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A

PROJECT REPORT

ON

“A COMPARATIVE STUDY OF ULIP PLANS OFFERED BY


ICICI PRUDENTIAL AND OTHER LIFE INSURANCE
COMPANIES”

Submitted To:
PUNJAB TECHNICAL UNIVERSITY,
JALANDHAR

FOR THE PARTIAL FULFILLMENT OF THE AWARD OF


DEGREE OF MASTER OF BUSINESS ADMINISTRATION

(Session 2008-10)

UNDER GUIDANCE OF: SUBMITTED BY;


Mrs. Sukhmeet kaur Dixit Kumar
Roll No. : 80906317020
SVIET
Contact no. - 09017076571

SWAMI VIVEKNAND INSTITUTE OF ENGINEERING AND


TECHNOLOGY
PUNJAB TECHNICAL UNIVERSITY,
JALANDHAR
Preface

MBA is a stepping-stone to the Management carrier and to develop good Managers is


necessary that the theoretical must be supplement with exposure to the real
environment.
Theoretical knowledge just provides the base and it’s not sufficient to produce a good
Manager that’s why the practical knowledge is needed.
Therefore the Research Project is an essential requirement for the student of MBA.
This research project not only helps the students to utilize his skills properly and learn
field realities but also provides a chance to the organization to find out talent among
the building Managers in the very beginning.
In accordance with the requirement of MBA course I have done my research project
on the topic “COMPARATIVE STUDY OF ULIP PLANS OFFERED BY ICICI
PUDENTIAL AND OTHER LIFE INSURANCE COMPANIES” with special
reference to ICICI Prudential.

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Certificate by the Faculty Guide

GUIDE’S CERTIFICATE

This is to certify that Mr. /Ms. __________________bearing the Reg.


No. ____________ currently undergoing IVth Semester MBA in Swami
Vivekanand Institute of Engineering and Technology affiliated to Punjab
Technical University, Jalandhar he carried out a project on “A
COMPARATIVE STUDY OF ULIP PLANS OFFERED BY ICICI PRUDENTIAL
AND OTHER LIFE INSURANCE COMPANIES” under my guidance and

supervision and the work done by her is original and outcome of her
sincere efforts.

Mrs. Sukhmeet Kaur


Date: ----------
(PROJECT GUIDE)

3
INDEX

I. PREFACE

II. CERTIFICATE

III. EXECUTIVE SUMMARY

IV. LITERATURE REVIEW

Sr.no Title
Chapter-1 INTRODUCTION

 Introduction - basics of insurance

 Need of life of insurance

 Roles of insurance

 Types of life insurance

Chapter-2 INDUSTY PROFILE

Chapter-3 COMPANY PROFILE

Chapter-4 RESEARCH METHODOLOGY

Chapter-5 COMPARATIVE STUDY

Chapter-6 DATA ANALYSIS & INTERPRETATIONS


Chapter-7 LIMITATIONS
(i) RECOMMENDATIONS

(ii) CONCLUSION

(iii) BIBLIOGRAPHY

(iv) ANNEXURE

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5
Literature Review

How a company does announced a name change especially when the old name was
well known? How does the company explain itself to constituents who may have
known the company quite well in an earlier incarnation but may be struggling to
figure out what the new organization stands for? How can the company create a new
image while retaining the strengths of the old one? And what role might corporate
advertising play in all this? Corporate advertising can tell a story about a company as
a whole, large organizations may need to use corporate ads to simplify their image in
the minds of key constituents and to show what unifies the company, despite the
geographical spread and variety of its businesses.

We can very well understand the concept of corporate advertising by taking the
example of ICICI Prudential communication. When Company first began operations,
the task was to present the visiting card of the company to the public at large and
build credibility and stature and to give the consumer the confidence that ''here is a
company that can be trusted to invest funds with.''
This required a corporate campaign - to establish the brand, build awareness and give
the brand a larger-than-life image.

The advertising idea, which was encapsulated in symbols of protection from the initial
print campaign, culminated in the corporate film where sindhoor was used as an
endearing and lasting symbol of protection. Once the corporate image and brand
identity were established, and as the company expanded and its product range grew,
the next phase of communication was to give the
consumer a rational and tangible reason to buy - first of all insurance and secondly
from ICICI Prudential Life. This was tackled through product-specific advertising,
such as for ICICI Pru Smart Kid, retirement solutions or LifeTime.

Key Summery

 Create a good citizen image through consistent & dedicated effort.

 Convey the organizations commitment to the concerned publics as well as to


the masses & eliminate prejudices, if any held by opinion leaders in particular
& by the public in general.

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 Boost both employee management relation & employee morale enabling all

 Members of the internal public to discover a new vitality.

EXECUTIVE SUMMARY

Title of the project:


Study ULIP in current market scenario/ Study customer response towards ULIP

Objectives:
 Working of the unit linked insurance plans
 Swot analysis of the product
 Comparative study of the competition
 Study tax planning solutions available in the market
 Study asset allocation through insurance plans
 Market interface

Comparative analysis done on:


 Life insurance corporation
 HDFC Stan Life
 Birla Sun Life
 Bajaj Allianz

Research Methodology:

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Primary data collected by personally visiting these leading insurance players. Eg:
LIC, Max New York Life Insurance, Bajaj Alliance, Birla Sunlife, HDFC Stan life.

Data Collection:

 Primary data collected through direct intrection with customer.


 Sample size 100 people.
 Secondary database from different magazines.
 First and foremost, accumulating information from newspapers ,
Journals, Magazines, and company webside.
 Secondly, taking a sample size and doing a market survey by filling up
questionnaires from customers to find out what different companies are
offering in the ULIP section and how are they similar/different from ICICI
PRUDENTIAL products. Also keeping a track and taking down the
feedback regarding perception, attitude, taste and preferences of the
customer.
 Thirdly, analyzing the data collected. Comparing the ULIP products
offered by other insurance players.
 Critical analysis of consumer perception; their choice and preferences.
 Eventually, deciding on how to familiarize ULIP products in the market
and what all safeguards need to be taken while approaching the customers.

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CHAPTER-1

9
INTRODUCTION TO INSURANCE

LIFE INSURANCE GENERAL

Insurance is a system to alleviate financial losses by transferring risk of loss from


one entity to another.

‘Insurance’ is basically a sharing device. The losses to assets resulting from natural
calamities like fire, flood, earthquake, accidents, etc. are met out of the common pool
contributed by large number of persons who are exposed to similar risks. This
contribution of many is used to pay the losses suffered by unfortunate few. However
the basic principle is that loss should occur as a result of natural calamities or
unexpected events which are beyond the human control. Secondly insured person
should not make any gains out of insurance.

