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COMPARATIVE STUDY OF HDFC SLIC, BAJAJ

ALLIANZ, BIRLA SUN LIFE AND LIC

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS


FOR THE AWARD OF THE DEGREE OF M.B.A

SUBMITTED BY:
ASAF ALI

UNDER SUPERVISION OF: UNDER GUIDANCE OF


MR. SANCHIT SACHDEVA MRS. VEERA LAKSHMI
SALES DEVELOPMENT MANAGER ASST. PROF MBA DEPT
HDFC SLIC COER SCHOOL OF MGT

UTTRAKHAND TECHNICAL UNIVERSITY, DEHRADUN


SESSION 2007-2009

1
TO WHOM IT MAY CONCERN

This is to certify that aforesaid candidate of MASTER OF BUSINESS


ADMINISTRATION (MBA) of the COER SCHOOL OF MANAGEMENT
(COER-SM), have satisfactorily completed dissertation project on the topic “” as per
rules of UTTRAKHAND TECHNICAL UNIVERSITY, DEHRADUN in
academic session 2007-2009.

His performance was satisfactory during development of the project.

Project Guide
(Mrs. Veera Lakshmi)
COER-SM
Dated:
ASAF ALI

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CANDIDATE’S DECLARATION

I, Asaf Ali, a bonafide student of MBA at the COER School of Management,


Roorkee, hereby declare that I have undergone the Summer Training at HDFC SLIC
LTD under the supervision of Mr. Sanchit Sachdeva.

I also declare that the present project report is based on the above summer
training and is my original work. The content of this project report has not
been submitted to any other university or institutes either in part or in full for
the award of any degree, diploma or fellowship.

(Signature)
Name: Asaf Ali

Roll No: 07060500016

Place: Roorkee

Date:

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ACKNOWLEDGEMENT

I would like to take this opportunity to thank all those who have helped me
tremendously during the course of the project.

My heartiest thanks are due to many persons for assistance in this project to
present state. The profound gratitude to our teachers especially;

 Mrs. Veera Lakshmi for being my guide throughout the completion of


this project.

 Mr. Hridesh Chauhan, Branch Manager of HDFC Standard Life


Insurance Corporation, Roorkee for clarifying the problems which I
encountered during the preparation of this project.

I would also like to thank Mr. Sanchit Sachdeva, Sales development


Manager, for guiding me throughout my project. I also extend my
gratitude to other SDM's and my friends who have helped me directly or
indirectly to complete my project.

I also acknowledge the Knowledge that I have gained during the preparation of
this project.

ASAF ALI

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CONTENT

1. INTRODUCTION 6
2. EXECUTIVE SUMMARY 7
3. OBJECTIVE OF THE STUDY 8
4. COMPANY PROFILES 9-13
5. DEPARTMENT OVERVIEW 15-17
6. INSURANCE FUNCTION 18-20
7. SOME TERMS ABOUT ULIP PLANS 21-23
8. PRODUCT PROFILE 24-44
9. TAXATION BENEFIT 45-48
10. COMPARATIVE STUDY OF DIFFERENT FIRMS 48-51
11. RESEARCH METHODOLOGY 52-54
12. CONCLUSION & RECOMMENDATION 55
13. BIBILOGRAPHY 56

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INTRODUCTION

The project started with class room sessions involving lectures and interactions
with the mentors Mr. Sanchit Sachdeva (SDM) and Mr. Hridesh Chauhan
(BM). They explained all the plans available with HDFC SLIC in detail and
the pension plan comparison of BIRLA SUN LIFE, BAJAJ ALLIANZ & LIC.

The classroom also involved role plays and games. The role plays and games
involved students being asked to play the roles of customers or clients and that
of a person trying to persuade the customer to go in for a plan with HDFC
SLIC.

These class room lectures and role-plays helped me to gain a substantial


understanding of the plans. This in turn helped me to effectively explain these
plans to people whom I meet or took appointment to meet.

The connect of life insurance has undergone several changes over the years and
what has myriad array of attractive options apart from the basic of life cover.
Life insurance schemes also offer tax benefits. In today’s scenario life
insurance solves the three objectives.

1. Security

2. Saving

3. Tax Benefit.

\
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EXECUTIVE SUMMARY

This project is based upon the fact & figure gathered from the websites about the
plans of the firm.

In the first part of the report there are some plans which are frequently sold by
HDFC SLIC in the market, and then comparative study of pension plan of
different firm namely BIRLA SUN LIFE, BAJAJ ALLIANZ and LIC is there

In the last part of the project I have given some of the findings and conclusion
about the life insurance market and what is the potential of the market. In the
end I have give all the sources from which I have collected all the information.

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OBJECTIVE OF STUDY

1. Comparative study of HDFC SLIC, BIRLA SUN LIFE, BAJAJ


ALLIANZ and LIC.

2. To analyze the pension plan on the basis of features offered.

3. To observe working of various departments of the organization.

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COMPANY PROFILE
HDFC LIMITED
HDFC was incorporated in 1977 with the primary objective of meeting a social
need – that of promoting home ownership by providing long-term finance to
households for their housing needs. HDFC was promoted with an initial share
capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the


country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another objective is to
increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets.

Organizational Goals

HDFC’s main goals are to


a) Develop close relationships with individual households,
b) Maintain its position as the premier housing finance institution in the
country,
c) Transform ideas into viable and creative solutions,
d) Provide consistently high returns to shareholders,
e) To grow through diversification by leveraging off the existing client base.

