A SUMMER TRAINING PROJECT REPORT ON ANALYSIS OF LIFE INSURANCE IN INDIA

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF MASTER IN BUSINESS ADMINISTRATION 2010-11 UNDER THE GUIDANCE OF: MR. VISHAVDEEP SHARMA FACULTY, RPIIT

Submitted By:AMIT KUMAR

(Roll No. M0903 Batch No.2009-11 MBA Sem.3rd )

R. P. INDERPRASTHA INSTITUTE OF TECHNOLOGY (Approved by AICTE, HRD Ministry, Govt. of India) Affiliated to Kurukshetra University, Kurukshetra.

DECLARATION
This is to certify that I have completed the summer report titled ANALYSIS OF LIFE INSURANCE IN INDIA in DLF Pramerica life insurance under the guidance of vishavdeep Sharma in the partial fulfillment of the requirement for the award of Master of Business Administration of R.P. Inderprastha Institute of Technology, Karnal.This is an original piece of work & I have not submitted it earlier elsewhere

Name of the Student AMIT KUMAR

ACKNOWLEDGEMENT
I express my sincere and deep sense of gratitude on this voyage of report development. I want to express my heartfelt reverence for his matured guidance, constant encouragement, and development of this presentation. I also convey my regard to our highly qualified faculty Mr.Vishavdeep Sharma, for leading me a helping hand to overcome all the hurdles in the whole procedure for the submission of this presentation. In last, it is a great pleasure to acknowledge great fully all the debt of all my friends and other people who directly or indirectly helped me in the completion of this report.

Amit Kumar (Student of MBA)

PREFACE
One can learn more about a road by traveling it, than by consulting all the maps in the world.
As a part of degree of MBA, every student has to undergo for training in a commercial organization. With the help of this training research students come to know that how the academic knowledge in applied in actual business situation. They also come to know about the working conditions under which they will have to work in the near future. In my summer training report I studied ANALYSIS OF LIFE INSURANCE IN INDIA, I must forewarn the readers that this project is not a work of excellence by a scholar. With the introduction of different insurance options in India. Our study aims of finding out how far it has been successful in keeping its promise of efficient serves. The main intension of this report is to compile the subject matter in such a ways that anybody, who has no prior knowledge of various insurance avenues in India can understand properly without any difficulty. Actually this report is result of an assignment to improve us and gain confidence. I have done my best to make it genuine study but as we all know a maxim TO ERR IS HUMAN. So there is chance for some mistake.

Executive Summary
The objective of the project was to do analysis of life insurance in India for DLF Pramerica for that we have to understand the customer needs, Income, constraints, response and emotions. The objective of this study was to analyze that what is insurance, what the benefits of life insurance are and what the consumer behavior about the insurance is. As the company was new and it was yet to be marketed to a large number of customers, it was essential to know the feedback of customers in order to formulate effective marketing and sales strategies in future and improve the quality of service to achieve better consumer satisfaction. The site visits and companing made us possible to measure the satisfaction of consumer by identifying the attributes, which gave consumer-varying degrees of satisfaction The questionnaire contains various aspects like there. How many people know about the insurance, what are the benefits of insurance, which insurance company they prefer more etc. After that usually meeting the persons and tell them about the company. Most important part is analyzing the information.

INDEX S.No. 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23) 24) 25) 26) 27) TABLE OF CONTENTS Acknowledgement Preface Executive summery Introduction company profile Research Methodology Objective of study What is insurance Nature of insurance Type of insurance Global insurance industry Insurance and economy Insurance in India Function of insurance industry Life insurance Insurance companies in India Detail of the life insurance companies Products of life insurance Points for buying life insurance Comparison of different products of life insurance Analysis of customer buying behavior Findings Limitations Suggestions Conclusion Bibliography Annexure questionnaire Page No. 5 6 7 9 10 19 24 26 27 29 31 33 35 39 44 46 48 52 55 58 74 86 88 90 92 94 96

INTRODUCTION

Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident and burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Insurance is actually a contract between two parties where by one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.

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INTRODUCTION
DLF Pramerica Life Insurance Company Limited is a joint venture between DLF Limited, one of Indias largest and most respected real estate organizations, and Prudential International Insurance Holdings, Ltd (PIIH), a fully owned subsidiary of Prudential Financial, Inc. (hereafter referred to as PFI), a U.S. based financial services leader About DLF DLF Limited is one of the leading real estate companies in the world. It has a track record of over six decades of sustained growth, customer satisfaction, and innovation. DLF's primary business is development of residential, commercial and retail properties. DLF has a unique business model with earnings arising from development and rentals. DLF has entered into several strategic alliances with global industry leaders. Also, it has recently forayed into the infrastructure, SEZ, financial services and hotel businesses. About PFI Pramerica Financial is a trade name used by PFI, a company incorporated and with its principal place of business in the United States, and its affiliates in select countries outside the United States. PFI is a financial services leader with operations in the United States, Asia, Europe, and Latin America. PFIs diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., the companys iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. PFI of the United States is not affiliated in any manner with prudential plc, a company incorporated in the United Kingdom

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The Rock

Standing tall and firm.

At DLF Pramerica, the Rock is not just a corporate symbol. It is the essence of our being. It is the icon of strength, stability, expertise and innovation and is the symbol of our unshakable commitment to our customers, stakeholders and employees. It is also the seal of security for the lives we touch. In fact, at the heart of everything we offer at DLF Pramerica - be it a sense of trust, a ray of hope or a dash of happiness, are values that are truly and quintessentially RockSolid.

Vision
DLF Pramerica Life Insurance vision is to ensure that every life we touch, feels secure and enriched.

Mission
Company shall be guide and a mentor to people so that they are able to make the most informed insurance decisions to meet their life goals.

Values Customer Focused

Be someone who places customers and their needs at the forefront while developing and managing their financial solutions.

Mutual Respect
Build mutual respect by being an equal partner, who knows and willingly shares, helping people go further, rather than walking ahead and leading them, or walking behind and following.

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Worthy of Trust
Build trust by choosing the right path, rather than the easy path and tell the truth the way it is. Be someone who keeps promises, meets commitments and behaves with integrity at all times.

Winning
Be positive and confident; seize every moment, every day, with a winning perspective, fearlessly facing the uncertainties of life

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MANAGING DIRECTOR OF DLF Pramerica LIFE INSURANCE

Kapil Mehta Managing Director & CEO Kapil Mehta is the Managing Director & CEO of DLF Pramerica Life Insurance Co. Ltd. Mr. Mehta has been associated with this initiative since 2006, when he was appointed Chief Representative for The Prudential Insurance Company of Americas Representative Office in India. He took charge as the CEO of DLF Pramerica Life Insurance Co. Ltd., when it was formed in 2007. Before joining DLF Pramerica Life Insurance, Mr. Mehta was the Senior Vice President Business Development & Strategic Planning at one of the leading life insurance companies of India.
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From 1997 till 2003, Mr. Mehta worked for McKinsey & Company leading projects across a wide spectrum of industries in India, South Korea, Brazil and Thailand. Mr. Mehta started his career with Unilever in India in the Sales and Marketing function. Mr. Mehta obtained his degree in Mechanical Engineering from the Indian Institute of Technology (IIT), Delhi and an MBA from the Indian Institute of Management (IIM), Ahmadabad. He wishes to develop DLF Pramerica Life Insurance Co. into a successful and enduring life insurance enterprise in India. "We would like to raise the standards of life insurance in the country by providing high quality insurance advice and protection products to our customers", says Mr. Mehta about this Endeavour.

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PRODUCTS OF DLF Pramerica LIFE INSURANCE

1. Savings Plans

DLF Pramerica Dhan Suraksha

DLF Pramerica Assure Money

DLF Pramerica Wealth+ Premier

DLF Pramerica Ezee Wealth+

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 2. Child Progress Plans

DLF Pramerica Fee Protect+

DLF Pramerica Fee Protect

3. Protection Plans

DLF Pramerica Family Income

DLF Pramerica Family First

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SWOT ANALYSIS OF COMPANY

STRENGTH
1. DLF Limited is one of the leading real estate companies in the world. 2. PFI is also working in insurance from many decades. 3. PFI is a financial company of USA. 4. DLF Pramerica is joint venture of DLF and PFI. 5. Both the companies are economically very strong.