It is natural to think of insurance of physical assets such as motor car insurance or fire
insurance but often we forget that creator of all these assets is the human being whose

efforts have gone a long way in building up the assets. In that sense, human life is a
unique income generating assets. Unlike the physical assets, which decrease in value
with passage of time, the individual becomes more experienced and more matured as
he advances in age. This raises his earning capacity and the purpose of life insurance
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is to protect the income in the event of his premature death. The individual himself
also needs financial security for the old age or on his becoming permanently disabled
when his income will stop. Insurance also has an element of savings in certain cases.

How insurance works?

Suppose there are 1000 persons all aged 35 years and healthy lives. They are insured
for one year against the risk of death. Each person is insured for Rs. 50,000. If the
past experience indicated that 4 out of 1000 persons, at this age are expected to die
during the year, expected amount of death claim to be paid to the family of four
persons would come to Rs. 2,00,000. The contribution to be paid by each of the 1000
persons will come to Rs. 200 per year. Thus, all the 1000 persons share loss caused to
the 4 unfortunate families. 996 persons who survived till one year have not lost
anything as they secured peace of mind and a feeling of security of their family.
While insurance cannot prevent accidents or premature death, it can help protect the
family of the decreased against the loss of income caused by the death of the main
breadwinner. In return for specified payments, insurance will provide protection
against the incidence of an uncertain event- such as premature death. The business of
insurance company called insurer is to bring together persons who are exposed to
similar risks, collect contribution (premium) from them on some equitable basis and
pay the losses (claims) to the unfortunate few who suffer.

Classification of Insurance

Insurance business can be divided into two broad categories, life and non-life. Life
insurance is concerned with making provision for a specific event happing to the
individual, such as death whereas non life (or general insurance) is more commonly
concerned with the provision for a specific event which affects a property, such as
fire, flood, theft etc. In this course we will only cover life insurance. So, let us now
move on to the definition of life insurance.

Definition of Life Insurance

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According to the U.S. Life Office Management Association Inc. (LOMA), life
insurance is defined as follows: ‘Life insurance provides a sum of money if the person
who is insured dies whilst the policy is in effect”.

NEED FOR LIFE INSURANCE

Risks and uncertainties are part of life's great adventure -- accident, illness, theft,
natural disaster - they're all built into the workings of the Universe, waiting to happen.

Insurance then is man's answer to the vagaries of life. If you cannot beat man-made
and natural calamities, well, at least be prepared for them and their aftermath.

Insurance is a contract between two parties - the insurer (the insurance company) and
the insured (the person or entity seeking the cover) - wherein the insurer agrees to pay
the insured for financial losses arising out of any unforeseen events in return for a
regular payment of "premium".

These unforeseen events are defined as "risk" and that is why insurance is called a
risk cover. Hence, insurance is essentially the means to financially compensate for
losses that life throws at people - corporate and otherwise.

The principle of insurance works on the concept of a large number of people exposed
to a similar risk making a contribution to a common fund. Those who suffer losses
due to the occurrence of these events are compensated for them from this fund.

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ROLE OF LIFE INSURANCE

Life Insurance As An Investment: -

Insurance is an attractive option for investment. While most people recognize the risk
hedging and tax saving potential of insurance, many are not aware of its advantages as
an investment option as well. Insurance products yield more compared to regular
investment options, and this is besides the added incentives offered by insurers.

You cannot compare an insurance product with other investment schemes for the
simple reason that it offers financial protection from risks, something that is missing
in non-insurance products. In fact, the premium you pay for an insurance policy is an
investment against risk. Thus, before comparing with other schemes, you must accept
that a part of the total amount invested in life insurance goes towards providing for
the risk cover, while the rest is used for savings.

In life insurance, unlike non-life products, you get maturity benefits on survival at the
end of the term. In other words, if you take a life insurance policy for 20 years and
survive the term, the amount invested as premium in the policy will come back to you
with added returns. In the unfortunate event of death within the tenure of the policy,
the family of the deceased will receive the sum assured.

Now, let us compare insurance as an investment options. If you invest Rs 10,000 in


PPF, your money grows to Rs 10,950 at 9.5 per cent interest over a year. But in this
case, the access to your funds will be limited. One can withdraw 50 per cent of the
initial deposit only after 4 years.

The same amount of Rs 10,000 can give you an insurance cover of up to


approximately Rs 5-12 lakh (depending upon the plan, age and medical condition of
the life insured, etc) and this amount can become immediately available to the
nominee of the policyholder on death. Thus insurance is a unique investment avenue
that delivers sound returns in addition to protection.

TYPES OF LIFE INSURANCE PLANS

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Life Insurance Plans:
Under Life insurance plans, ICICI Prudential offers plans under the following major
need categories:
Education Insurance Plans
Wealth Creation Plans
Premium Guarantee plans
Protection Plans

Education Insurance Plans

One of your most important responsibilities as a parent is to ensure that your child
gets the best possible education that can be provided.
ICICI Prudential offers a wide portfolio of education insurance plans that are designed
to provide peace of mind to you, as a parent, that your child's education will be
secure. These plans ensure that money is made available at the crucial junctures in a
child's education - Class X, Class XII, graduation and post-graduation - to fund
crucial commitments for the child's future.
Importantly, education insurance plans ensure that in the unfortunate event of the
death of a parent, the child's education continues unhampered.
Under the education insurance plans platform, ICICI Prudential brings the following
products to you. Please click on the product name to know more about the plans.

Plan Name Plan Type

SmartKid New Unit-linked Unit Linked


Regular Premium

SmartKid New Unit-linked Unit Linked


Single Premium

SmartKid Regular Premium Traditional

Wealth Creation Plans

Wealth Creation Plans give the customer the dual benefit of protection along with the
potentially higher returns of market-linked instruments. The most important benefit of
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ULIPs is the flexibility they give the customer in choosing the premium amount and
also choosing the underlying fund in which this money is to be invested. Wealth
creation plans also offer the customer more liquidity options as compared to
traditional plans. As such, ULIPs are ideal for customers who want the protection of a
life cover to be allied to the returns of market linked instrument – giving them an
unmatched combination of benefits.
Under the wealth creation platform, ICICI Prudential brings the following products to
you. Please click on the product name to know more about the plans.

Plan Name Plan Type

LifeTime Super Unit Linked


LifeLink Super Unit Linked
PremierLife Gold Unit Linked
LifeTime Plus Unit Linked

Premium Guarantee Plans

The latest addition to the life insurance product portfolio of ICICI Prudential is the
Premium Guarantee plan - InvestShield Life New. Premium Guarantee plans are the
ideal insurance-cum-investment option for customers who want to enjoy the
potentially higher returns of a market linked instrument, but without taking any
market risk.