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HDFC STANDARD LIFE
The Partnership:
HDFC is an organization that strives for excellence, with the twin objectives of
enhancing customer satisfaction and shareholder value”
HDFC and Standard Life first came together for a possible joint venture, to
enter the Life Insurance market, in January 1995. At the outset it was clear that
both companies shared similar values and beliefs and a strong relationship
quickly formed. In October 1995 the companies signed a 3 year joint venture
agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further
strengthening the relationship. The next three years were filled with
uncertainty, due to changes in government and ongoing delays in getting the
IRDA (Insurance Regulatory and Development authority) Act passed in
parliament.
Despite this both companies remained firmly committed to the venture.
In October 1998, the joint venture agreement was renewed and additional
resource made available. Around this time Standard Life purchased 2% of
Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also
started to use the services of the HDFC Treasury department to advise them
upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and
both companies agreed the time was right to move the operation to the next
level. Therefore, in January 2000 an expert team from the UK joined a hand
picked team from HDFC to form the core project team, based in Mumbai.

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Around this time Standard Life purchased a further 5% stake in HDFC and a
5% stake in HDFC Bank. In a further development Standard Life agreed to
participate in the Asset Management Company promoted by HDFC to enter the
mutual fund market. The Mutual Fund was launched on 20th July 2000.

The company was incorporated on 14th August 2000 under the name: HDFC
Standard Life Insurance Company Limited.

Their ambition from as far back as October 1995 was to be the first private
company to re-enter the life insurance market in India. On the 23rd of October
2000, this ambition was realized when HDFC Standard Life was the only life
company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with 81.6%, while
Standard Life owns 18.4%. HDFC and Standard Life have a long and close
relationship built upon shared values and trust. The ambition of HDFC
Standard Life is to mirror the success of the parent companies and be the
yardstick by which all other insurance companies in India are measured.
HDFC Standard Life Insurance Company has been signed on by Blue Star to
provide insurance cover to its 1,805 employees across India and overseas.
HDFC Standard Life Insurance is one of the leading players in the group
insurance segment of the life insurance business. Its group business has grown
significantly since inception and now covers over 25,000 lives, across the
entire industry spectrum including software, FMCG, pharmaceuticals, banking,
consultancy, BPOs, retailing, and consumer electronics
HDFC STANDARD LIFE

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MISSION:-
HDFC Standard Life aims to be the top new life insurance company in the
market.
This does not just mean being the largest or the most productive company in
the market, rather it is a combination of several things like:
 Customer service of the highest order
 Value for money for customers
 Professionalism in carrying out business
 Innovative products to cater to different needs of different customers
 Use of technology to improve service standard
 Increasing market share

VALUES:-

1. SECURITY: Providing long term financial security to its policy holders


will be the company’s constant endeavor. It will do this by offering life
insurance and pension products.

2. TRUST: HDFC Standard Life appreciates the trust placed by its policy
holders in it. Hence, it will aim to manage their investments very
carefully and live up to this trust.

3. INNOVATION: Recognizing the different needs of its customers, it


will be offering a range of innovative products to meet these needs. The
company’s mission is to be the best new life insurance company in India
and these are the values that will guide it in this

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Why HDFC Standard Life?
There are many reasons why one may choose HDFC Standard Life Insurance
Company Ltd. as your partner in meeting your insurance needs:

a) Innovative products to meet your needs.


b) Efficient customer service team.
c) Good financial track record of both parents – HDFC and Standard Life.
d) Certified Financial Consultants to advise you.
e) Professional approach in managing your investments.
f) Income Tax benefits for our insurance products.

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FINANCE DEPARTMENT AT HDFC STANDARD LIFE

The finance department of HDFC Standard Life Insurance is headed by the


General Manager (Finance), who reports to the MD and CEO. There are four
other departments under the Finance Departments. These are:
1. Accounts Department
2. Actuary Department
3. Investment Department
4. Underwriting Department

The Accounts Department:


The Accounts Department functions like any other Accounts department. It is
concerned with the disbursement of salaries, reimbursements, incentives,
commissions to agents. It also handles the payments due to other agencies with
which the Company interacts, viz. event management companies etc. The work
of an Accounts department assumes much importance in an insurance company
because it has to be able to pay the claims arising time to time.

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The Actuary Department:
The Actuary Department is the “Pricing Department” of an insurance company.
It must be understood that the basic premise on which the insurance companies
work is “use the corpus of policy holders for disbursement for any claim”.
Based on this principle, this department decides the amount of premium to be
charged from a client for a particular policy. This is normally done with the
help of Mortality Tables, which can either be prepared by the company itself,
or the company can use the existing tables available for its use. The IRDA
(Insurance Regulation Development Authority) has prescribed the use of the
mortality tables used by LIC for all other companies.
The Actuary Department is also responsible for Asset-Liability Management of
the insurance company. It must ensure that the Solvency margin (Assets-
Liabilities) must be at least Rs 50 crores, as prescribed by IRDA. 95% of the
surplus above this has to be distributed to the investors a bonus. HDFC
Standard Life has till now declared three bonuses to its policyholders

The Investment Department:


The Investment Department is responsible for the investment of the money of
the investors. Since the basic reason for the investors investing their money in
Life Insurance is security, IRDA has put certain regulations on such companies
for investments so that the money of investors is safe.

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These guidelines are:
1. not less than 50% of the corpus will be invested in Government Securities
(G-Sec)
2. Up to15% of the corpus will be invested in infrastructure, social and rural
sectors.
3. Not less than 20% can be invested in government and other equities.
4. Remaining 15% can be invested in “unapproved” equities.
Till recent time, HDFC has not been investing in equities. But now it has
decided to follow the footsteps of its Joint-Venture partner Standard Life,
which invests around 75% of its corpus in equities. The Investment
Department is also responsible for calculating the returns of the investment to
the investors. Here also the insurance companies are bound by regulations and
guidelines. According to IRDA, the returns have to be in the range of 6 %-9 %.