WEAKNESSES
1. DLF is in LIFE INSURANCE, so awareness about this is less. 2. Clients face problem to get insured due to large number of formalities.

OPPORTUNITIES
1. The DLF Pramerica is going to open many branches in coming 4-5 years. 2. The company is now going to expand- its Branches. 3. Its Employees. 4. Its Life Advisors. 5. The insurance sector is growing so there is opportunity for business growth.

THREATS
1. Competition is growing, because there are some major companies already in insurance sector. 2. Main threat is COMPETITORS 3. Weak perception of private players in the mind of Indian people due of frequent financial sums.

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RESEARCH METHODOLOGY
Research methodology refers to the search for Knowledge. It is a way to systematically solve the research problem. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with logic behind them. Research Methodology concerning a research problem or study provide answers to various questions like; why a research study has been undertaken, how the research problem has been defined, what data have been collected and what particular method has been adopted to collect the data, what technique has been used for analyzing the data and a host of similar other questions. Though there are more than one alternative approaches available to the researcher, but this not enough to make the task of selecting the suitable research design simpler. Like the so-called suitable research design may require some in between approach. The objective of study being the main determinant of the validity and reliability of the method adopted the degree of usefulness of the scientific method. Since there are many aspects of research methodology, in line of action has to be chosen from variety of alternatives, so that individual choice of suitable method is further complicated and make a viable whole. The choice of suitable method is further complicated by the possibility of many permutations and combinations. The fair selection can be arrived at through the objective assessment and of course comparison of various alternatives. The finally selected line of action must ensure that this is indeed best one as against those rejected by the researcher. in addition, the circumstances and problems also having a bearing in the choice. To count a fem, limitations could be imposed in the sense of funds available, time and urgency in conducting the research. So the final choice must be based on assessment of its advantage and disadvantages when weighted against affecting factors. Research methodology can be said to have four major components namely-Research design, Sample design, Data collection procedure and methods of analyzing and reporting the findings.

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RESEARCH DESIGN
The research problem having been formulated in clear cut terms, the researcher will be required to prepare a research design i.e., he will have to state the conceptual structure with in which research would be conducted. The preparation of such a design facilitates research to be as efficient as possible yielding maximal information. But how all there can be achieved depends mainly on the research purpose. Research purpose may be grouped into four categories. (1) Exploration (2)Description (3) Diagnoses and (4) Experimentation. Exploratory research studies are those whose main purpose is that of formulating a problem for more precise investigation or of developing the working hypotheses from on operational point of view. Descriptive research studies are those studies which are concerned with describing the characteristics of a particular individual, or of a group Diagnostic research studies determine the frequency with which something occurs. Experimental research studies are those where the researcher tests the hypothesis of casual relationship between the variables. Research design of this particular research study of dematerialization of shares is primarily based on descriptive and diagnostic research design. As descriptive and diagnostic research design describes the characteristics and determines the frequency with which something occurs respectively, similarly this research determines the characteristics of the individuals who deal in share and also determine the frequency of dealing on the basis of their characteristics

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Sample Design
All the items under consideration in any field of inquiry constitute a Universe or Population. A complete enumeration of all the items in the population is known as a census inquiry. This type of inquiry involves a great ideal of time, money and energy. Hence quite often a few items so selected constitute what is technically called a sample. The researcher must decide the way of selecting a sample or what is popularly known as sample design. A sample design is a definite plan determined before any data are actually collected for obtaining a sample from a given population. Samples can be either probability or non-probability samples. With probability samples each element has a known probability of being included in the sample but non-probability samples are those based on simples do not allow the researcher to determine this probability. Probability samples are those based on simple random sampling, systematic sampling , etc where as non probability samples are those based on convenient sampling, judgment sampling etc.

Data collection techniques

The required data is collected both from primary as well as secondary sources. Primary Sources: Primary data is that which is not used before in any research. It is the fresh data for research. The primary data was collected through structured unbiased questionnaire and personal interviews of investors. For this purpose questionnaire included were both open ended & close ended & multiple-choice questions.

Secondary Sources: Secondary data is that which has been used before in any type of research or work. Secondary data is the data, which is collected and complied for different purposes, which are used in research for this study. The secondary data includes material collected from:Magazines & Bulletins- Brochure of DLF Pramerica life insurance Internetwww.dlfpramerica.com

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SIZE OF SAMPLE
The population for the study is general public of a famous area in Karnal named Sector-12 during the survey period, extending from July 1, 2010 to August 14, 2010. During the survey period, a total of 200 people were asked several questions . The people were given seven questions about interest in investment, preferable investment sector, future plan for investment, period of investment, volume of savings from income, basis of investment, tax payment, annual income etc.each question have 4-5 option. Many people choose 1 or more option of same question. So first of all I count the answer of several question, then I calculate the percentage of collected data. Then I was put the data in different type of chart to understand collected data easily. A sample questioner is attached at below. By analyzing the collected data I understood about the investment market. I was also understood about the view point of customer upon investment sector.

Method used for analysis of study Methodology used for this purpose is Survey and Questionnaire Method. It is a time consuming And expensive method and requires more administrative planning and Supervision. It is Also subjective to interviewer bias or distortion. For questionnaire I have prepared a questionnaire. This has 10 questions in it and all questions have options. It is prepared to know the investment portfolios of clients linked with Unicon investment solutions

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OBJECTIVES OF STUDY

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OBJECTIVE OF STUDY
To know the basic of insurance. To know the basic of Life insurance. To find out various products being offered by company. To know the various reason for purchasing life insurance. For comparison in traditional plans of different company.

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WHAT IS INSURANCE
The business of insurance is related to the protection of the economic values of assets. Every asset has a value. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefits from it. It is a benefit because it meets some of his needs. The benefit may be an income or in some other form. In the case of a factory or a cow, the product generated by it is sold and income is generated. In the case of a motor car, it provides comfort and convenience in transportation. There is no direct income. Both are assets and provide benefits. Every asset is expected to last for a certain period of time during which it will provide the benefits. After that, the benefit may not be available. There is a life-time for a machine in a factory or a cow or a motor car. None of them will last forever. The owner is aware of this and he can so manage his affairs that by the end of that period or life-time, a substitute is made available. Thus, he makes sure that the benefit is not lost. However, the asset may get lost earlier. An accident or some other unfortunate event may destroy it or make it incapable of giving the benefits. An epidemic may kill the cow suddenly. In that case, the owner and those enjoying the benefits there from would be deprived of the benefits. The planned substitute would be deprived of the benefits. The planned substitute would not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the effects of such adverse situations. It promises to pay to the owner or beneficiary of the asset, a certain sum if the loss occurs.

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NATURE OF INSURANCE
The insurance has the following characteristics, which are observed in case Of life, marine, fire and general insurance.

Sharing of risk
Insurance is a device to share the financial losses Which might befall on an individual or his family on the happening of a specified event. The event may be death in case of life insurance, fire insurance etc. If insured the loss arising from these events will be shared by all insured in the form of premium.

Co-operative device
The most important feature of every insurance plan is the corporation of large number of persons who, in effect, agree to share the financial loss arising due to a particular risk, which is insured. An insurer would be unable to compensate all losses from his capital. So, by insuring a large number of persons, he is able to pay the amount of loss.

Value of risk
The risk is evaluated before insuring to charge the amount of share of an insured, premium. There are several methods of evaluation of risks. If there is expectation of more risk, higher premium may be charged. So, the probability of loss is calculated at the time of insurance.

Payment at contingency
The payment is made at a certain contingency insured. If the contingency occurs, payment is made. Since the life insurance contract is a contract of certainty, because the contingency, the death or the expiry of term, will certainly occur, the payment is certain. In other insurance contracts, the contingency is the fire or the marine perils etc., may or may not occur. So, if the contingency occurs, payment is made, otherwise no amount is given to the policyholder.