Under the Premium Guarantee Plans platform, ICICI Prudential brings to you the
following products:

Plan Name Plan Type

InvestShield Life New Unit Linked


InvestShield CashBak Unit Linked

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Protection Plans

The sole objective of these plans, as their name indicates, is to serve the protection
needs of the customer and by doing so, safeguard one’s family from the financial
implications of unfortunate circumstances than one cannot foresee.
Under the Protection Plans platform, ICICI Prudential brings to you the following
products:

Plan Name Plan Type

LifeGuard Traditional
Save'n'Protect Traditional
CashBak Traditional
Home Assure Traditional

THE INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY (IRDA)

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Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body
in April 2000 has fastidiously stuck to its schedule of framing regulations and
registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
IRDA’s online service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that the
insurance companies would have a trained workforce of insurance agents in place to
sell their products, which are expected to be introduced by early next year. Since
being set up as an independent statutory body the IRDA has put in a framework of
globally compatible regulations. In the private sector 12 life insurance and 6 general
insurance companies have been registered.

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WHY PRIVATE INSURANCE?

• All the private companies have a lock in period of 3 yrs hence no


disinvestments possible.
• Minimum net worth of 500 Cr required for acquiring license with a minimum
paid up capital of 100 Cr in their insurance venture.
• Commitment to increase the paid up capital manifold in next five years.
• Re insurance for all its policies worth more than 5 lakhs. Reinsurance partners,
best and the largest in the world – general cologne and Swiss reinsurance.
• Audit of accounts by at least 2 independent approved auditors each year.
• Products and pricing are cleared by IRDA, which looks into the financial
visibility of the product and the financial implication.
• IRDA is now proposing a Pvt. Policy Protection fund.
• Funds to be invested in only regulated and controlled areas with close to
80%being pumped into only gilts thereby assuring safety of funds.

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CHAPTER-2

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INDUSTRY PROFILE

Background
In 1912, the Indian life insurance companies Act was passed . This was the first

comprehensive legislation in India to regulate the business of insurance. it had been

observed that the provisions of Indian Company’s Act did not meet the purpose. A

further legislation was passed in 1928, But a comprehensive legislation was passed in

1938. The amendments in the act were made in 1956 when insurance was nationalized

and LIC and GIC were formed.

Life insurance business was nationalized with effect from 19 January 1956

and 256 companies were merged. Insurance Act was further amended in 1999 and

IRDA was formed in view of the circumstances arising out of opening up of insurance

industry in 2000.IRDA authority to protect the interest of the holders of insurance

policies, to regulate , promote and ensure the working of all companies.

As we enter into the new millennium, economies of the world over are getting

redefined and remodeled with the new mindsets, new technologies, new riles and new

directions. Financial sector reforms received top priority ever since the Govt. of India

initiated the process of economic liberalization. These reforms are extending the

horizons of the financial services sector and have been transforming our capital

markets , banking and financial services industries.

In the last four decades , after nationalization of the insurance industry ,

certain socio-economic objectives were achieved through public ownership of the

insurance business. Yet, market oriented dynamism was missing as evidenced by the

lack of

product innovations, high premium rates and limited use of information

technology.

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The insurance sector reforms have encouraged Blue-Bloods of Indian corporate sector

TATA,ICICI,HDFC,BIRLA,SBI,RELIANCE,KOTAK etc to tie up with world’s

largest insurance majors to capture slice of the country’s potential insurance market.

This has brought abuzz activities in insurance business. New players are wooing the

customer with promises of better services and customized products. The LIC and GIC

are countering the competition on the strength of their track records, distribution

networks and so on.

This new scenario will witness financially sound and experienced players

transforming the industry with best products in service and product development ,

operational efficiency, marketing capability, service plus and tech-savvy orientation.

As a result, the insurance business can become global with e-business applications.

It is awkward business playing value figures on people’s lives. It is almost as

awkward as selling the likelihood of an event people do not want crossing their minds

. in India, it is rather a shrub. For this reason alone life insurance is no ordinary

market. Under the pressure of competitors differentiate their offerings, insurers no

longer sell life insurance as a product that meets a basic need , many of them sell

though the appeal of a wide variety of add on benefits ranging from tax saving to

investment return, sometimes pitying more emphasis on these basic benefits.

This assumes significance because India is witnessing foreign

competition in this sector after a long monopoly period.

There is consensus on success becoming a function of market strategy.

So far the market has been shaped by LIC . it is only recently that private

insurers with 74:26 joint ventures between Indian and foreign companies have

been formed under the watch of IRDA. ICICI prudential, HDFC slandered life

and Max New York Life were first off the block, followed by Kotak

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Mahindra, Royal Sundram,TATA Aig,Birla Sunlife,SBI Life and ING Vyasa

which were started later.

Sudden burst of competition itself is a unique occurrence. The Indian

market distinguishes itself in other ways too, most notably in the areas of

consumer perception and investment option. So it is worth which will the

market move and what could be the winning strategies. Basic premise is clear

that “life insurance is a specialized business”.

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LIFE INSURERS

1. BAJAJ ALLIANZ LIFE INSURANCE CO.LTD.

2. BIRLA SUNLIFE INSURANCE CO. LTD.

3. HDFC STANDARD LIFE INSURANCE CO. LTD.

4. ICICI PRUDENTIAL LIFE INSURANCE CO. LTD.

5. ING VYSYA LIFE INSURANCE CO.PVT.LTD.

6. LIFE INSURANCE CORPORATION OF INDIA.

7. MAX NEWYORK LIFE INSURANCE CO. LTD.

8. METLIFE INDIA INSURANCE CO. PVT.LTD.

9. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE CO.

LTD.

10. SBI LIFE INSURANCE CO.LTD.

11. TATA AIG LIFE INSURANCE CO.LTD.

12. AVIVA LIFE INSURANCE CO. LTD.

13. SAHARA LIFE INSURANCE CO. LTD.

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Life Insurance Companies

ICICI Prudential Life Insurance Company Limited

ICICI Prudential Life Insurance Company Limited was incorporated on July

20,2000.The authorized capital of the company is Rs 2300 million and the paid up

capital is Rs 1500 million. The Company is joint of ICICI (74%) and Prudential

plc UK (26%)

The company was granted certificate of registration for carrying out life insurance

business, by the insurance regulatory and development Authority on November

24,2000.it commenced commercial operations on December 19, 2000,becoming

one of the first few private sector players to enter the liberalized arena. ICICI

Prudential collected Rs.1584 corers as their premium during 2004-05 & the

market share of ICICI pru. as per their premium is 5.63% as a whole but in the pvt

.co .ICICI hold 40% of market share.