The Underwriting Department


This department is responsible for taking the decision on whether to insure a
person or not. For this it must take into account the risk premium associated,
the reinsurance opportunities etc. normally, there are charts available with the
people of this department on the basis of which they can come to a viable
decision.

Underwriting is done on the basis of two grounds:

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· Financial Grounds: here the underwriters decide on the worth of the person
by taking into account his tax returns of the last three years. On this basis they
are able to assess the premium paying ability of that person and accordingly
take a decision.
· Medical Grounds: each new customer is required to undergo a
comprehensive medical test, which determines the person’s general health. On
the basis of this report, the underwriters decide upon the premium to be
charged from customer.

Functions of Insurance

The functions of Insurance can be bifurcated into three parts:


1. Primary Functions
2. Secondary Functions
3. Other Functions

The primary functions of insurance include the following:

1) 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.

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Insurance is actually a protection against economic loss, by sharing the risk
with others.

2) Collective bearing of risk - Insurance is a device to share the financial loss


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

3) 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

4) Provide Certainty - Insurance is a device, which helps to change from


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

The secondary functions of insurance include the following:

1) Prevention of Losses - Insurance cautions individuals and businessmen to


adopt suitable device to prevent unfortunate consequences of risk by observing
safety instructions; installation of automatic sparkler or alarm systems, etc.
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Prevention of losses causes lesser payment to the assured by the insurer and
this will encourage for more savings by way of premium. Reduced rate of
premiums stimulate for more business and better protection to the insured.

2) Small capital to cover larger risks - Insurance relieves the businessmen


from security investments, by paying small amount of premium against larger
risks and uncertainty.

3) Contributes towards the development of larger industries - Insurance


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

The other functions of insurance include the following:

1) 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.

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2) 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.

3) 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

SOME TERMS ABOUT ULIP PLANS

Fund Management

The crux of the entire product is the returns that this product can generate and
this is dictated by the management of the fund. There is no great value in doing
well in all other aspects of the product delivery if the fund does not perform
well.

The insurance company has two options with regards to the management of the
fund i.e. external and internal. External funds usually have a proven track
record that could be used as a significant marketing too. In India many of the
insurance companies, which are apart of the larger financial services groups,
already have a sister fund Management Company and they could bank on their
performance. For others, they would usually be having an in-house investment
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team and this could be extended to management of the funds too. The expenses
and hence the cost should be kept in mind as by nature the unit linked
insurance product is a very transparent product and hence this would become a
significant selling point in the long run.

Charges and Expenses

There are different charges that can be levied by the insurance companies,
some of the more common ones are:

1) Initial charges

2) Annual charges

3) Investment charges

4) Morality charges

5) Surrender charges

Initial charges

Initial charges are applied at the time of setting up the policy; this could be in
the form of a bind offer spread and also in the form of allocation of units
known as the allocation factor. It is also possible to be levying a per member
level charge.

Annual charges

The annual charges can either be fixed or can be linked to the size of the fund.
It could also be linked to the number of members in the scheme. This charge is
usually taken to cover the maintenance expenses of the insurer.

Investment charges
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A fund management charge is levied to take care of the fund management
expenses depending upon whether the fund is managed internally or externally.

Mortality charges

It is possible to have an insurance element built into the super annuation


contract and in case of a gratuity there would be an element of insurance the
degree and the form could differ from company to company.

The insurance premium can be taken as a part of the gratuity contract of it can
be administered outside this but packaged to look as if it is a whole some
product offering gratuity and insurance to the employees of the organization.

Surrender Charges

The surrender charges can be used in multiple ways. It could be used as a way
of recouping the initial outlay of the insurer in case the company decides to
withdraw in the early years of the contract or it could be used as a deterrent for
the company to shift the service provider at any point of the contract. Usually
the surrender charges/ penalty would decrease over a period of time and would
be expressed as a percentage of the fund.

Administration

The unit –linked policies are significantly complex to administer and also
would need a very highly technically trained customer service department to
handle enquiries. Much of the administer the policy, As the allocation of units
would be time dependent it is extremely important to have a very robust
system that can take care of allocation, de allocation and reallocation of units.
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It is essential to have a system that would be able to talk/ interact with other
systems to capture the unit price details, to give outputs to accounting
packages, report generators etc.

INDIVIDUAL PRODUCTS:
Each of us leads a unique life and so has unique needs. HDFC Standard Life
offers a range of products and invites you to choose the one that suits you best.
PLAN BENEFIT
Savings Plans
Endowment Assurance Plan Life Insurance with Savings
Unit Linked Endowment Plan Life Insurance & Savings with choice
of investment funds
Children’s Plan Financial Security for your child
Money Back Plan Financial security for your child with
choice of investment funds
Unit Linked Young Star Plan Life Insurance with Savings
Investment Plans
Single Premium Whole of Life Plan Investment with Life Insurance
Protection Plans
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Term Assurance Plan
Life Insurance customized for home
loans
Loan Cover Term Assurance Plan
Life Insurance at an affordable price

Retirement Plans
Personal pension plan Savings for retirement

Unit Linked Pension Plan Retirement Savings with a choice of


investment funds

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Endowment Assurance Plan

Endowment assurance plan is a participating (with profits) insurance plan that


offers the following features:

Provides financial support to the family by way of a lump sum payment in


case of the unfortunate death of the life assured within the term of the policy.
provides a lump sum payment to the life assured on survival up to maturity

This plan is with profits saving plan and is well suited for saving money for
your long term financial goals. This plan also helps provide for the needs of
your family in your absence by paying out a lump sum in the event of your
unfortunate death during the term of the policy.