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Amount of payment
The amount of payment depends upon the value of loss occurred due to the particular insured risk provided insurance is there up to that amount. In life insurance, the purpose is not to make good the financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event. If the event or the contingency takes place, the payment falls due if the policy is valid and in force at the time of the event.

Large number of insured persons

To spread the loss immediately, smoothly and cheaply, large number of persons should be insured. Large number of persons or property is insured to lower the cost of insurance and the amount of premium.

Insurance is not a gambling

The insurance serves indirectly to increase the productivity of the community by eliminating worry and increasing initiative. The uncertainty is changed into certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. From the companys point of view, the life insurance is essentially non-speculative; in fact, no other business operates with greater certainties. From the insured point of view, too, insurance is also the antithesis of gambling. Nothing is more uncertain than life and life insurance offers the only sure method of changing that uncertainty into certainty.

Insurance is not charity

Charity is given without consideration but insurance is not possible without premium. It provides security and safety to an individual and to the security although it is a kind of business because in consideration of premium it guarantees the payment of loss. It is a profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service.

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TYPE OF INSURANCE

INSURANCE

BUSINESS POINT OF VIEW

RISK POINT OF VIEW

LIFE

GENERAL

SOCIAL

PROPERTY

LIABILTY

Life Insurance
Life Insurance is different from other insurance in the sense that the subject matter of insurance is life of human being. The insurer will pay the fixed amount of insurance at the death or at the expiry of certain period. At present, life insurance enjoys maximum scope because each and every person requires the insurance. This insurance provides protection to the family at the premature death or gives adequate amount at the old age when earning capacities are reduced. Types of insurance plans offered in our country: - Term assurance plans - Whole life plans - Endowment assurance plans - Assurances for children - Family income policy - Life annuity Joint life assurance - Pension plans - Unit linked plan - Policy for maintenance of handicapped dependent Endowment policies with health insurance benefits

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General Insurance
The general insurance includes property insurance, liability insurance and other forms of insurance. Fire and marine insurance comes under property insurance. Liability insurance includes motor, theft, fidelity and machine insurances to a certain extent. The strictest form of liability insurance is fidelity insurance whereby the insurer compensates the loss to the insured when he is under the liability of payment to the third party. Types of insurance policies available are: Health insurance - Medical-claim policy - Personal accident policy - Group insurance policy - Automobile insurance - Workers compensation - Liability insurance - Aviation insurance - Business insurance - Fire insurance policy - Travel insurance policy

Social Insurance
The social insurance is to provide protection to the weaker sections of the society who are unable to pay the premium for adequate insurance. Pension plan, disability benefits, unemployment benefits, sickness insurance and industrial insurance are the various forms of social insurance

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GLOBAL INSURANCE INDUSTRY

Globally, insurers increasingly are pressured by the demands of their clients. The development of global insurance industry over the past few years was influenced by booming stock markets which enabled considerable capital gains to be made in non life business. Increase in insurers equity capital increased underwriting capacity, while demand did not develop at the same pace, resulting in decrease in insurance policies prices. The stock market boom of the past few years led to demand for unit linked insurance products. The global insurance industry is growing at rapid pace. Most of the markets are undergoing globalization. Lot of mergers and acquisition are taking place in the insurance world. The rapidity in the industry, technological improvement has resulted in pressures on a few economic parameters. The world insurance industry is at peak of its globalization process. Global insurance market is increasing by an average of six percent per year since 1990. Insurance companies have collected $2443.7 billion premium worldwide according to the global development of premium volume in 144 countries in 2005. $1521.3 has been generated as life insurance premium and $922.7 as non life insurance premium. The US accounted for 35% of global life and non life premium, Japan had global share of 21%, and UK was having 10% of global share. Influence on Indian Insurance Industry: In this era of globalization, insurance companies face a dynamic global environment. Dramatic changes are taking place owing to the internationalization of activities, appearance of new risk, new types of covers to match with new risk situations, and unconventional and innovative ideas on customer services. Low growth rates in developed markets, changing customers needs, and the uncertain economic conditions in the developing world are exerting pressure on insurers resources and testing their ability to survive. Now the existing insurers are facing difficulties from non-traditional competitors those are entering the retail market with new approaches and through new channels.

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India has a rapidly growing middle class and this section can afford to buy insurance products. This shows the attraction that the Indian market holds for foreign insurers who have been putting pressure on developing countries as well as on India to open up its market.

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INSURANCE AND ECONOMY

Indian economy is growing in reference to global market. Business of insurance with its unique features has a special place in Indian economy. It is a highly specialized technical business and customer is the most concern people in this business, therefore this business is able to spur the growth of infrastructure and act as a catalyst in the overall development of Indian economy. The high volumes in the insurance business help spread risk wider, allowing a lowering of the rates of the premium to be charged and in turn, raising profits. When there is a bigger base, the probabilities become more predictable, and with system wide risks balanced out, profits improve. This explains the current scenario of mergers, acquisitions, and globalization of insurance. Insurance is a type of savings. Insurance is not only important for tax benefits, but also for savings and for providing security. It can be serving as an essential service which a welfare state must make available to its people. Insurance play a crucial role in the commercial lives of nations and act as the lubricants of economic activities. Insurance firms help to spread the potentially financial consequences of risk among the large number of entities, to mobilize and distribute savings for productive use, facilitate investment, support and encourage external trade, and protect economic entities against external risk. Insurance and economic growth mutually influences each other. As the economy grows, the living standards of people increase. As a consequence, the demand for life insurance increases. As the assets of people and of business enterprises increase in the growth process, the demand for general insurance also increases. In fact, as the economy widens the demand for new types of insurance products emerges. Insurance is no longer confined to product markets; they also cover service industries. It is equally true that growth itself is facilitated by insurance. A welldeveloped insurance sector promotes economic growth by encouraging risk-taking. Risk is inherent in all economic activities. Without some kind of cover against risk, some of these activities will not be carried out at all. Also insurance and more particularly life insurance is a mobilizer of long term savings and life insurance companies are thus able to support infrastructure projects which require long term funds. There is thus a mutually beneficial
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interaction between insurance and economic growth. The low income levels of the vast majority of population have been one of the factors inhibiting a faster growth of insurance in India. To some extent this is also compounded by certain attitudes to life. The economy has moved on to a higher growth path. The average rate of growth of the economy in the last three years was 8.1 per cent. This strong growth will bring about significant changes in the insurance industry. At this point, it is important to note that not all activities can be insured. If that were possible, it would completely negate entrepreneurship. Professor Frank Knight in his celebrated book Risk Uncertainty and Profit emphasized that profit is a consequence of uncertainty. He made a distinction between quantifiable risk and non-quantifiable risk. According to him, it is nonquantifiable risk that leads to profit. He wrote It is a world of change in which we live, and a world of uncertainty. We live only by knowing something about the future; while the problems of life or of conduct at least, arise from the fact that we know so little. This is as true of business as of other spheres of activity. The real management challenges are uninsurable risks. In the case of insurable risks, risk is avoided at a cost.

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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. 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. When it was introduced for English Windows. Even till the end of the nineteenth century, insurance companies in India were mainly the overseas companies investing in the insurance works in India. An interesting fact here was that higher premiums were charges for Indian lives, as they were considered riskier for insurance cover. Insurance mainly of two types: 1. LIFE INSURANCE 2. GENERAL INSURANCE Under life insurance the life of an individual is covered where by an individual or his family is assured a particular amount. Life insurance covers only the financial losses and not the emotional losses. Indian General Insurance covers almost everything related to property, vehicle, cash, household goods, health and also once liability towards others. The basic difference of general insurance with the life insurance policy is that it offers protection against contingencies. Some of the important milestones in the insurance business in India are: 1912 The Indian life assurance companies act enacted as the first statute to regulate the life insurance business. 1928 The Indian insurance companies act enacted to enable the government to collect statistical information about both life and non-life insurance business. 1938 Earlier legislation consolidated and amended to by the insurance act with the objective of protecting the interests of the insuring public.

