be independent contractors. Despite this limitation on control,
career agents with suitable training, supervision and motivation can be highly productive and
cost-effective. . Moreover their level of customer service is usually very high due to the
renewal commissions, policy persistency bonuses, or other customer service-related awards
paid to them.

2.Special Advisers

Special Advisers are highly trained employees usually belonging to the insurance partner,
who distribute insurance products to the bank’s corporate clients. Banks refer complex
insurance requirements to these advisors. The Clients mostly include affluent population who
require personalized and high quality service. Usually Special advisors are paid on a salary
basis and they receive incentive compensation based on their sales.

3.Salaried Agents

Having Salaried Agents has the advantages of them being fully under the control and
supervision of bank & insurance. These agents share the mission and objectives of the bank
& insurance. The only difference in terms of their remuneration is that they are paid on a
salary basis and career agents receive incentive compensation based on their sales.

4.Platform Bankers

Platform Bankers are bank employees who spot the leads in the banks and gently suggest the
customer to walk over and speak with appropriate representative within the bank. The
platform banker may be a teller or personal loan assistant and the representative being

47
referred to may be attained bank employee or a representative from the partner insurance
company.

5.Direct Response

In this channel no salesperson visits the customer to induce a sale and no face-to-face contact
between consumer and seller occurs. The consumer purchases products directly from the
bank & insurance by responding to the company's advertisement, mailing or telephone offers.

6.Internet

Internet banking is already securely established as an effective and profitable basis for
conducting banking operations. The reasonable expectation is that personal banking services
will increasingly be delivered by Internet banking. Bank& insurance can also feel confident
that Internet banking will also prove an efficient vehicle for cross selling of insurance savings
and protection products.

7.E-Brokerage

Banks can open or acquire an e-Brokerage arm and sell insurance products from multiple
insurers. The changed legislative climate across the world should help migration of bank &
insurance in this direction. The advantage of this medium is scale of operation, strong brands,
easy distribution and excellent synergy with the internet capabilities.

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 DISTRIBUTION CHANNEL OF TATA AIA
The winds of liberations initiated vast changes in the functions of the industry today.
Increasing number of multinational partnership with private insurer have paved the way for a
radical shift in insurance selling through number of new distribution channels besides
bringing about more awareness on the need for insurance and also stressing on the important
role technology can play.

In the developed markets, many insurer have a prefer mode of distribution. In India many
players are hedging their bets because the need for or the sale outweighs consideration of
focus and because non-agency distribution, which is presently operational for the last two
years, forms a basis for studies.

TATA AIA has a corporate agency channel, which handles its corporate agents and has
tie-ups with 38 corporate houses. Insurer wants to lower distribution costs by finding more
efficient channels. The new private players are developing multiple channel models; many
insurer use are plan to use several banks as distributors .because most of bank have strong
religion bias, in this regards has agreement with HBSC through that it’s doing both life
insurance and general insurance. Because most banks have strong religious bias, Insurer can
use banks without creating large overlap. Many large are sourcing product several insurer
acting as manufacturer.

As important distribution challenge facing insures is the ruler and social sector legislative
requirements stipulated in terms of markets opening. For TATA AIA its takes ruler
insurance as an opportunity and not an obligation. For achieving objective in an rural area it
has also tie with NGOs.in this project mainly focus on distribution channel of life insurance
of TATA AIA also.as the whole topic of distribution channel can be known for the both
company of TATA AIA. Gradually channels are incorporating day by day for the growth of
business.

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 AWARDS AND ACHIEVEMENTS:-

May 2006

Life Insurance Marketing and Research Association gave the prestigious International
Quality Agent award to 61 advisors of Tata AIG Life Insurance Company. The company also
won in a first-ever customer survey in insurance sector conducted by the Voluntary
Organisation In Interest of Consumer Education

Tata AIA Life Insurance Company bags World Finance Pension Fund Award

Gets special accolade for HR practices, which is one of most impressive across the globe
according to the judging panel

Innovative customer care initiatives, such as key feature document and customer service
camp, get special mention for maintaining high standards

Mumbai: Tata AIA Life Insurance Company (Tata AIA Life) has won the World Finance
Pension Fund of the Year Award 2013 from India at a ceremony held at the London Stock
Exchange. The award was bestowed on Tata AIA Life in recognition of its financial strength,
efficiency of the investment functions, customer relationship management, operational
Performance and human resource management.