Optional benefits
You can add the following optional benefits to customise your policy to suit
your needs:
• Critical Illness (CI) Benefit provides an amount, equal to the sum
assured chosen under this optional benefit, on diagnosis of any one of
the 6 common critical illnesses(1). The sum assured is payable if you
survive for 30 days after the date of the claim. Once such a claim has
been met, no further Critical Illness Benefit is payable. However, your
basic policy continues even after we pay a claim On this benefit.
• Additional Term Benefit (ATB) provides an additional amount
equal to the sum assured chosen under this optional benefit, in case of
your unfortunate death.

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• Accidental Death Benefit (ADB) provides an additional amount,
equal to the sum assured chosen under this optional benefit, in case of
your unfortunate death:
-due to an accident and within 60 days of an accident.
• Waiver Of Premium (WOP) Benefit waives the premium for you in
case you become totally disabled. The waiver is applicable during the
period of total disability.
This plan can be taken on a single life basis or a joint life (first claim)
basis.

Eligibility

This plan can be taken as a single life basis or a joint life (first claim) basis.
The eligibility ages are as follows:

Basic Basic policy with optional benefits


CI ATB ADB WOP
Policy
Min. age of entry 12 18 18 18 18
Max. age of entry 60 5 60 55 50
Max. age of expiry 75 70 75 65 60

Minimum term: 10 years Maximum term: 30 years

Tax Benefits
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Tax benefits described in Section 88, Section 80D and Section 10 (10D) of the
income Tax Act are applicable.

Applicable to premium paid for CI and WOP

Payment options
you have the choice of paying your premium either in yearly, half-yearly or
quarterly modes, depending on your convenience

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Unit Linked Endowment Plan:
The unit linked endowment plan is an insurance policy that is designed to pay
a lump sum on maturity or on earlier death. The Unit Linked Endowment Plan
also gives the option of additional protection against the six common critical
illnesses, as well as additional protection if death is as the result of an accident.
Your premiums are invested in units of the investment fund of your choice,
based on the prevailing unit price. On maturity you receive the value of your
units. On death (or critical illness, if chosen) you receive the greater of the
value of your units and your selected basic sum assured.

Premiums
Premiums can be paid either quarterly, half-yearly or annually, throughout the
term of the policy. The minimum premium amount is Rs. 10,000 each year.
Premiums can be paid by cash, cheque or demand draft.

Benefits
There are 4 different options available to choose from:

1. Life Option
On death within the policy term, the greater of the Sum Assured and the
value of the unit-linked fund will be paid to your nominee.
On survival to the end of the policy term the value of the unit linked
fund will be paid to you.

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2. Life and Health Option
On death or earlier diagnosis of any one of six common critical illnesses
within the policy term, the greater of the Sum Assured and the value of
the unit-linked fund will be paid to your nominee.
On survival to the end of the policy term the value of the unit-linked
fund will be paid to you.
“The illnesses covered under this option are cancer, coronary artery
by pass graft surgery, heart attack, kidney failure, major organ
transplant (as recipient) and stroke”.
3. Extra Life Option
This option pays the same benefits as the Life Option but, should death
occur within the policy term as the result of an accident, an extra benefit
equal to the Sum Assured will be paid.
4. Extra Life and Health Option
This option pays the same benefits as the Life and Health Option but,
should death occur within the policy term as the result of an accident, an
extra benefit equal to the Sum Assured will be paid.

Levels of protection
Depending on your age at entry, you may choose between 3 levels of cover –
Low, Medium or High. For each level the Sum Assured is based on the amount
of premium you pay each year.
The Sum Assured can not be changed during the term of the contract.

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Levels of cover
Age at entry
Low Medium High
18 to 40 5XPremium 10XPremium 20XPremium
41 to 50 5XPremium 10XPremium
Over 51 5XPremium

Eligibility
The age and term limits for taking out a Unit Linked Endowment Plan are:
(years)
Maximu Maximum
Minimum Maximum Minimum
m age at age at
term term age at entry
entry expiry
Life 10
10 30 18 60 75

Life and
health 10 30 18 5 65

Extra life
10 30 18 55 70

Extra life
and health 10 30 18 55 65

The alteration of premium, surrendering of the policy, conditions on stopping


of payment of premiums and charges are the same as that of the unit linked
pensions plan.

Tax Benefits
31
Tax benefits under section 88 and section 10 (10D) of the income tax act are
applicable.

Surrendering the policy


The policyholder can surrender the policy at any point of time during the
contract term. The amount payable will be the unitised fund value after
applying additional surrender charges mentioned below.

Accessing money?
You can make lump sum withdrawals from you funds provided the fund
balance after withdrawal and charges does not fall below the Sum Assured. The
minimum withdrawal amount is Rs. 10,000.

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Children's Plan

Children’s Plan is designed to provide a lump sum to the child at maturity. It


also provides financial security to the child in the future, even in case of the
insured parent’s unfortunate death during the policy term. Children’s Plan
receives simple reversionary bonuses, which are usually added annually. This
is a flexible plan with three options for you to choose from, depending on your
requirements. The details of these options are explained in the next section.

Options
You will have the choice of 3 options at the start of the policy.

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Option On the death of the insured On maturity
parent during the policy
term
Maturity Future premium waived and
Benefit Plan the policy continues till
maturity.
Accelerated Sum assured + bonuses paid On the survival of the
Benefit plan and the policy stops. insured parent to the
maturity date, sum assured
+ bonuses paid.

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Double Sum assured paid, future Sum assured + bonuses
Benefit plan premiums waived, and the paid.
policy continues till
maturity.