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1956 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

Some of the important milestones in the general insurance business in India are: 1. 1907 The Indian mercantile insurance Ltd. Set up, the first company to transact all classes of general insurance business. 2. 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. 3. 1968 The insurance act amended to regulate investment and set minimum solvency margins and the Tariff advisory committee set up. 4. 1972 The general insurance business act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurance 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. Today Insurance companies in India have grown manifold. The insurance sector in India has shown immense growth potential. Even today a giant share of Indian population nearly 80% is not under life insurance coverage, let alone health and non-life insurance policies. This clearly indicates the potential for insurance companies to grow their market in India. In 1999, various reforms were suggested in the insurance industry in India. This has changed a lot of things for the insurance companies in India. These reforms were: Bringing down of the governments stake holding to 50% Only the private companies with a minimum capital of Rs. 100 crores should be allowed to enter the insurance sector. No insurance company can deal in both life and non-life insurance under the same business entity. Foreign insurance companies can enter India only in collaboration with domestic insurance companies.
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 Interest should be paid on delays of payments by the insurance companies in case of non settlement of insurance claims. Many more to bring greater freedom and a well-planned regulation to the insurance companies in India. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 22 private companies have been granted licenses. The various fields covered by insurance companies in India include Life Insurance: for students, children, family, individual etc. Health Insurance: for self, for family, accidental insurance premium, medical claim polices etc. Non-life insurance : home or house insurance and other property insurance, auto insurance (for cars, motorcycle and other two-wheelers, commercial vehicles), infrastructure projects insurance travel insurance, real estate insurance, mobile insurance etc. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. With the largest number of life insurance policies in force in the world, Indias insurance sector accounted for 4.1 percent of GDP in 2006-07, up from 1.2 percent in 1999-2000, far ahead of china where insurance accounts for just 1.7 percent of the GDP and even the US where insurance penetration stands at 4 percent of the GDP. One area that continues to cause concern is the number of customer grievances in insurance, especially in a few specific classes. This calls for more transparency in designing the contract wording and on insisting that the applicant is sufficiently informed about the coverage and more particularly the exclusions. In addition, the legislation itself requires to be transformed to meet the needs of the emerging markets. The demand for health insurance covers has seen a healthy increase, and today the sector is the fastest growing segment in the non-life insurance industry in India, which grew at over 40% last
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year. It is also emerging as an increasingly significant line of business for life insurance companies. While this rate of growth appears to be very healthy, it is on a low base, and health insurance penetration in the country continues to be low. Only about 25 million persons are presently covered for health through commercial insurance, in a country of over 1.1 billion people. Overall, the Indian health sector is still characterized by the near absence of any significant risk protection against major health-related expenditure.

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FUNCTIONING OF INSURANCE INDUSTRY

Insurers Business Model:
Profit = Earned Premium + Investment Income Incurred Loss Underwriting expenses Insurers make money in two ways: 1. Through Underwriting, the processes by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks, and 2. By investing the premiums they collect from insured. The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy.

An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. Insurance companies also earn investment profits on float. Float or available reserve is the amount of money, at hand at any given moment that an insurer has collected in insurance

39

premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. Naturally, the float method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle.

Finally, claims and loss handling is the materialized utility of insurance. In managing the claimshandling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages.

Investment Management
Investment operations are often considered incidental to the business of insurance, and have traditionally viewed as secondary to underwriting. In the past risk management was the most important part of business, whereas today the focus has shifted to fund management. Investment income is a large component of insurance revenues, skilful and careful management of funds. Insurance is a business of large numbers and generates huge amount of funds over time. These funds arise out of policyholder funds in the case of life insurance, and technical and free reserves in the non-life segments. Time lag between the procurement of premium and the payment of claim provides an interval during which the funds can be deployed to generate income. Insurance companies are among the largest institutional investors in the world. Assets managed by insurance companies are estimated to account for over 40% of the worlds top ten asset managers. Returns on investments influence the premium rates and bonuses and hence investment income will continue to be an important component of insurance company profits. In life insurance, benefits from insurance profits accrue directly to policy holders when it is passed on to him in the form of a bonus. In non life insurance the benefits are indirect and mostly by the creation of an investment portfolio. Investment income has to compensate for underwriting results which are increasingly under pressure. In the case of insurance, the difference between revenue and the expenses is known as operating surplus.
40

Revenue = Premium Expenses = (Sum of Claims + Commission payable on procurement of business + Operating expenses)

Operating Surplus = (Revenue Expenses)

Net investment income includes income from trading in and holding stock market securities including government securities, special deposits with the central government, loans to several public utilities and service providers in state government. Insurance premium collected is converted in a pool of fund then divided in to four expenses. To pay the expenses of the management To pay agency commission To pay for the claims Surplus money will be invested in govt. securities

Requirements of an insurance risk

Insurance normally insure only pure risks .However, not all pure risk is insurable .certain requirements usually must be fulfilled before a pure risk can be privately insured .From the view point of the insurer, there are ideally six requirement of an insurable risk: There must be a large number of exposure units The loss must be accidental and unintentional The loss must be determinable and measurable The loss should not be catastrophic The chance of loss must be calculable The premium must be economically feasible

41

Comparison of Insurance with other Similar Factors

1. Insurance and Gambling compared
Insurance is often erroneously confused with gambling .There are two important differences between them .First , gambling creates a new speculative risk ,while insurance is a technique for handling an already existing pure risk .thus ,if you bet Rs 300 on a horse ,a new speculative Technique is created, but if you pay Rs 300 to an insurer for fire insurance, the risk of fire is already present and is transferred to the insurer by a contract. No new risk is created by the transaction. The second difference between insurance and gambling is that gambling is socially unproductive, because the winners gain comes at the expense of the loser .In contract; insurance is always socially productive, because neither the insurer nor the insured is placed in a position where the gain of the winner comes at the expense of the loser. The insurer and the insured have a common interest in the prevention of a loss. Both parties win if the loss does occur .Moreover, consistent gambling transaction generally never restore the losers to their former financial position .In contract ,insurance contracts restore the insureds financially in whole or in part if a loss occurs. 2. Insurance and Hedging compared The concept of hedging is to transferring the risk to the speculator through purchase of future contracts .An insurance contract, however, is not the same thing as hedging .Although both technique are similar in that risk is transferred by a contract, and no new risk is created, there are some important difference between them. First, an insurance transaction involves the transfer of insurable risks, because the requirement of an insurable risk generally can be met .However, hedging is a technique for handling risks that are typically uninsurable ,such as protection against a decline in the price agriculture products and raw materials. A second difference between insurance and hedging is that insurance and hedging is that insurance can reduce the objective risk of an insurer by application of the law of large numbers. As the number of exposure units increases, the insurers prediction of future losses improves, because the relative variation of actual loss from expected loss will decline .thus, many insurance transactions reduce objective risk. In contract, hedging typically involves only risk transfer , not risk reduction .The risk of adverse price fluctuation is transferred because of superior knowledge

42

of market conditions .The risk is transferred, not reduced, and prediction of loss generally is not based on the law of large numbers.

43

LIFE INSURANCE
Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a specified period of time, whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as Life Assurance. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy.

Roles of 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: 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 too.

Importance of 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.
44

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 channelizes 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: 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. Tax Benefit: Under the Income Tax Act, premium paid is allowed as a deduction from the total income under section 80C.