Accepting the award on behalf of the company, Saravana Kumar, chief investment
officer, Tata AIA Life, said, "It is a great honour to be chosen as the winner of World Pension
Fund Award from India. This award is a testimony of our endeavour to generate superior and
consistent investment returns for our customers to meet their long term financial objectives.
We will continue to work hard to help our customers meet their financial goals."

Tata AIA Life was adjudged the winner based on a wide criterion. The most notable
amongst them being the incorporation of the latest technologies and full automation that
alleviated human error and created an excellent foundation for a highly efficient organisation.

50
The judges were highly impressed with overall approach of Tata AIA Life to customer
management and took note of how the company has invested heavily in the continued
training of both clients and employees in order to raise the standards. Some of the innovative
initiates taken by the company, such as key feature document and customer service camps,
were acknowledged by judges as the company's commitment to maintain high standard in
customer care.

The judges were particularly impressed by the genuine consideration Tata AIA Life
showed for its staff and the human resources practice of the company led by a distinct margin
over the other finalists. According to them, the HR of Tata AIA Life was one of the most
impressive they had Viewed in all the submission globally.

The ISO standard 10002:2004 certification for the Complaints Management System and
the method of implementation of the same was another key parameter that influenced the
decision of the judges in favour of Tata AIA Life, as they felt it not only improved the quality
of service offering but also raised the bar in service standards across India. A special mention
was made of the fact that the company's senior personnel from the investment team are
available via video conference to answer queries and communicate personally with the
customers.

The judges also applauded the company's efforts towards contributing back to the
society. They felt that whilst Tata AIA Life enjoyed a commanding position as one of India's
premier institutions, they also led by example across their community projects and showcased
responsibility towards the society at large.

The clear vision and direction of the executive team at Tata AIA Life was spoken very
highly of by the judging panel. They highlighted that the high operational standards displayed
by the company's board has filtered through the organisation and is very much evident
throughout the company.

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 The World Finance Awards have been recognising achievements of innovative financial
service providers across the globe by way of their annual awards since 2007. The process of
selecting the winners of these awards comprises of two stages:

First is the open voting process by the World Finance audience, whereby all insurance
companies that operate in a respective country may be voted for. The top three companies
with the highest count of votes are then shortlisted as the finalists and presented to the
judging panel.

The judging panel compiles a number of questions to help them better understand the
operations of the finalists. On receiving the responses, the judges speak to their
contacts/colleagues working in the country being judged for references. The final assessment
is based on a range of criteria including financial strength/performance, operational efficiency
and effectiveness, product/service development, quality and vision of leadership, customer
support and any philanthropic/charitable projects.

52
 FINDINGS

After collecting primary data and analyzing them graphically it can be concluded that:

➢ 12% of the investors are less than that of 20 years of age.37% lie in the age group of 20-
30 years as such investors are returns oriented and are risk takers.33% lie in the age group
of 30-45 years as these investors want safe products with assured returns.Only 18% of the
investors lie in the age group of more than 45 years. Such investors are risk averse.

➢ It was found that in a sample of 100, 36 (36%) of people had annual income between
Rs.100000-250000. Out of these 36, 14 people pay a premium below Rs. 10000, 22 pay
premiums between Rs. 10000-20000.

➢ In the same sample of 100, 40 (40%) people had annual income between Rs. 250000
500000. Out of these 25, 7 people pay premium between Rs. 10000-20000, 14 people pay
premium between Rs. 20000-50000, and 9 of them pay premium above Rs. 500000.

➢ The highest market share from the sample was of LIC with 47% respondents having LIC
policy, followed by ICICI PRUDENTIAL with a market share of 27%, HDFC
STANDARD LIFE with 11% share , TATA AIA with 5% and OTHERS with 10% share.

➢ Most people choose LIC for its Brand Image and since it is a PSU, also it offers to its
customers’ low EMIs, but on the other hand private players offer better returns.

➢ It was found that most of the people considered ―Returns 43%‖ as a major factor while
buying insurance with positive responses, 32% ―Brand Image‖ as the prime factor,
8(8%) prefer ―EMI‖ and 17(14%) prefer ―Time Period‖.

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➢ The most preferred avenue for investment was found out to be Stock Market preferred by
37% respondents, followed by Mutual Fund preferred by 22% respondents, 32%
preferred Govt. Bonds, 9% preferred Fixed Deposit.

➢ Out of the entire sample of 100, 78(78%) preferred Traditional Insurance Plans, and
22(22%) preferred ULIPs 3 years ago but in present scenario 12% prefer Traditional
Plans and 88% prefer ULIPs. Among the reasons for this change 52(52%) respondents
prefer ―Potential for better returns‖, 20(20%) prefer ―Greater Transparency‖, 18(18%)
prefer ―Flexibility in investment‖ and 10(10%) prefer ―Higher liquidity‖.