Tax Benefits

The premiums you pay will be eligible for tax relief under Section 88 of the
Income Tax Act, 1961. The benefits received under the policy are eligible for
tax relief under Section 100 (10D) of the income tax act, 1961.

Eligibility
The eligibility ages for the life assured under the plan are as follows:
Minimum Age of Entry
18 years

Maximum Age of Entry


60 years

Maximum Age of Maturity


75 years

Term of policy

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Min. Term: 10 years Max. Term: 25 years

Payment options
You have the choice of paying the premium either in yearly, half-yearly or
quarterly modes, depending on your convenience

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Unit Linked Young Star Plan

HDFC Unit Linked Young Star Plan is designed to provide a lump sum to the
child at maturity. It also provides financial security to the child in the future,
even in case of the insured parent's unfortunate death during the policy term.
The Unit Linked Young Star Plan also gives the option of additional protection
against the six common critical illnesses.
Your premiums are invested in units of the investment funds of your choice,
based on the prevailing unit prices. On maturity the value of the units will be
paid. On death (or critical illness, if chosen) the selected basic sum assured is
paid, and the policy continues until maturity. Following a valid death or critical
illness claim, we will pay the future premiums (at the level originally chosen at
inception) into your policy, as and when they would have fallen due.

Premiums
You agree to pay a level premium regularly, either quarterly, half-yearly or
annually, throughout the term of the policy. The minimum premium amount is
Rs. 10,000 each year.
Premiums can be paid by cash, cheque or demand draft.
Benefits
There are 2 different options available:
1. Life Option
This option consists of a Maturity Benefit and a Death Benefit.
The Maturity Benefit will pay the value of the unit-linked fund at the end
of the policy term.

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The Death Benefit will pay the basic Sum Assured on death of the life
assured during the policy term. Following payment of this benefit, no
further premiums are due from the policyholder.
Following a valid death claim, we will pay future premiums on your
behalf, as and when they become due. The level of premium will be that
chosen by you at inception of the policy.

2. Life and Health Option


This option consists of a Maturity Benefit, a Death Benefit and an
Extra Health Benefit.
The Maturity Benefit will pay the value of the unit-linked fund at the
end of the policy term.
The Death Benefit will pay the basic Sum Assured on death of the life
assured during the policy term. Following payment of this benefit, no
further premiums are due from the policyholder and the Extra Health
Benefit will lapse without value.
The Extra Health Benefit will pay the basic sum assured on diagnosis of
any one of six critical illnesses during the policy term. Following
payment of this benefit, no further premiums are due from the
policyholder and the Death Benefit will lapse without value. The
illnesses covered under this benefit are cancer, coronary artery by pass
graft surgery, heart attack, kidney failure, major organ transplant (as
recipient) and stroke.

Following a valid death or critical illness claim, we will pay future


premiums on your behalf, as and when they become due. The level of
premium will be that chosen by you at inception of the policy.
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Eligibility
The age and term limits for taking out a Unit Linked Young Star Plan are:
(Years)

Minimum Maximum Minimum Maximum Maximum


Term Term Age at Age at Age at
Entry Entry Expiry
Life 10 25 18 60 75
Option

Life and 10 25 18 55 65
Health
Option

Surrendering the policy


The policyholder can surrender the policy at any point of time during the
contract term. The amount payable will be the unitised fund value after
applying additional surrender charges mentioned below.

Accessing money
You can make lump sum withdrawals from you funds provided the fund
balance after withdrawal and charges does not fall below Rs. 15,000. The
minimum withdrawal amount is Rs. 10,000.

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Money Back Plan

It is a participating (with profits) insurance plan that offers the following


features:
Payment of cash lump sum, each of which is a proportion of the basic sum
assured, at 5-year intervals during the term of the policy. (Please refer to the
table given below.)
on survival up to maturity, a payment equal to the basic sum assured plus
any bonus additions less the cash lump sums paid earlier is provided.
In case of the unfortunate death of the life assured within the term of the
policy, the basic sum assured plus any bonus additions is provided. This is over
and above the earlier payouts.
This plan helps you plan for future anticipated expenses by paying periodic
cash lump sum to you at regular intervals. This plan also helps provide for the
needs of your family in your absence by paying them the basic sum assured
plus any bonus additions in the event of your unfortunate death during the term
of the policy.
Benefits
You can add the following optional benefits to customise your policy to suit
your needs:

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• Critical Illness (CI) Benefit provides an amount, equal to the sum
assured chosen under this optional benefit, on diagnosis of any one of
the 6 common critical illnesses. The sum assured is payable if you
survive for 30 days after the date of the claim. Once such a claim has
been met, no further Critical Illness Benefit is payable. However, your
basic policy continues even after we pay a claim on this benefit.

• Additional Term Benefit (ATB) provides an additional amount, equal


to the sum assured chosen under this optional benefit, in case of your
unfortunate death.
\
• Accidental Death Benefit (ADB) provides an additional amount equal
to the basic sum assured in case you die:
- due to an accident, and
- within 90 days of the accident.

• Waiver Of Premium (WOP) Benefit waives the premium for you in


case you become totally disabled. The waiver is applicable during the
period of total disability.
All optional benefits must be selected at the outset of your plan.