45

INSURANCE COMPANIES IN INDIA

1. Life Insurance Corporation of India 2. Bajaj Allianz Life Insurance Co. Ltd 3. Birla Sun Life Insurance Co. Ltd 4. HDFC Standard Life Insurance Co. Ltd 5. ICICI Prudential Life Insurance Co. Ltd 6. ING Vysya Life Insurance Co. Ltd 7. Max New York Life Insurance Co. Ltd 8. Met Life India Insurance Co. Ltd 9. Kotak Mahindra Old Mutual Life Insurance Co. Ltd 10. SBI Life Insurance Co. Ltd 11. Tata AIG Life Insurance Co. Ltd 12. Reliance Life Insurance Co. Ltd 13. Aviva Life Insurance Co. Ltd 14. Sahara India Life Insurance Co. Ltd 15. Shriram Life Insurance Co. Ltd 16. Bharti AXA Life Insurance Co. Ltd 17. Future General Life Insurance Co. Ltd 18. IDBI Fortis Life Insurance Co. Ltd 19. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd 20. AEGON Religare Life Insurance Co. Ltd 21. DLF Pramerica Life Insurance Co. Ltd 22. Star Union Dai-ichi Life Insurance Co. Ltd 23. National Insurance Company Ltd.
46

Logos of the life insurance companies:

47

DETAIL OF SOME LIFE INSURANCE COMPANY IN INDIA

Alliance Bajaj Life Insurance Company Limited

Alliance Bajaj Life Insurance Company Limited is a joint venture between Alliance AG and Bajaj Auto Limited. The company was incorporated on March 12, 2001. The company received the IRDA certificate of registration on August 3, 2001 to conduct Life Insurance business in India.

Birla Sun Life Insurance Company Limited

It is a joint venture between Birla Group and Sun Life Corporation of U.S.The products of Birla Sun Life Insurance Company (BSLI) are distributed through a fully owned subsidiary BSDL Insurance Advisory Services Limited (BSDL IAS) BSDL. The company claims to have unique products, presenting a powerful combination of returns, liquidity, safety, tax benefits, transparency and convenience.

HDFC Standard Life Insurance Company Limited

HDFC and Standard Life was the first joint venture to enter the life insurance market, in January 1995. In October 1998, the joint venture agreement was renewed and Standard Life purchased 2 percent of Infrastructure Development Finance Company Limited (IDFC). The company as such, was incorporated on August 14, 2000 under the name of HDFC Standard Life Insurance Company Limited. HDFC are the main shareholders in HDFC Standard Life, with 81.4 percent, while Standard Life owns 18.6 percent. HDFC and Standard Life have a long and close relationship built upon shared values and trust.

48

ICICI Prudential Life Insurance Company Limited

The company was incorporated on July 20, 2000, with an authorized capital of Rs.230 Crores (paid up Rs.190 Crores). It is a joint venture of ICICI (74%) and Prudential plc U.K (26%). The company is on the top of the list of competitors to LIC. The company was granted certificate of incorporation on 26-11-2000 and it started its operations on 19-12-2000.

Life Insurance Corporation of India Limited

LIC was established in 1956 and is the dominant leader in life insurance in India. It has 7 zonal offices, over 100 divisional offices and 204 branches in India with over 6.50 lakhs agents.

Tata AIG Life Insurance Company Limited

It is capitalized at Rs.185 Crores of which 74 percent has bee Tata Sons and the American partner brings in the remaining 26 percent. American Insurance Group (AIG) is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. AIGs global businesses also include financial services and asset management. Including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management etc.

SBI Life Insurance Company Limited

Indias largest bank SBI and Cardiff S.A. a leading insurer in France have firmed SBI Life. It is a 74: 24 venture; with Cardiff the foreign partner contributing 24 percent paid capital of Rs.250 Crores. SBI plans to market the insurance products through select branches of SBI and its seven associate banks.

49

OM Kotak Mahindra Insurance Company Limited

The joint venture OM Kotak Mahindra Life Insurance started off with an initial net worth of Rs.150 Crores, with 74: 26 stake between KMFL and OM. Kotak Mahindra is one of Indias premier financial services groups, with a range of over two dozen highly specialised products and services. Starting as a one-product company in the mid 80s, they have evolved into a full service financial conglomerate. Old Mutual pic. Is a leading financialservices provider in the world, providing a broad range of financial services in the area of insurance, asset management and banking. It is a leading life insurer in South Africa, with more than 30 percent market share. The partnership with Old Mutual plc. provides the Kotak Mahindra group with an international perspective and expertise in the life insurance business.

Max New York Life Insurance Company Limited

It is a partnership between Max India Limited, one of Indias leading multi business corporations and New York Life, a Fortune 100 company. The paid up capital of the joint venture is Rs.250 Crores. Max India Ltd. is building businesses in the emerging knowledge based areas of Healthcare, Financial Services and Information Technology.

ING Vyasya Life Insurance Company Ltd.

It is a joint venture between ING, Vyasya Bank, one of Indias leading private sector banks and GMR group. As per the joint venture agreement, Vyasya Bank holds 49 percent stake, ING 26 percent, and the GMR Group would hold 25 percent. The paid up capital of the joint venture is Rs.110 Crores. Vyasya Bank has a very high degree of retail focus with good customer service. ING Group, with an asset base of over Rs.28, 42,000 Crores is a global financial institution of Dutch origin, which is active in the field of banking, insurance and asset management in more than 60 countries.

50

Aviva Life Insurance Company Ltd.

It is a joint venture between Dabur India and CGU, a wholly owned subsidiary of Aviva Pic, is capitalised at Rs.110 Crores. Aviva Pic is the largest life and general insurance group of UK and the worlds largest insurer with worldwide premium income and retail investment sales of 28 billion. Aviva Life has tied up with ABN Amro, Canara Bank, Laxmi Vilas Bank and American Express for distribution of its products. AMP Sanmar Assurance Company Ltd.It is a joint venture between AMP having a stake of 26 percent and the Sanmar Group holding 74 percent. The Sanmar group is one of the largest industrial groups in South India. AMP Limited is one of the worlds leading financial services businesses

DLF Pramerica life insurance company Ltd.

It is a joint venture between DLF and PFI which is the financial company of USA which experience is more than hundred years. DLF is also world biggest real estate company.DLF Pramerica is 45 million dollar joint venture Company. Under the terms, PFI will be the majority shareholder in the joint venture with 61 per cent interest, while DLF will own the remaining 39 per cent. They started insurance business from September 01, 2008. It is true the DLF Pramerica new company and there are many established companies already in the market but in India there many people who dont have any type of insurance so there is opportunity for DLF to earn some market share.

51

Product of Life Insurance

Type of life insurance

Term Insurance Policy Whole life policy Endowment Policy Money Back Policy Annuity & Pension Policy

Term Insurance Policy

A term insurance policy is a pure risk cover for a specified period of time. What this means is that the sum assured is payable only if the policyholder dies within the policy term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period.

What if he survives the 15-year period? Well, then he is not entitled to any payment; the insurance company keeps the entire premium paid during the 15-year period.

So, there is no element of savings or investment in such a policy. It is a 100 per cent risk cover. It simply means that a person pays a certain premium to protect his family against his sudden death. He forfeits the amount if he outlives the period of the policy. This explains why the Term
52

Insurance Policy comes at the lowest cost.

Whole life policy

As the name suggests, a Whole Life Policy is an insurance cover against death, irrespective of when it happens.

Under this plan, the policyholder pays regular premiums until his death, following which the money is handed over to his family.

This policy, however, fails to address the additional needs of the insured during his postretirement years. It doesn't take into account a person's increasing needs either. While the insured buys the policy at a young age, his requirements increase over time. By the time he dies, the value of the sum assured is too low to meet his family's needs. As a result of these drawbacks, insurance firms now offer either a modified Whole Life Policy or combine in with another type of policy

Endowment policy
Combining risk cover with financial savings, endowment policies is the most popular policies in the world of life insurance.

In an Endowment Policy, the sum assured is payable even if the insured survives the policy term.

If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover.

A pure endowment policy is also a form of financial saving, whereby if the person covered remains alive beyond the tenure of the policy; he gets back the sum assured with some other investment benefits.

In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/ education endowment plans. The cost of such a policy is slightly higher but worth its value

53

Money back policy

These policies are structured to provide sums required as anticipated expenses (marriage, education, etc) over a stipulated period of time. With inflation becoming a big issue, companies have realized that sometimes the money value of the policy is eroded. That is why with-profit policies are also being introduced to offset some of the losses incurred on account of inflation.