ING VYSYA LIFE INSURANCE COMPANY PVT. LTD.

ING Vysya Life Insurance is a joint venture between three

pioneers, ING Insurance Vysya Bank.

ING Group: Over the last 150 years, ING Group has grown to become one of the

largest life insurance organizations in the world. Today it touches the lives of over

50 millions people across 65 countries. It offers a range of financial services

including insurance, pensions, banking and asset management. In the year

2000,total assets of the group stood at over INR 28,42000 corers.

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KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD.

Kotak Mahindra life Insurance Company Limited is a joint

venture between Kotak Mahindra Finance Ltd and Old Mutual.

Kotak Mahindra Finance Ltd.

Kotak Mahindra is one of the India’s leading financial

institutions, offering complete financial solution that encompasses every sphere of

life. From Banking, to stock Broking, to Mutual Funds, to Life Insurance, to

Investment Banking, the company caters to the financial needs of individuals and

corporates.

Old Mutual

Old Mutual, a company with over 157 years of experience in life

insurance business, has the largest financial services business in South Africa,

through its life assurance, asset management, banking and general insurance

operations. Being listed in London Stock Exchange and included in FTSE 100 list

of companies, old Mutual’s assets under management are worth $208 billion.

Tata AIG Life Insurance Company:

Tata AIG General Insurance Company Ltd and Tata AIG Life Insurance Company

Ltd (collectively “Tata AIG”) are joint venture companies between the Tata group

India’s most trusted industrial house and American International grouping (AIG), the

leading U.S based international insurance and financial services organization.

Both promoters have a deep and abiding interest in India’s Insurance sector. Prior to

nationalization, the Tanta’s pioneered private insurance in India when Sir Dorab Tata

set

up new India assurance in 1919.By 1973,when General Insurance was nationalized

the Tata company had a global presence with 56 overseas offices. Aig too has always

25
considered the Indian insurance sector to be of significance. The AIG companies

entered India in 1954 and had offices in several Indian cities prior to nationalization.

HDFC –Standard Life:

HDFC Standard Life Insurance company is a joint venture between India’s

largest housing finance provider, HDFC and Europe’s largest mutual life assurance

company The Standard Life Assurance Company (UK). HDFC Standard Life

Insurance Company Limited is the first private sector life insurance company to be

granted a license.

Standard Life, UK, found in 1825. The UK insurance industry for 175 years

by combining sound financial judgment with integrity and reliability. It is the largest

mutual life company in Europe and has total assets of Rs.5,50,000 crore sit is one of

the very few insurance companies in the world to have ‘AAA’ rating from two of the

leading international credit rating agencies, Moody and Standard and Poor’s. Standard

Life was recently voted ‘company of the decade’ in UK by the independent Brokers

called IFAs.

LIFE INSURANCE CORPORATION OF INDIA (LIC)

The Life Insurance Corporation (LIC) was established about 49 (in1956)

years ago with a view to provide an insurance cover against various risks in life .A

monolith then, the corporation, enjoyed a monopoly status and become

synonymous with life insurance.Its main asset is its staff strength of 1.24 lakhs

employees and 2048 branches and over six-lakh agency force. LIC has hundred

divisional offices and has established extensive training facilities at all levels .At

the apex, is the Management Development Institute, Seven Zonal Training centers

and 35 Sales Training Centers.

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At the industry level, along with the Government and GIC, it has helped established

the National Insurance Academy. It presently transacts individual life insurance

businesses, group insurance businesses, social security schemes and pensions,

grants housing loans through its subsidiary; and markets saving and investment

products through its mutual fund. It payoff about Rs 6000 crore annually to 5.6

million policyholders. Market share of LIC which is 82.3%.By the LIC 1.09 crores

policies has been sold that was in the 2004-05 & the total premium that are

collected by LIC in 2004-05 was Rs.9007 crores.

ALLIANZ BAZAZ LIFE INSURANCE COMPANY

Allianz AG with over 110 years of experience in over 70 countries and Bajaj

Auto, trusted for over 55 years in the Indian market ,together are committed to

offering financial solutions.

Characterized by global presence with a local focus and driven by

customer orientation to establish high earnings potential and financial strength,

Allianz Bajaj Life Insurance Co Ltd was incorporated on 12th March 2001.The

company received the insurance regulatory and development Authority (IRDA)

Certificate of Registration on 3rd August 2001 to conduct Life Insurance business in

India. The Market share of Bajaj Allianz in 2003-04 was .95% which has been

increases in 2004-05 and it is know 2.03% which depicts the financial position of

the co.

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CHAPTER-3

28
COMPANY PROFILE

Overview

India’s Number One private life insurer, ICICI Prudential Life Insurance Company is a joint
venture between ICICI Bank-one of India’s foremost financial services companies-and
Prudential plc- a leading international financial services group headquartered in the United
Kingdom. Total capital infusion stands at Rs. 20.60 billion, with ICICI Bank holding a stake
of 74% and Prudential plc holding 26%.

We began our operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of over
580 offices, over 234,000 advisors; and 22 bancassurance partners.

ICICI Prudential was the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential
has been voted as India’s Most Trusted Private Life Insurer, by The Economic Times – AC
Nielsen ORG Marg survey of ‘Most Trusted Brands’. As we grow our distribution, product
range and customer base, we continue to tirelessly uphold our commitment to deliver world-
class financial solutions to customers all over India.

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Vision & Values

Our vision:
To make ICICI Prudential the dominant Life and Pensions player built on trust by world-class
people and service.
This we hope to achieve by:
Understanding the needs of customers and offering them superior products and
service
Leveraging technology to service customers quickly, efficiently and conveniently
Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders
Providing an enabling environment to foster growth and learning for our employees
And above all, building transparency in all our dealings.

The success of the company will be founded in its unflinching commitment to 5 core values –
Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describe
what the company stands for, the qualities of our people and the way we work.
We do believe that we are on the threshold of an exciting new opportunity, where we can play
a significant role in redefining and reshaping the sector. Given the quality of our parentage
and the commitment of our team, there are no limits to our growth.

Our values :
Every member of the ICICI Prudential team is committed to 5 core values: Integrity,
Customer First, Boundary less, Ownership, and Passion. These values shine forth in all we do,
and have become the keystones of our success.

The ICICI Prudential edge comes from our commitment to our customers, in all that we do –
be it product development, distribution, the sales process or servicing. Here’s a peek into what
makes us leaders.

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1. Our products have been developed after a clear and thorough understanding of customers’
needs. It is this research that helps us develop Education plans that offer the ideal way to truly
guarantee your child’s education, Retirement solutions that are a hedge against inflation and
yet promise a fixed income after you retire, or Health insurance that arms you with the funds
you might need to recover from a dreaded disease.