Eligibility
This plan can be taken on a single life basis or a joint life (first claim) basis.
The eligibility ages are as follows:

Basic Basic policy with optional benefits


CI ATB ADB WOP
Policy
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Min. age of entry 12 18 18 18 18
Max. age of entry 60 5 60 55 50
Max. age of expiry 75 70 75 65 60

PAYMENT OPTIONS
You have the choice of paying your premium either in yearly, half-yearly or
quarterly modes, depending on your convenience

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SINGLE PREMIUM WHOLE LIFE INSURANCE
Single Premium Whole of Life Insurance Plan is well suited to meet your long
term investment needs. This participating (with profits) plan offers you the
following
Benefits:
A sound investment:
Your money will be invested in our With Profits fund. The fund aims to
provide secure and stable long term growth. Normally, we will declare a
compound reversionary bonus for your policy every year and add it to your
policy on its anniversary. In addition, on death, surrender or on the guaranteed
dates, a terminal bonus might be payable. You pay a single premium and the
policy will pay you a lump sum.

Flexibility of term:
Even after choosing your policy, you can decide on the policy term. For 4
weeks after any one of the 10th, 15th, 20th and subsequent five-year
anniversaries, you can choose to receive the sum assured plus any attaching
bonuses, in full. Once the money has been received, your policy will cease.

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Surrender value:
You can terminate the policy any time, after it has been in force for at least 6
months, and receive a surrender value.

In case of unfortunate death:


Your nominee gets the sum assured secured by your premium, plus any
attaching bonuses.

No medical requirements:
We do not require you to undergo any medical test for this plan.

Eligibility

Minimum age at entry


: 18 years

Maximum age at entry


: 70 years

You can buy the product on a single life basis.

Tax benefits

Tax benefits under Section 88 of the income Tax Act are applicable on
premiums up to 20% of the sum assured.

Payment options
A single premium can be paid by cash, cheque or demand draft.
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PENSION PLAN

• The policy is basically a saving contract, which is designed to provide an


income for life from retirement, with an option to take the lump sum
elsewhere to buy the annuity, provide it is permitted by the prevailing
regulations.

• Your commitment. You agree to pay a single premium or level premiums


with installments due every quarter half-year or year throughout the
deferment period of the policy, after which you will start receiving your
pension.

• Plan is basically a savings contract, which is designed to provide an income


for life from retirement. It does this by accumulating a national lump sum
on retirement, comprising of sum assured plus any attaching bonus.

Can I take the national lump sum as cash on retirement?

Subject to the prevailing legislation and regulations, part of this can be taken as
a lump sum and the rest used to buy an immediate annuity.

Mode of premium

You can pay either a single premium or pay premiums is quarterly half yearly
or annual form by cheque, in cash or by bank drafts.

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Eligibility

The age and term limits for looking out a personal pension plan area:

Minimum Maximum Maximu Maximu Minimum Maximum


Term Term m Age m Age of age of age of
entry Retirement Retiremen
t
RP SP RP SP RP SP
10 5 40 15 18 35 60 50 70

What if I need money?

Loans

There is no facility for loans against this contract.

Tax benefits

Tax benefits described in Section 80 CC of the income tax act are applicable
(up to Rs. 10,000)

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47
Unit Linked Pension Plan
The unit linked pension plan is basically an insurance contract, which is
designed to provide a retirement income for life.
Your premiums are invested in units of the investment fund of your choice,
based on the prevailing unit price. On vesting the value of your units will be
used to buy your retirement benefits.
On earlier death, the beneficiary receives the value of your units plus a cash
lump sum of Rs 1000.

Premiums
You agree to pay level premiums regularly, either quarterly, half-yearly or
annually, throughout the term of the policy or a single premium at the start of
the policy. The minimum premium amount for regular premium mode is Rs.
10,000 each year and for single premium, it is Rs. 25,000.
To facilitate increased investment, we allow additional single premium top-ups
at any time. The minimum single premium top-up is Rs. 5,000.
Premiums can be paid by cash, cheque or demand draft.

Benefits
At the chosen vesting date, the unitised fund value will be available to secure
pension benefits. Subject to the prevailing regulations, part of this value can be
taken in the form of a cash lump sum and the rest converted to an annuity at
the rate then offered by HDFC Standard Life. Alternatively, if it is permitted by
the prevailing regulations, the proceeds net of any cash lump sum can be used
to buy an annuity with any other insurance company who will accept such
business. The current maximum limit for any cash lump sum is one-third of the
unitised fund value on vesting.
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On death the unitised fund value will be paid along with a cash lump sum of
Rs. 1,000. The beneficiary may use the proceeds to purchase pension benefits
for the surviving spouse.
Your basic benefits will be paid by cheque.

Eligibility
The age and term limits for taking out a Unit Linked Pension Plan are:
(Years)
Minimu Maximu Minimu Maximu Minimu Maximu
m Term m Term m Age of m Age of m Age of m Age of
Entry Entry Vesting Vesting

Regular
Premiu 10 40 18 60 50 70
m
Version

Single
Premiu 5 40 18 65 50 70
m
Version

TAXATION
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TAX BENEFITS OF INSURANCE AND PENSION PLAN.
Life insurance and retirement plans are effective ways of saving taxes. The tax
breaks that are available under various insurance and pension policies are
described below:
1. Life insurance plans are eligible for deduction under Sec. 80C.
2. Pension plans are eligible for a deduction under Sec. 80CCC.
3. Health riders are eligible for deduction under Sec. 80D.
4. The proceeds or withdrawals of life insurance policies are exempt
under Sec 10(10D), subject to norms prescribed in that section.

Tax Rates for Individuals


The rates of income tax for FY 2005-06 are as follows:
Rate of tax
Senior Women below Others
Total Income (Rs.)
citizen 65 years
Nil Nil Nil
Up to Rs 1, 10,000/-
Above Rs 110,000/- to Nil Nil 10%
125,000/-
Above Rs 125,000/- to Nil 10% 10%
150,000/-
Above Rs 150,000/- to 20% 20% 20%
250,000/-
Above Rs 250,000/- 30% 30% 30%

Surcharge on Income Tax: In case where the Total Income exceeds


Rs 10, 00,000, there would be a surcharge @ 10%.