A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum assured is payable.

In case of death, the full sum assured is payable to the insured.

The premium is payable for a particular period of time

Annuity and pension policy

In an annuity, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protect against risk as well as provide money in the form of pension at regular intervals. Over the years, insurers have added various features to basic insurance policies in order to address specific needs of a cross section of people.

54

5 POINTS FOR BUYING LIFE INSURANCE

Life insurance plays an important role in any individual's financial planning process. For it is life insurance that helps secure the financial future of the nominees. However, many individuals do not know how to go about while considering life insurance products. We have identified five points to remember before zeroing in on a life insurance product.

1) Identify your need

Before considering life insurance, it becomes imperative that individuals first identify their needs. An individual should understand whether buying life insurance is necessary to begin with. For example, if an individual is single and earning but has no financial dependants, then he may not really need life insurance. This stems from the fact that nobody is going to be 'financially hurt' in the absence of the insured (i.e. the individual in question). On the other hand, we can consider a married individual who has family members dependent on him. He also happens to be the sole earning member in the family. Such an individual obviously needs life insurance. This stems from the fact that his entire family is dependant on him for financial support and in his absence, their lifestyle would be severely impaired. Such individuals should have adequate life cover as early as possible.

2) How much insurance do your need ?

After having identified the need to buy insurance, the next step is to ascertain the amount of cover needed. The concept of human life value (HLV) can help in deciding how much life cover an individual should opt for. The HLV takes factors like the individual's annual income and expenses along with the inflation rate into consideration while calculating the value.

55

3) Which product should you consider?

After having quantified the need for insurance, the next step is to finalise a plan that will fulfil the individual's need. There are two kinds of insurance plans - term plans and savings-based plans. A term plan insures the individual for a high sum at a low cost. A term plan makes for a good fit in all individuals' portfolios, irrespective of their profile. Many individuals also look at life insurance as a savings instrument. Here, apart from insuring the individual's life for a certain amount (i.e. the 'sum assured' in insurance parlance) savingsbased life insurance plans also give returns on maturity. This is unlike term plans, which act as a pure risk cover and do not give any returns on maturity. Term plan: A feasible alternative? Age (Yrs) Sum Assured (Rs) Tenure (Yrs) Premium (Rs) Term Plan 30 2,000,000 2,000,000 30 30 7,000 51,500

Savings-based plan 30

As can be seen from the table, it could become expensive for an individual to adequately cover himself for the necessary amount with a savings-based plan due to the higher premiums. Instead, individuals can look at covering themselves with a term plan for the necessary amount and invest their savings in various instruments at their disposal like the national savings certificate (NSC), public provident fund (PPF), bank deposits and mutual funds.

4) Select an insurance agent

Having understood how much insurance is needed, an individual then needs to approach a life insurance agent. Individuals wanting to buy insurance should preferably opt for full-time life insurance agents. The agent should have a good track record to show for in terms of offering objective advice in the client's favour and not his own. This will stand the individual in good stead over the long run since life insurance needs call for evaluation every few years and the insurance agent will help the individual with the same over a period of time.

56

5) Compare policies across companies

Before zeroing in on an insurance plan from any company, individuals should compare policies across insurance companies. This will help them in evaluating, which insurance plan is best suited to their needs. One way of doing this is by contacting the insurance agent and asking him for a comparative analysis of insurance plans. Another way is by visiting the websites of different companies and scouting for relevant information. For example, an ideal term plan for a 25 year old can be the one that offers him the necessary cover at the cheapest cost. For a unit linked insurance plan however, different criteria like expenses, fund management and flexibility offered will come into the picture. The comparison will differ across various parameters depending on individual needs as well as the type of plan chosen.

57

COMPARATIVE

STUDY

OF

DIFFERENT

PRODUCTS OF LIFE INSURANCE COMPANIES

1) ENDOWMENT PLAN Life Insurance Tata Life AIG Kotak OM Life Max Insurance New SBI Life DLF Pramerica life Insurance Kotak and Endowment Life Gain and Sudarshan Endowment Plan protection covers Available under police would two continue after Dhan surakhsha

York Life

Insurance

COMPANY Corporation Insurance PRODUCT Jeevan Mitra Assure DETAIL Security

Growth Plan Plan Policy would a continue to be plan. enforce

Features

after life and at the time that

Plans - Fixed the death of the Sum Assured police holder all (Plan Increasing A): premium will

your death. If same you the outlive ensures

policy money does not

waiver and after maturity

term, you will lie idle still receive

Sum Assured the (Plan B):

sum assure will given family bonuse. to his with

sum assured, with bonuses

Age Limit

18-50

18-65

18-65

Min: 91 days 12-62 Max 65, (Regular

yrs 18-65 yrs.

60,55, 50 for Premium 10, 15, 20, 25 Payment) 12terms. 50 yrs 65 yrs (Single for Age to 60 Premium plans Payment)

58

Term

15-30

10,20,30.

10-30 yrs max 10,15,20,25 plan can and plan age 60

8-30 yrs

10-15-20-25-30 Yrs plans are available

Endowment to age

age 60 years cover: 75 yrs is available. Sum Assured 50,000/No limit Survival Benefits Basic Sum A guaranteed sum also

Rs 50,000

Rs limit

50,000-no

assured On

maturity, Fixed

Sum Sum

assured accrued

assured along addition with bonuses

of plus the bonus you get sum Assured opted plus plus

vested 10% of the addition. Bonus assured

the reversionary plus

will sum assured if addition is the together with vested bonus. bonus assured If Plan

be payable on the policy has amount in the sum the assured life been in force Accumulation for 10 years or Account*,

B terminal bonuse maturity

of all paid up opted SA gets the in additions,

increased at a benefit will be from rate of 5% per the face amount

surviving till more, the end of the payable term death maturity Death Benefits

is excess of the bought on sum assured or the

bonuses annum if

declared, any

death claim in A guaranteed the beneficiary On death of the Fixed Sum Base the case of addition of would receive the

face

Life Assured along amount, accrued the reversionary and

this policy is 10% of the the sum assured Insured, sum with twice or thrice sum assured if or the amount in assured the basic sum the policy has the assured been in force Accumulation

vested bonus bonus

together with are payable to terminal bonus sum of assured Nominee. paid If in case of

depending on for 10 years or Account, whether it is more, double cover payable or triple cover death endowment. maturity is whichever on higher. or

up Plan B opted participating. In if nominees wud case of non

is additions,

any is paid to get a Cover participating the increased at face amount

beneficiary. In the rate of 5% case of death per of annum

Life along with the

Insured before
59

attaining age bonus accrued 10, premiums paid refunded together with interest are all

Tax benefits Section 80C, Section 80C, Section 10(10D) Income Act Riders Accident Benefit of 10(10D) Tax Income Act Term of 10(10D)

80C, Section 80C, Section 80C, Section of 10(10D) of 10(10D) Tax Income Act Term Assurance Accidental death rider, of 10(10D)

80C, of

Tax Income Tax Act Income Act Term Benefit / Personal

Tax Income Tax Act

Accident and Preferred Term Accident Disability Riders Benefit; Accidental Death

benefit Term

Benefit Rider, Cover; Term Rider, Accidental

rider, Waiver of & premium and rider critical

Benefit; Dread Disease Death Rider, Waiver Accidental of Premium Total Term Permanent Disability Cover;

Permanent Disability

illness rider

Benefit; Critical Rider,

Illness Benefit; Renewable Life Guardian and Convertible Rider, Rider Payor

Benefit; Accidental Disability Guardian Benefit Loans Yes Yes After 3

Critical Illness

Take

loan

policy years

against police

60

2) TERM PLAN Company Life Insurance Kotak name Corporation Life Insurance Plan Anmol Jeevan Kotak Plan Term Assure Lifeline Level Cover Term Shield DLF Pramerica plan Features Pure risk cover Pure cover risk Convertible - term cover be Pure risk cover Pure risk Pure risk OM Tata AIG Life Max New York SBI Insurance Life Insurance Insurance Life DLF insurance Life

cover. Allows cover you to increase your cover at 5% every year or substantial increase of for

convertible to can

any other plan converted into provided there years are 5 saving plans

before

cover ceases

cover @ 50% every 5 years Age Limit 18-55 Term 5 to 25 yrs 18-60 18-60 18-55 18-60 18-60 5,10,15,20,25