2. Having the right products is the first step, but it’s equally important to ensure that our
customers can access them easily and quickly. To this end, ICICI Prudential has an advisor
base across the length and breadth of the country, and also partners with leading banks,
corporate agents and brokers to distribute our products

3. Robust risk management and underwriting practices form the core of our business. With
clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth
and hassle-free claims process.

4. Entrusted with helping our customers meet their long-term goals, we adopt an investment
philosophy that aims to achieve risk adjusted returns over the long-term.

5. Last but definitely not the least, our 16,000 plus strong team is given the opportunity to
learn and grow, every day in a multitude of ways. We believe this keeps them engaged and
enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

Promoters

ICICI Bank

ICICI Bank (NYSE:IBN) is India’s second largest bank and largest private sector bank with

over 50 years presence in financial services and with assets of over Rs 3446.58 bn (USD 79
billion) as on March 31, 2007. The Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of delivery channels and
through its 31pecialized subsidiaries in the areas of investment banking, life and non-life
insurance, private equity and asset management. ICICI Bank is a leading player in the retail
banking market and services its large customer base through a network of over 950 branches
and extension counters, 3300 ATMs, call centers and internet banking (www.icicibank.com)

31
to ensure that customers have access to its services at all times.
Prudential Plc

Established in London in 1848, Prudential plc, through its businesses in the UK and Europe,
the US and Asia, provides retail financial services products and services to more than 20
million customers, policyholder and unit holders and manages over £251 billion of funds
worldwide (as of 31 December 2006). In Asia, Prudential is the leading European life
insurance company with life operations in China, Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, the Philippines, Singapore, Taiwan, Thailand, Vietnam. Prudential is the second
largest retail fund manager for Asian sourced assets ex-Japan as at June 2006. Its fund
management business has expanded into a total of ten markets : China, Hong Kong, India,
Japan, Korea, Malaysia, Singapore, Taiwan, Vietnam and United Arab Emirates.

Sheet

THE Company

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
a premier financial powerhouse, and Prudential plc, a leading international
financial services group headquartered in the United Kingdom. ICICI Prudential
was amongst the

first private sector insurance companies to begin operations in December 2000


after receiving approval from Insurance Regulatory Development Authority
(IRDA).
ICICI Prudential's capital stands at Rs. 20.60 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. As of March 31, 2007, the
company garnered Rs. 4,843 crore of weighted retail + group new business
premiums and wrote over 1.96 million retail policies. The company has assets held
to the tune of over Rs. 15,000 crore.
ICICI Prudential is also the only private life insurer in India to receive a National

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Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind)
rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to
meet its obligations to customers at the time of maturity or claims.
For the past six years, ICICI Prudential has retained its position as the No. 1
private life insurer in the country, with a wide range of flexible products that meet
the needs of the Indian customer at every step in life. To know more about the
company, please visit
Distribution
ICICI Prudential has one of the largest distribution networks amongst private life
insurers in India. As of March 31, 2007 the company has over 580 offices across
the country and over 234,000 advisors.
The company has over 22 bancassurnace partners, having tie-ups with ICICI Bank,
Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank, Idukki
District Co-operative Bank, Jalgaon Peoples Co-operative Bank, Shamrao Vithal
Co-op Bank, Ernakulam Bank, 9 Bank of India sponsored Regional Rural Banks
(RRBs), Sangli Urban Co-operative Bank, Baramati Co-operative Bank, Ballia
Kshetriya Gramin Bank, The Haryana State Co-operative Bank.
Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basic policy at a
marginal cost, depending on the specific needs of the customer.

1. Accident & disability benefit: If death occurs as the result of

an accident during the term of the policy, the beneficiary


receives an additional amount equal to the rider sum assured
under the policy. If an accident results in total and permanent
disability, 10% of rider sum assured will be paid each year,
from the end of the 1st year after the disability date for the
remainder of the base policy term or 10 years, whichever is
lesser. If the death occurs while traveling in an authorized
mass transport vehicle, the beneficiary will be entitled to twice
the sum assured as additional benefit.
2. Critical Illness Benefit: protects the insured against financial

loss in the event of 9 specified critical illnesses. Benefits are


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payable to the insured for medical expenses prior to death.
3. Waiver of Premium: In case of total and permanent disability

due to an accident, the future premiums continue to be paid by


the company till the time of maturity. This rider is available
with LifeTime Super, LifeTime Super Pension and CashPlus.

About the Promoters


ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector
bank with over 50 years presence in financial services and with assets of over Rs
3446.58 bn (USD 79 billion) as on March 31, 2007. The Bank offers a wide range
of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialised subsidiaries in
the areas of investment banking, life and non-life insurance, private equity and
asset management. ICICI Bank is a leading player in the retail banking market and
services its large customer base through a network of over 950 branches and
extension counters, 3300 ATMs, call centers and internet banking
www.iciciprulife.com to ensure that customers have access to its services at all
times.
Established in London in 1848, Prudential plc, through its businesses in the UK
and Europe, the US and Asia, provides retail financial services products and
services to more than 20 million customers, policyholder and unit holders and
manages over £251 billion of funds worldwide (as of 31 December 2006). In Asia,
Prudential is the leading

European life insurance company with life operations in China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand,
Vietnam. Prudential is the second largest retail fund manager for Asian sourced
assets ex-Japan as at June 2006. Its fund management business has expanded into a
total of ten markets : China, Hong Kong, India, Japan, Korea, Malaysia,
Singapore, Taiwan, Vietnam and United Arab Emirates.
The ICICI Prudential Life Insurance Company Limited Management team comprises
reputed people from the finance industry both from India and abroad.

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Ms. Shikha Sharma, Managing Director & CEO
Mr. N. S. Kannan, Executive Director
Mr. Bhargav Dasgupta, Executive Director
Ms. Anita Pai, EVP – Customer Service & Technology
Mr. Azim Mithani, Chief Actuary
Mr. Puneet Nanda, Chief Investments Officer
Mr. Binayak Dutta, Chief – Sales and distribution

Mr. N. S. Kannan
Executive Director
ICICI Prudential
Life Insurance Company Limited

N. S. Kannan joined ICICI Prudential Life Insurance Company Ltd as Executive Director
in August 2005, where he has overall responsibility for sales, marketing, investments,
group business and business intelligence. Prior to joining ICICI Prudential, Kannan was
the Chief Financial Officer and Treasurer of ICICI Bank Limited where he was
responsible for investor relations and for the finance, performance management, accounts,
taxation, risk management, secretarial and credit middle office functions. The treasury
operations of ICICI Bank include Balance Sheet Management and Asset and Liability
Management. ICICI Bank is the second largest bank in India with an asset base of about
US$ 55 billion. The bank is listed on Indian national stock exchanges and the New York
stock exchange. Kannan joined ICICI group in 1991 as a project officer. During his
tenure at ICICI group, he has handled project finance operations, infrastructure financing,
structured finance and treasury operations. Prior to his current assignment, he has headed
the Telecom & Transportation group and Structured Finance group of the bank.Kannan is
a postgraduate in management from the Indian Institute of Management, Bangalore with a
gold medal for best all-round performance. He is also a Chartered Financial Analyst from
the Institute of Chartered Financial Analysts of India and an Honours graduate in
Mechanical Engineering. His work experience includes 3 years of industrial experience
with a large engineering group in India.