Education Cess on Income Tax: Education Cess @2% will be payable on the
amount of income tax (including surcharge).
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Premiums paid for Life insurance - Deduction under Section 80C
1 Category of assesses allowed deduction: Individual assessee and Hindu
Undivided Family assessee.
2 Eligible Savings: Premiums paid or deposited by assessee to effect or to
keep in force insurance on the life of following persons:
In case of individual assessee – Himself/herself, spouse, children of such
individual
In case of HUF assessee – any member
3. 20% limit: If the amount of premium paid in a financial year for a policy is
in excess of 20% of the actual capital sum assured, then deduction will be
allowed only for premiums up to 20% of the sum assured.
4 Limit on amount of deduction: Deduction will be restricted to investments
of up to Rs 100,000 in savings specified under Section 80C (including life
insurance premiums). If any investments have been made under Section
80CCC and 80CCD, then the qualifying amount under Section 80C will stand
reduced to that extent.

5. Deduction limit: The amount of deduction will be equal to the amount by


which the income tax payable on such total income is in excess of the amount
by which the total income exceeds 100,000.
Premiums paid for Pension plans - Section 80CCC
1 Permitted Deduction: Section 80CCC allows for deduction of premiums
paid under a pension plan. As per this Section, a premium paid up to Rs 10,000
by an individual is allowed as deduction from his total income.
2 Disallowance: This benefit will be reversed if the policy lapses / is cancelled.

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3 Limit: It may be noted that from FY2005-06, the limit of deduction under
Section 80CCC will be part of the overall limit prescribed under Section
80CCE.
Premiums paid for medical insurance - Section 80D
I) Category of assessee allowed deduction: Individual assessee and Hindu
Undivided Family assessee.
II) Eligible premiums: Premiums paid by assessee by cheque out of his taxable
income to effect or to keep in force an insurance on the health of following
persons: In case of individual assessee – Himself/herself, spouse, dependant
children and dependant parents.
In case of HUF assessee – any member of HUF

III) Deduction and upper limit: The qualifying amounts under Section 80D is
up to Rs 10,000/-. However, a higher amount of up to Rs 15,000/- is permitted
if the person, for whose health insurance the premium was paid, was aged 65
years or more at any time during the financial year in which the premium was
paid. Such amounts of premium paid would be allowed as deduction from the
total income of the assessee.
Overall deduction limit - Section 80CCE
A new Section 80CCE is proposed to be inserted from FY2005-06. As per this
section, the maximum amount of deduction that an assessee can claim under
Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000.
Benefits under insurance policy - Section 10(10D)
As per Section 10(10D) of Income tax Act, 1961, any sum received under a life
insurance policy, including the sum allocated by way of bonus on such policy
is exempt from tax. However, this rule does not apply to following amounts:
Sum received under Section 80DD (3), or
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Any sum received under a Key man Insurance Policy, or
Any sum received other than as death benefit under an insurance policy
which has been issued on or after April 1 2003 and if the premium paid in
any of the years during the term of the policy is more than 20% of the sum
assured.

Rebate in respect of Securities Transaction Tax (STT) paid


1 Section 88E has been introduced by Finance Act (No 2) of 2004.
2 As per the provisions, where total income of an assessee includes any income
under the head ‘Profits and Gains from Business or Profession’ arising from
taxable securities transactions, he shall be entitled to a deduction from the
income tax on such income.
3 Amount of deduction: Amount of STT paid in respect of taxable securities
transactions entered into in the course of business during that previous year
4 The deduction will be allowed if proof of payment of STT is furnished along
with the return. The proof has to be furnished as per the format prescribed by
Income Tax.
5 Maximum deductions shall be equal to the amount of income tax on above
income.

COMPARITIVE ANALYSIS

CONTENTS

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1. HDFC PENSION-II VS BIRLA FLEXI SECURELIFE RETIREMENT
2. HDFC PENSION-II VS BAJAJ ALLIANZ UNIT GAIN
3. HDFC PENSION –II VS LIC BIMAPLUS

HDFC PENSION-II VS BIRLA FLEXI SECURE LIFE RETIREMENT


VS BAJAJ ALLIANZ UNIT GAIN VS LIC BIMAPLUS

HDFC BIRLA Flexi Secure Allianz Bajaj


Features PENSION Life Retirement Unit gain LIC Bima Plus
Age 18 - 60 years 18 - 60 years 0 – 60 years 12 - 55 years
Term 10 - 30 years Minimum Term of Choice rests with
10 years the consumer
with a minimum
premium
payment term of
3 years

10 years
Sum Assured Only 5, 10, 20 Minimum Sum Minimum Sum Maximum limit
(age-based) Assured is Rs. Assured is 5 up to Rs. 2
multiples are 50,000. Zero Death times the lakhs
allowed as Benefit is also premium paid.
Sum Assured. available.
Survival Value of units Unit Value is used to Value of Fund at Bid Value of the
benefit partly in cash purchase an annuity Bid price fund units
partly
converted to
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annuity.
Death benefit Value of units, Value of units in this Higher of Sum Death during
no sum case the Sum Assured or value the first 6
assured is Assured is zero. of units. months - 30%
given. of SA + value of
units, next 6
months - 60%
of SA + value of
units. Death
after 1st year -
SA + value of
units. Death
during the 10th
year - 105% of
SA + value of
units.
Partial or Premature
Withdrawal No Partial No Partial complete withdrawal
benefit withdrawals withdrawals are withdrawal at bid allowed after
are available. available price after 3rd one year (after
year applying bid-
offer spread.