10 - 30 years 1, 5, 10, 15, 5, 10, 15, 20 or 5 to 25 yrs for regular 20 and 25 25 years

premium 5 - 30 years for single

years or until age 60.

premium Max Premium Premium Premium for payable term the Premium payable Premium for for the Premium for term

Premium payable for the payable Paying term chosen the

term payable for the payable term chosen the

term chosen

61

period

chosen

chosen

chosen

Max Maturity Age

65 years

70 years

Not Available 60 years

65 years

According to the term

SA -Min Rs.5,00,000/- No min sum Rs 500,000/- 2,50,000 assured mentioned -

It according to the which customer want to choose. term

Min premium must be Rs 2000/SA -Max Rs. 3,00,00,000 (Inclusive all of Not available Rs 20,00,000/Rs 5 crore

Max amount

face will

be decided on the basis of medical financial underwriting and

Term

Assurance plans)

Survival No Benefits Death benefits

maturity No

maturity No

maturity No benefits

maturity No

maturity No

maturity

benefits.

benefits.

benefits

benefits.

benefits

Sum Assured Sum assured Face Amount Sum Assured

Depending on Sum Assured the chosen nominee would receive increased sum assured @5% per annum or 50% every 5 years. Depends option the

62

on the number of policy years completed.

Premium For 25 yr old For 25 yr old For amt male annual the male annual the male annual

25

yr For 25 yr old the yearly premium is 1662 for 15 yr for Rs

Premium

is

based on the income of the assured person.

premium is Rs premium 1414.00 for 15 Rs

is premium is Rs term

2220.53 2304 for 15 6,00,000

yr term for Rs for a 15 year year term 15 6,00,000 sa. term with Years Term

sum asssured Plan of 6,50,000 Maturity Nil Benefits Riders you opt for can Not available Accidental Death Benefit, Permanent Disability Benefit, Critical Illness Benefit Accident Personal Accidental Accidental and benefit rider Nil Nil Nil Nil Nil Rs

Benefit rider Accident Benefit Death Rider, Disease Waiver Premium Rider Dreaded Accidental Rider, Total of Permanent Disability Rider, Premium

Waiver Benefit Rider

63

Tax benefits

Section 80C & Section 10(10D) Income Act apply premium

80C Section

80C Section 80C & Section 80C & Section of 10(10D)

80C

of & 10(10D) of & 10(10D) of 10(10D) Tax Income would Act for apply for premia Tax Income would Act for apply

of & 10(10D) of Tax Income would Act for apply Tax would for

Tax Income Tax Act Income would would apply for Act for premia for life apply

for premia for life cover and riders premia for life premia for life and respectively. cover riders respectively and cover riders respectively and

life cover and life cover and cover riders respectively riders riders

respectively. respectively

3) RETIREMENT PLAN

Life COMPANY Insurance NAME Product Name Tata AIG Life Max York Life Easy Retirement Plan New MetLife Insurance Life MET Pension Participating Deferred Annuity SBI Life

DLF Pramerica Life insurance No retirement Plan is available

Corporation Insurance Jeevan Nidhi Nirvana

Insurance Lifelong - Pension

64

Features

This is a with This profits deferred annuity which offers cover

is

a Easy

Life MET Pension

The pension is Account can any of

flexible policy Retirement that allows you Plan

gives structured as Holder a invest

plan to choose your guaranteed also retirement fund pension risk and your

participating amount endowment regular and

retirement age

a contribution

participating towards immediate annuity retirement savings. minimum Rs. 3,000 annually. can increase or

lower annual contribution during working life, subject this minimum amount Age limit 18-65 18-55 20-60 18-65 to

65

Min/Max Rs Sum Assured 50,000/Min annual premium: Rs 3000. S.A. 500000 Max Rs

Min

annual Min Premium Rs 10,000/-

premium: 5000/-

Min S.A Rs 296000/-

Survival Benefits

Sum Assured A + Guaranteed Reversionary Additions + bonus

Withdraw up On maturity to 33% of the you have a annuity amount free choice to

Bonus is used projected at an to generate a annual pension (annuity). Guaranteed compounded rate of 3%

tax withdraw up and to 33% from

chose to buy your an with balance annuity Personal the Pension Account in a

from the 5th year.A

Additions @ policy Rs.50/-

per Terminal

amount from lump sum not only

thousand Sum bonus of up to assured each completed for 40% payable at the time of or

MetLife but any other

retirement

insurance company

year, for the death first five must

(policy be for in a 10

years. Policy force

to participate minimum in profits from years). 6th year

onwards and shall be

66

entitled receive bonuses whenever declared

to

Vesting age Death Benefits

40 yrs

50-65 years

50-70

guaranteed In addition death the

case

of In case of the

10% to

within death of the

sum one year from policy holder the policy date, during the

assured

payable at the premia shall be endowment time of your refunded death if your without policy phase, there any will be return premium

has interest. In the of plus

been in force unfortunate for 10 years.

event of your reversionary death after one bonus if any. year effective from Immediate date annuity

of the policy phase: There (but before the will be no vesting we date), death benefit be during of annuity the

shall

refund

premium with phase for the interest @ 3% beneficiary per annum as of the policy the minimum

guaranteed interest rate,

67

limited to the sum assured

specified in the schedule together with

the Cash Value of the Pure

Endowment benefits, if

any. This may be availed of by beneficiary the

Bonus

Guaranteed additions@ Rs

A Reversionary

50/-per bonus

thousand Sum projected at an assured each completed for annual compounded rate of 3%

year, for the from the 5th first five years policy year. A Terminal bonus of up to 40% payable at the time of or

retirement death must force

(policy be for in a 10
68

minimum

years)

NCO

Can commute 25% of your Notional upto 1/3rd of accumulated Corpus,

On maturity you have a choice to

the amount on sum assured is comprising the vesting refunded after Sum Assured, your retirement together or death Pure Endowment benefits purchased out of the bonuses (if any) as with

withdraw up to 33% from your Personal Pension Account in a lump sum

declared by the Company from time to time. You can take up to 25% of this Notional in

Corpus

lump sum and use the balance amount, purchase to an

69

annuity

Annuity

The remaining

The remaining You can take 75% can be up to 25% of Notional in

amount can be used purchase this

used to buy an an annuity that Corpus annuity

pays a monthly lump sum and pension for the use the balance rest of your (or amount, your purchase beneficiarys) annuity. life to an

Riders

Term Assurance

Accident, Term and

Rider Option, Critical Illness Critical Illness option, Accidental Death Disability Benefit and Rider riders

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Annuity Options

Annuity

for No

Annuity Annuity at Life

for

Fixed annuity amount as

Life, Annuity options payable for present

5,10,15,20 yrs as chosen and then for life, Annuity with return of

long as you live

purchase price on death,

Increasing annuity, Joint Life Survivor Annuity Tax Benefits 80CCC (1). 80CCC (1). 80CCC (1). 80CCC (1). 80CCC (1). Last

4) CHILDREN PLAN

COMPANY NAME Product Name

DLF Pramerica life MetLife Insurance MET Junior MB SBI Life Insurance SBI - Scholar insurance Child progress plans DLF Pramerica fee protect & protect+

71

Features

This policy is suitable for The plan is suitable for people This is the plan for parents who wish to who wish to provide for their those want people that who their

provide for the children's children's higher education expenses by education/marriage

children get higher education and

paying fixed, affordable premiums. It can be

success in their life.

availed by parents having children aged between 0 to 14 years Age limit 0-14 0-15 0-18

MinimumMaximum assured Survival Benefit sum

50,000- nolimit

50,000 10 lakh

50,000-nolimit

Term

At

the Amount

of After the child attains the 18 Child

can

easily

end of money back years of age, Sum Assured is complete his study paid in four equal annual 5th year 20% of sum assured spread over four years. Also guaranteed additions are

10th year

20% of sum payable along with the last assured installment. The policy holder has the option to

15th year

20% of sum assured

receive a lump sum instead of four installments spread over four years

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Death Benefits On Death Prior of to risk commencement

40% sum assured

Full

If

father

who the

purchase police death entire

suddenly then the

full premium paid along with interest at such rates as decided by the

along with the is bonus paid

premium

will paid by the company and after when child is 18 his sum assure will give him.