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 RECOMMENDATIONS

Recommendations for whole Insurance Industry

As it can be seen that that most of the investors are inclined toward stock market and
mutual funds there is a strong need to take some important steps on the part of
government and insurance companies which would help this sector grow at a faster pace.

The government should make life insurance mandatory, because most of the people live
with the myth ―I don’t need insurance‖, so this myth should be eradicated from the mind
of the consumers by highlighting the benefits of life insurance, government can launch
camp to increase awareness especially in the rural sector.

The companies should highlight the advantages of life insurance in comparison

togetherinvestment avenues such as mutual funds, stock market, as only ULIPs offer
returns plus life cover which other investment options do not provide, also capital gains
or maturity amount is exempted from tax under Section 10(10) D of the Income Tax Act.

There should be strong distribution channel of the insurance companies so that they are
closely connected to consumers, distribution channel that is the agents of life insurance
companies are foundation of life insurance business, they must be properly trained by the
companies to sell products according to the needs of the customer, give suitable
suggestions to the customer to make his/her future secure.

55
 CONCLUSION

Earlier Life Insurance was taken as an option for risk cover or a tax saving by people.
Burin the present scenario the mind set and outlook of people has changed a lot. They
now consider Life insurance as an investment opportunity in long run. Clients have also
shifted a lot from traditional plans to Unit linked insurance plan (ULIP).

ULIP provide the investor with benefits like Potential for better returns. Under IRDA
guidelines, traditional plans have to invest at least 85% in debt instruments which results
in low returns. On the other hand, Ulips invest in market linked instruments with varying
debt and equity proportions and if you wish you can even choose 100% equity option.

The state owned insurance companies such as LIC and GIC have limited number of
policies to offer to their subscribers while in case of private insurance companies, their
policy numbers are many more and the premium amount as well as the maturity period is
much competitive as against those of government insurance companies. The private
sector insurance players have started exploring the rural markets in which until
recently,the state owned companies had the monopoly.

Here it can be concluded that the summer internship program, done for partial fulfillment
of the MBA course in UPTU University, in TATA AIA Life Insurance Co. Ltd. has been
completed successfully.

Following are the achievements done during the summer internship from 20th JUNE
2013 to 14 AUG 2013.

a) Survey done with interest of TATA AIA has been conducted successfully and results are
discussed above.

b) Sales done during the time have done great business to the company.

c) The experience gained during the internship has sharpen my skills and given a corporate
exposure.

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 BIBLIOGRAPHY

BOOKS

Insurance Distribution – An Introduction, Insurance Series, ICFAI University

Kothari, C.R: Research methodology, 2nd edition, 1990, new age international (p) ltd
New Delhi
IC-24, Legal Aspect of Life Insurance issued by IRDA
Marketing Management –Philip Kotler,13th edition

WEBSITES

http://www.TATA AIA.com
http://www.irdaindia.org/
www.google.com
http://economictimes.indiatimes.com

57
 QUESTIONNAIRE

1. What is your age?

Less Than 20
30-45
20-30
More Than 45

2. What is your marital status?

Married
Unmarried

3. What is your annual income?

Less than 1,00,000
More than 5,00,000
1,00,000-2,50,000
2,50,000-5,00,000

4. Which Avenues do you prefer for investment?

Stock Market
Mutual funds
Govt. Bonds’
Fixed deposit

5. Are you aware about the benefits of Insurance?

Yes No

Q6. Are you and your family members insured?

All members including you
Only you
No one

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Q7. If yes, from which company are you insured?
LIC
HDFC
TATA AIA
Any other

Q8. Which of the following features affect your purchase?

Brand
EMI
Return
Time period

Q9. What is the annual premium you are paying?

5000-15000
15000-30000
30000-50000
More than 50000

Q10. Which type of plan you prefer now?

Traditional
UPILs

Q11. If your preferred avenue has been changed then please mention the reason?
Potential for better return
Greater transparency
Flexibility in investment
Higher liquidity

Q12. Which kind of policies do you have?

LIFE INSURANCE
HEALTH INSURANCE
GENERAL INSURANCE
ALL OF THEM

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Q13. Are you aware all the plans and updates from company?
YES
NO

Q14. How do you come to know about this company product?

NEWS PAPER
AGENT
ADVERTISMENT
MOUTH OF SPREAD

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