Contribution/ Minimum: Rs. Minimum Rs. 5,000 Minimum: Rs. Minimum Rs.
premium 10,000 p.a. p.a. 10,000 p.a. 10,000 p.a
Flexible Available Not available Only an increase Not available
contribution in contribution is
allowed
Investment 5 Fund Nourish, Growth and Equity Fund, Balanced,
55
options Options- Enrich Debt Fund, Secured & Risk
Balanced, Balanced Fund,
Defensive Cash Fund
Managed,
Safe
Managed,
Liquid &
Growth
Surrender The surrender Surrender is A selling / Partial surrender
Value charge is 25% available from the purchase price up to 50% of
of 3 years of 1st year itself. In the spread of 5% will bid value of
regular 1st year surrender be applicable units allowed
premium. No charges are 75%, in from the 3rd year after 3 years
charges after 3 the 2nd year the onwards from date of
years charges are 50%, in commencement
the 3rd year the
charges are 25%..
Top-up Available with Available, with a Available
a minimum minimum top-up of
top-up of Rs Rs. 10,000
5,000 and Available
maximum of (Charges: 1.5%
20% of sum of the top-up)
assured.
Switch 24 Switches 2 free switches every Three free No free
are free. year. Every switches every switches. Cost
additional switch policy year. of switching is
will be charged at Subsequent 2% of the fund
56
0.5% of the switch switches would
amount. be charged @1%
of switch amount
or Rs. 100,
whichever is
higher. value.
Initial Charge Charges Charges Charges
1st yr-27%, 20% of the initial 1st year - 70%;
2nd yr- 27%, premium in the 1st 2nd year - 2%;
3rd yr year and 2% of the 3rd year - 1%; No
onwards- 1% premium from the charges from the
2nd year onwards. 4th year onwards Not Disclosed
Admin Charge Admin Policy admin fee of Annual admin
charges of Rs. 20 per month charges of 1.25%
Rs.180 fixed p.a. of net assets
charge
Per annum. Not applicable
Fund Least in the A fund based fee of Annual 1% of the fund
Management industry 0.8% 2.25 % p.a. of the investment per annum
Charges of the fund per policy fund. charge of 1% p.a.
annum of fund.
Bonus units Available Not Available Not Available Available

RESEARCH METHODOLOGY
STUDY
The present investigation is a descriptive type of study undertaken to estimate
the comparative study pension plan of HDFC SLIC, BIRLA SUN LIFE,
BAJAJ ALLIANZ, LIC.
SAMPLE SIZE
57
For the purpose of analysis a sample size of different companies were selected.
The sample size taken was 4.
SAMPLING METHOD
The sampling method used for the project was “Random Sampling”. This type
of sampling is also known as probability sampling where each and every item
in the population has an equal chance of inclusion in the sample and each one
of the possible samples. This procedure gives each item an equal probability of
being selected.

DATA COLLECTION

SECONDARY DATA
The secondary data was collected by referring through web sites, and the final
data was analyzed systematically to achieve the desired result.

DATA ANALYSIS AND INTERPRETATION

After analyzing the data above in the table we came to the following
interpretation. Interpretation has been done on the basis of the features
mentioned in the table.
1. AGE AND TERM OF POLICY: Since the minimum age is minimum
in BAJAJ ALLIANZ and the term depends on the customer. The
customer has probability of getting the maximum returns (all other
things being equal). And HDFC is offering investment for maximum 30
years which is rated as second best in this feature.
58
2. SWITHCHES: After analyzing the feature the conclusion drawn is that
HDFC is offering the most switches in the year.

3. CHARGES: The charges levied on the policy of the insurer is lowest in


HDFC SLIC like FMC, PAC, but initial charge is second lowest which is
also not bad in terms of investment.

4. WITHDRAWALS: Withdrawals not allowed in HDFC SLIC & BIRLA


SUN LIFE because if withdrawals are there plan would not yield good
return.

5. INVESTMENT OPTIONS: HDFC SLIC provides you the maximum


funds for investment (Balanced fund, Defensive Managed fund, Safe
Managed fund, Liquid fund & Growth fund). So HDFC SLIC provides
you better portfolio to diversify your funds which reduces the risk and
maximizes the return.

6. TOP UP: In HDFC SLIC the minimum top up is of RS 5000 with no


charges levied but in others it is Rs 10000. Here we could see that
people with low income can increase the premium with small amount.

7. BONUS UNIT: Only two firms are offering bonus unit to the customer
and they are HDFC SLIC and LIC.

8. FLEXIBLE CONTRIBUTION: This feature is available in HDFC


SLIC where a customer can increase or decrease its premium, but only
Bajaj Allianz is offering an increase option only.

59
RECOMMENDATIONS

1. Premium allocation charge (initial charge) should be reduced to provide


customer with better return.

2. Policy administration charge should be reduced to gain more advantage


in the market.
3. Surrender charges should be reduced.

CONCLUSION

Based on comparative study HDFC SLIC is on the upper side in the private
life insurance companies in comparison to Birla sun life, Bajaj Allianz.
60
HDFC SLIC based on the comparative study has many advantage in this
segment of product like fund management charge, switches facility and
maximum number of investment funds in offering (i.e., 5 namely Balanced
fund, Defensive Managed fund, Safe Managed fund, Liquid fund & Growth
fund ) but the rest of the insurance player that is LIC, Birla sun life, Bajaj
Allianz are also not far behind HDFC SLIC.

BIBLOGRAPHY

 WWW.HDFCINSURANCE.COM

 www.irda.com

 www.LICindia.com

 www.birlasunlife.com

 WWW.GOOGLE.COM

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