Company from time to time shall be paid to the nominee. On Death after the

immediatel y. This

apart child will be

commencement of risk Guaranteed plus Sum Assured

eligible for the scheduled four annual installment s of Sum assured Plus

accrued are

guaranteed payable the

additions without

deducting

survival benefits, if any, paid earlier

accrued additions Bonus

guaranteed

Guaranteed bonus @ Rs.25 per thousand sum assured is payable along with the last installment when the child attains 21 years of age

Riders

Accident

and

Total Accidental pay

benefit by the

Permanent Disability benefit will

company Loans No Behalf of police loan can be providing.

73

ANALYSIS CUSTOMER BUYING BEHAVIOUR FOR LIFE INSURANCE PRODUCTS

74

1) Do you have any Insurance Plan?

ANSWER Yes No

RESPONSE IN FAVOUR 120 80

Interpretation: According to this 120 people have insurance plan and 80 people dont have insurance plan.

75

2) Are you interested in any insurance plan? ANSWER yes No RESPONSE IN FAVOUR 60 140

Interpretation: Mostly people are not interested in taking insurance plan due to number of reasons: They already have insurance plan. They do not believe in insurance companies They fear from taking risk

76

3) Are you heard about DLF Pramerica Life insurance? ANSWERS Yes No RESPONSE IN FAVOUR 66 134

Interpretation: Awareness of people about DLF Pramerica is less because it is newly introduced company. And no advertisements display by them or company regarding their products.

77

4) Which company insurance plan preferred by you? NAME OF COMPANY LIC Other RESPONSE IN FAVOUR 140 60

Interpretation: People prefer LIC because in this government has largest share. Other companies establish few years before and they are completely private companies. Premium in comparison to other companies is less. And also People dont know any IRDA that control them. So they prefer to invest in LIC.

78

5) At what interval are you interested for paying premium? INTERVAL Quarterly Half yearly Annually RESPONSE IN FAVOUR 120 60 20

Interpretation: Mostly people prefer quarterly premium because in this they have to pay less amount. That easily bears by them. Upper class people who have large money to invest, they prefer yearly installment because this give them more benefits.

79

6) How long do you intend to remain invested? YEARS 1-3 years 3-5 years 5-10 years >10 years RESPONSES IN FAVOUR 110 40 30 20

Interpretation: Mostly people in favor of less time because: Future is uncertain they need money at any time In India mostly generation belong to middle class they dont have extra money that can they save for future

80

7) Which plan preferred by you? TYPE OF PLAN TERM PLAN ANY OTHER PLAN RESPONSES IN FAVOUR 66 134

Interpretation: Mostly people hardly give importance to other plan rather than term plan, because term plan is pure risk plan. In this your family members use money only when insurer died in given year. But other plans such as child plan, endowment plan give benefits to insurer and his family at the whole time. It means these plans contain the features of safety and saving.

81

8) Are you satisfied with your life insurance policy? SATISFACTION LEVEL Highly satisfied Satisfied Not satisfied Not responding RESPONSE IN FAVOUR 40 30 20 30

Interpretation: 40 people are satisfied with their police, 30 people are satisfied, 20 people are not satisfied and 30 people are not responding.

82

9) According to you, what is the right age to buy insurance? Age > 25 25-35 35-45 < 45 Any time RESPONSE IN FAVOUR 78 57 36 17 12

Interpretation: Mostly people prefer to buy insurance plan at the age of less than 25 years.

83

10) What do you think are the benefits of Life Insurance? Benefits Covers future uncertainty Tax Savings Investments Comprehensive investment coverage instrument and RESPONSE IN FAVOUR 70 67 40 risk 23

Interpretation: Mostly people prefer insurance plan as it covers the future uncertainty and tax savings benefits.

84

11) Which feature of Life Insurance policy will you consider while buying? Features Money Back Guarantee Low Premium Larger Risk Coverage Companys Credibility RESPONSE IN FAVOUR 65 53 45 27

Interpretation: Mostly people considered money back guarantee, low premium and larger risk coverage while buying an insurance plan.

85

86

FINDINGS
Low level of awareness of people about life insurance who has buying capacity. People dont know which product is beneficial for them. People not ready to believe on private insurance sector. People believe on the agents but agents dont have sufficient time for proper arrangement of people funds. It means some time agent knows money increment is not saved in this fund yet they dont transfer it into another funds Sometime agents become so much conscious about their commission, in such case they dont provide actual information to customer, they tells only strong point about products. More than half of them buy for Tax Planning. Only 50% satisfied with the extent of their life insurance cover.

87

88

LIMITATIONS
The following difficulties were encountered during the execution of the project. 8 week time is not enough to study the vast insurance sector. No company is ready to share information due to competition in the market. Training department has no sufficient time for giving their efforts. As I didnt have sufficient funds to explore all the questionnaire effectively

89

90

RECOMMENDATION
Agents must be trained & know everything. It issued quickly with less formalities. Insurance should be popularized as means of security rather than tax Provide proper knowledge to customer. Short-term premium policies also introduced. Proper advertisement must be given for awareness and sale purpose. Companies must conduct regular survey to know people need. Should aware the people about additional features of companys product as compared to their competitors.

91

92

CONCLUSION
Insurance is a market where customer invests money only when he is convinced that his money is going into right hands and will get him best returns according to his financial needs. Hence he gives his money only into the hands of the person he trusts most. Therefore, it is very important for DLF Pramerica Life Insurance to develop its sales channel so that more and more people can be brought into the loop as Life Advisors. Graduate trainee program is a good initiative for the purpose. 4/6 criteria will ensure quality Life Advisor for the company. They will take interest in the program, as there are lots of growth prospects by which they can give a very good launch to their carriers.

With regards to strategies, different companies employ different ones. Some of the companies give much preference to infrastructure as a criterion for the selection of corporate agents; whereas others give preference to the existing distribution network of a prospective Corporate Agent. Corporate Agency is one of the most important and sensitive issue as far as channel for distribution of life insurance product is concerned. Graduate trainee program is also equally productive in form of Life advisors for the company and Sales Managers from among the students who are undertaking this program

93

94

BIBILOGRAPHY

WEBSITES: www.irdaindia.org www.licindia.in www.scribd.com www.wikipedia.org www.answers.com www.google.com www.wiki.answers.com www.docstoc.com www.insuranceguru.com

DLF PRAMERICA LIFE INSURANCE.. BORUCHERS BOOKS: KOTHARI & MEHTA

95

Annexure

96

QUESTIONAIRE
1) Do you know about Insurance policy?

Yes No

2) Are you interested in any Insurance policy?

Yes No

3) Are you heard about DLF Pramerica Life insurance?

Yes No

4) Which company insurance plan preferred by you?

LIC Other company

5) At what interval are you interested for paying premium?

Quarterly Half yearly Annually

6) How long do you intend to remain invested?

Between 1-3 years Between 3-5 years Between 5-10 years >10 years

7) Which plan preferred by you?

Term plan Any other plan

97

8) Are you satisfied with your life insurance policy?

Highly satisfied Satisfied Not so satisfied Not responding

9) According to you, what is the right age to buy insurance?

< 25 years 25 - 35 years 35 - 45 years > 45 years Any time

10) What do you think are the benefits of Life Insurance?

Covers future uncertainty Tax Savings Investments Comprehensive investment and risk coverage instrument

11) Which feature of Life Insurance policy will you consider while buying?

Money Back Guarantee Larger Risk Coverage Low Premium Companys Credibility

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