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SWOT ANALYSIS OF ICICI PRUDENTIAL

STRENGTHS

• ICICI PRUDENTIAL is the largest private player in the insurance industry in


India, with a market share of around 36% amongst the private players.
• ICICI PRUDENTIAL has deposited a paid up capital of Rs. 925 crores with
IRDA as a caution deposit, the highest amongst all the life insurance
companies in India whereas LIC has deposited only 60 crores so far.
• ICICI PRUDENTIAL is the first life insurance company to offer ECS debit
facility.
• ICICI PRUDENTIAL is the first company to introduce unit linked life
insurance and pension products. Presently the maximum numbers of ranges
are under ULIP like life insurance, investment as well as pension plans.
• Its Venture funds management co. Ltd is India’s largest venture capital
company.
• PRODUCTS:

 Flexibility to switch your fund value at your own discretion 4 times a year
Viz Maximiser, Protector, Balancer, Preserver.
 Greater transparency- policyholder knows what is happening to his
money and where the company has invested the money.
 Liquidity option: you can make partial or complete withdrawals
anytime after 3 years.
 Life insurance plans are eligible for deduction under Sec. 80C.
 The proceeds or withdrawals of life insurance policies are exempt
under Sec 10(10D), subject to norms prescribed in that section.
 Riders are provided to give the policyholder the additional protection
at marginal cost- Accident and Disability rider, Critical Illness Rider,
Accidental benefit rider.

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 Loan against the policy
: After the policy has acquired a surrender value
one can avail loan against the policy.
WEAKNESSES

• Industry in nascent stage.


• Rural areas still not covered.
• Not very well known among the Indian population.
• Lack of credibility in the public because ICICI being a private player.
• Premiums are high as compared to its competitors.
• Very few branches in the country.
• PRODUCTS:
 The policy doesn’t have the surrender option before the 3rd year.
 Plan do not offer any guarantee or assured return
 The product profile is not very comprehensive.
 Mortality, management and administrative charges are sky-scraping as
compared to its competitors.

OPPORTUNITIES

• Liberalization of Indian economy.


• As the industry is growing the whole market is virgin.
• The whole private sector is open to be tapped even though the competition is
fierce from government owned insurance companies.
• It’s a volume business that is even if the company has few good corporates
the turnover ceases to increase by manifold.
• PRODUCTS:
 Preserver fund looks good due to comfortable liquidity in the economy
and there is little chance of any hike in short-term rates by RBI.

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 Finance minister unveiled a budget-favoring consumer spending,
boosting demand and therefore higher economic growth

THREATS

• The Govt. players will become aggressive thus growth is going to be tough.
• Entry of other new players is not ruled out
• Apprehension towards ICICI PRUDENTIAL being a private life insurance
company.
• We expect the industry to rationalize in future that is mergers and acquisitions
will happen which will impact the industry and ICICI PRUDENTIAL
fortunes.
• PRODUCTS:
 Past performance of these plans is not indicative of the future
performance of the plan
 The sum invested in the funds is subject to market risks and there
can be no assurance that the objective of the plans will be
achieved.
 All benefits payable under the policy are subject to the tax laws
and other financial enactment, as they exist from time to time

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MEANING OF ULIP

A policy, which provides for life insurance where the policy value at any time varies
according to the value of the underlying assets at the time. ULIP is life insurance
solution that provides for the benefits of protection and flexibility in investment. The
investment is denoted as units and is represented by the value that it has attained
called as Net Asset Value (NAV).

Unit linked
Units in
insurance Underlying
funds
plans investment

Contribution
A ULIP structure looks like as follows:

Less charge

Investment represented as Life cover


units

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FEATURES OF ULIP

ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one-stop solution providing:

· Life protection
· Investment and Savings
· Flexibility
- Adjustable Life Cover
- Investment Options
· Transparency
· Options to take additional cover against
- Death due to accident
- Disability
- Critical Illness
- Surgeries
· Liquidity
· Tax planning

The two strong arguments in favour of unit-linked plans are:


• Firstly, the investor knows exactly what is happening to his money
• Secondly it allows the investor to choose the assets into which he wants his
funds invested.
An investor in a ULIP knows how much he is paying towards mortality, management
and administration charges. He also knows where the insurance company has invested
his money.
The investor gets exactly the same returns that the fund earns but he also bears the
investment risk. The transparency makes the product more competitive. So if you are
willing to bear the investment risks in order to generate a higher return on your
retirement funds ULIPs are for you. Traditional ‘with profits’ policies too invest in
the market and
generate the same returns prevailing in the market. But here the insurance company
evens out returns to ensure that policyholders do not hold money in a bad year. In that
sense they are safer. ULIPs also offer flexibility. For instance a policyholder can ask
40
the insurance company to liquidate units in his account to meet to mortality charges if
he is unable to pay any premium installment. This eats into savings but ensures that
the policy will continue to cover his life.
ULIP came into play in the 1960s and became very popular in Western Europe and
Americas. The reason that is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which it offers. Unit- linked plans are a
contemporary product: transparent and flexible. Individuals have greater control over
their investments. The popularity of ULIPS stems from the fact that they offer
customers “integrated financial solutions with a transparent charge structure”. In
today’s times, ULIP provides solutions for insurance planning, financial needs,
financial planning for children’s future and retirement planning. Unit-linked insurance
plans (ULIPs) have become something of a rage with their 'promise' of market-linked
returns combined with the dual benefit of insuring your life from eventualities.
Why do insurers prefer ULIPs?

Insurers love ULIPs for several reasons. Most important of all, insurers can sell these
policies with lesser capital of their own than what would be required if they sold
traditional policies. In traditional ‘with profits’ policies the insurance company bears
the investment risk to the extent of insured amount. In ULIPs the policyholder bears
most of the investment risk. Since ULIPs are designed to mobilize savings, they give
insurance companies an opportunity to get a large chunk of asset management
business which has been traditionally dominated by mutual funds. ULIPs are suitable
for individuals who are already adequately insured and are reasonably well-informed
and savvy to take active investment decisions by using the `switch option' that is
provided to a ULIP policyholder. Also policyholders with regular endowment plans
who are not satisfied with the 4-6% returns can consider taking a ULIP with a lower
equity component. It is best if insurance-seekers tread the middle path and choose
balanced plans (with about 50-60% equity
component). Ideally they need to avoid taking the aggressive 100% equity ULIP,
which could needlessly expose their assets to market volatility. So if insurances-
seekers/investors play their cards right, they can make this marriage work.

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WORKING OF UNIT LINKED INSURANCE PLANS
UNIT LINKED PLANS

SUPER SMART KID

SmartKid offers an exclusive choice of 3 education insurance plans: SmartKid New


Unit-linked Regular Premium, SmartKid New Unit-linked Single Premium and
SmartKid Regular Premium. Take a look at the features and benefits of each plan:
1. SmartKid New Unit-linked Regular Premium
SmartKid New Unit-linked Regular Premium is a unit-linked plan, which enables you
and your child to accumulate wealth by virtue of the performance of the underlying
market-linked instrument. Take a look at the features of the plan:

Premium: The minimum premium to be invested is Rs. 10,000 per annum. After
deducting premium allocation charges from the premium, the remaining amount will
be invested in a fund of your choice.

Sum Assured: The minimum Sum Assured that the policyholder can opt for is Term
* Annual Premium/2, subject to a minimum of Rs 1 Lac
Policy term: The term of the policy will be calculated as the difference between your
child's current age and the age of your child when the policy matures.

Mortality, Policy Administration charges: These and other charges will be


deducted from the units in the fund.
2. SmartKid New Unit-linked Single Premium
SmartKid New Unit-linked Single Premium works in much the same way as
SmartKid New Unit-linked Regular Premium policy mentioned above. The only
different feature is the premium amount-you will be required to pay only a single
premium, which starts at as low as Rs. 50,000.

Additional Features and Benefits Common to All 3 Plans

Regular payouts: As your child approaches key educational milestones such as 12th
standard or graduation exams, he or she will receive regular payouts, guaranteeing he
or she continues to study, no matter what the circumstance.

Death Benefit: Your child will receive the Sum Assured immediately, should
something happen to you. ICICI Prudential will pay the remaining premiums,
ensuring your child continues to receive policy benefits, as always.

Income Benefit Rider: You can choose to add the benefits of this rider to your child's
education plan. Should you depart before your son's or daughter's education is

42
complete, you child will receive 10% of Rider Sum Assured, for the balance term of
the policy.

Add-on riders: 'Accidental Death and Disability Rider' and 'Waiver of Premium
Rider' ensure your child stays doubly protected, at all times. You can choose to add
these to your child's education policy.

Tax benefits: Premiums you pay for a SmartKid policy are eligible for tax savings
[u/s 80(C)]. Maturity and death benefits are eligible for tax exemptions [u/s 10(10D)].
3. SmartKid Regular Premium
Flexible investment option: Choose the amount of premium with which you wish to
safeguard your child's education.

Flexible policy tenure: The tenure of the plan will be calculated as the difference
between your child's current age and his or her age at which the policy matures.

Flexible premium options: The premium will be calculated based on 3 factors: Sum
Assured, policy tenure and your age.
Guaranteed bonus: A guaranteed bonus of 3.5% per annum is declared for the first 4
premium paying years plus an annual vested bonus declared in subsequent years.

LifeLink Super

Well-deserved financial incentives, rewarding business profits and even ancestral


money are precious amounts that you should invest immediately so they earn you
potentially higher returns in the long run.

Invest in ICICI Prudential's LifeLink Super policy-a single-premium unit-linked


policy

that works best for investors who have in mind long-term financial goals, such as the
education of a child or the purchase of a larger home.

Apart from the potentially higher returns that you can earn, LifeLink Super insures
your family against misfortunes with its protective insurance cover.

Read more about the features and benefits of this plan, right away.

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LifeLink Super at a glance

Minimum/Maximum Entry Age 0 years to 65 years


Maximum Age at Policy Maturity 70 years
Minimum Policy Term 5 years
Minimum Single Premium Up to age 44: Rs. 25,000, age 45 and above: Rs.
50,000
Minimum Sum Assured Annual Premium x Term/2. Subject to a
minimum of Rs. 1,00,000
Tax Benefit Premium payment up to 20% of the Sum
Assured is eligible for benefit under Sec. 80C.
Any amount paid to you will be eligible for tax
benefits under Sec. 10 (10D) exemption, if
premium paid in any year does not exceed 20%
of the Sum Assured.

Features and benefits of LifeLink Super

2 options of Sum Assured: Choose to receive either 125% or 500% of the single
premium amount.

Flexible policy term: Decide how long you wish to invest in this policy. You can
invest for a minimum of 5 years and keep your investment growing for as long as you
wish after that.

Partial withdrawal of money: Withdraw funds in installments from the 4th year
onwards.

Attractive premium allocation rates: Enjoy 100% allocation for premium amounts
equal to or greater than Rs. 5 lacs.

6 investment funds: Select among Flexi-Growth, Maximiser, Flexi-Balanced,


Balancer,
Protector, and Preserver, based on your financial goals and risk profile.

Switch benefit: Switch between funds anytime to maximize on market movements.


You can switch funds 4 times a year, at no cost. For subsequent switches, you will be
required to pay a switch fee of Rs. 100.

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Maturity benefit: Receive the Fund Value when your policy matures. Choose to take
this value as a single lump-sum amount or in monthly, bi-annual or annual
installments spread over 1 to 5 years.

Death benefit: Your family receives the higher of Fund Value or Sum Assured
should something happen to you.

Why LifeTime Super

As an individual who desires a lot from life-a car, a beautiful home and of course, the
comfort and contentment of your family-you would undoubtedly want to plan your
finances such that you can take care of all your requirements.

Invest in ICICI Prudential's LifeTime Super policy-a regular-premium unit-linked


policy, which offers potentially higher returns that systematically enable you to meet
your long-term financial objectives. In addition, LifeTime Super also provides the
protective benefit of an insurance cover, which keeps your family secure, always.

Read more about the features and benefits of this plan.

LifeTime Super at a glance

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Minimum/Maximum Entry Age 0 years to 65 years
Maximum Age at Policy Maturity 75 years
Minimum/Maximum Policy Term 10 years to 75 years
Premium Payment Frequency Monthly, half-yearly, yearly
Minimum Premium Rs. 18,000 per annum
Minimum Sum Assured Annual Premium x Term/2. Subject to a
minimum of Rs. 1,00,000
Tax Benefit (8)
Premium paid for the policy and critical illness
benefit rider will be eligible for tax benefit
under Sec. 80C and 80D respectively. Any
amount paid to you will be eligible for tax
benefits under Sec. 10 (10D) as per prevailing
Income Tax laws.

Features and benefits of LifeTime Super


Flexible policy term: Decide for how long you want your policy. You can invest for
a minimum of 10 years and a maximum of 75 years.

3 choices of premium payment: Opt to pay the premium on a monthly, bi-annual or


an annual basis.

6 investment funds: Select among Flexi-Growth, Maximiser, Flexi-Balanced,


Balancer, Protector, and Preserver, based on your financial goals and risk profile.
Systematic withdrawal of money: Withdraw money in installments from the 4th
year onwards.

Maturity benefit: Receive the Fund Value when your policy matures. Choose to take
this value as a single lump-sum amount or in monthly, bi-annual or annual
installments.

Death benefit: Your family receives the higher of Fund Value or Sum Assured
should something happen to you.

Switch benefit: Switch between funds anytime to adjust your portfolio, based on your
goals and risk profiles. You can switch funds 4 times a year, at no cost. For
subsequent switches, you will be required to pay a switch fee of Rs. 100.

ROLE OF AN ADVISOR IN UNIT LINKED INVESTMENT


PLANS

46
It is important for us to know that what is the role that an advisor will play. At ICICI
Prudential, you are an advisor is to
1. Provide ongoing financial advice for his/her clients: You are an advisor and just
like a lawyer or a doctor you advice the client about insurance and finance.
2. Identify future clients: Life insurance is a business of contacts an the advisor
constantly need to know people so that his business expands.
3. Constantly make appointments: Just making contacts will not be enough to
develop a good life insurance business.
4. Advisor needs to meet these contacts and thus should make appointments on
constantly.
5. Conduct financial review meetings with prospects/ clients: As an advisor it is
necessary to meet with client not only for the purpose of selling but also to
review the need of the client and prospects. Many people would not be in for life
insurance today but as time moves they can be requiring one. Similarly an
existing client may also be in need of more insurance as responsibilities and
liabilities increase.
Close sale:
Ultimately success is defined as sales. The advisor should lead each
appointment towards a sale and close it effectively where in the client is happy
on purchasing the insurance solution and feels satisfied with it.

CHAPTER-4

47
RESEARCH METHODOLOGY

Research Methodology has many dimensions, it include not only research


methods but also considers the logic behind the methods used in the context of the
study and explains why only a particular method of technique had been used so that
research lend themselves to p[roper evaluations. Thus in a way it is a written game
plan for concluding research therefore in order to solve research problem it is
necessary to design a research methodology for the problem as the same may differ
from problem to problem. Research design is the conceptual structure within which
the research is conducted. Its functions are to provide for the collection of relevant
evidence with minimum expenditure of effort, time and money. But, how this can be
achieved depends on the research purpose. In my study the research purpose is

48
exploratory study i.e. to gain familiarity with phenomena or to achieve new insights in
it.

MARKET RESEARCH DESIGN : Descriptive type


DATA SOURCES : Primary source
RESEARCH APPROACH : Survey method
RESEARCH INSTRUMENT : Questionnaire
TYPE OF QUESTIONS : Close-ended
SAMPLE SIZE : 100 samples
MODE OF COLLECTING DATA: Respondents to be chosen randomly.

SAMPLE DESIGN:
Social phenomenon being very vast, it becomes impossible to contact each and every
individual of population due to limitation of essential resources like time and money.
Therefore, the study is preferably narrowed down to a representative sample to make
the study more manageable. Quota sampling is adopted in the exploratory study. It is
a non-probability study in which various insurance players are taken.

SAMPLING UNIT:
The data can be collected from primary sources. The basic premises of my study are
primary data but at the same time it is supplemented with the secondary data.
Sampling unit is a unit which would be considered for the purpose of study to conduct
the comparative study of the ICICI Prudential and other insurance companies with
special reference to Unit Link Plans.
SAMPLING SIZE:
It refers to the number of items to be selected from the universal, to constitute a
sample. To commence the study various insurance players are taken.

HOW DID I GO ABOUT THE PROJECT:-

SAMPLE SIZE

A sample size of 100 customers was selected to do this project, which was random
sampling keeping in mind the basic criteria.

49
FIELD WORK

The research was done for a period of 2 months in (students, government employee &
other) ambala. I started with MY MARKET 100 and thereafter I used to give cold
calls from the company’s database and if seemed interested I take along with me the
representatives of the company for further information gathering.

1) Study of Secondary Data: The quickest and the most economical way for
researchers to find possible hypothesis is to take the advantage of the work done
earlier and thus utilize their efforts.

2) In-depth Interviews: I used in-depth interviews because it attempts to influence


respondents to talk freely about their subject of interest .A formal questionnaire
was made and according to which the questions were asked to the respondents.

Basic methods of collecting Primary Data:

1) Questionnaire Method: The questionnaire used by me for the purpose of data


collection were of structured type (Non-disguised).

2) Contact Method: In order to derive information from the intended organization,


it was elementary for me to search for a link which could enable me to conduct a
research in that organization.

OBJECTIVE OF THE STUDY


The project undertaken by me as a part of my Summar Training of M.B.A.course is an
effort made to study the ULIP policies and activities in ICICI PRUDENTIAL with
special emphasis on unit linked products of the company.
In this era of cut throat competition, any organization needs to select and retain the
best talent. People selected should have positive attitude, ability to inspire others and
must be dynamic.

50
The main objectives of this study are:
• Working of Unit linked Insurance Plans
• SWOT analysis of the product sold
• Comparative study with the competitor.
• Study tax planning solutions available in the market.
• Study asset allocation through insurance plans.
• Market interphase.

CHAPTER-5

51
COMPARATIVE STUDY WITH THE
COMPETITORS

LIST:

• LifeTime Super Vs LIC BimaPlus

52
• LifeTime Super Vs Birla SunLife Classic Life

• LifeTime Super Vs HDFC Linked

• PremierLife Vs Bajaj Allianz Unitgain Plus

LIFETIME SUPER VS LIC BIMAPLUS

Features LifeTime Super LIC BimaPlus


Age 0 – 60 years 12 - 55 years
Term Minimum premium payment term of
3years 10 years
Sum Assured Choose your sum assured, subject to Maximum limit upto Rs. 2 lakhs
a minimum sum assured of Rs. 1
lakh
Survival benefit Value of units (3rd year onwards) Bid Value of the fund units
53
along with maturity bonus at 5%
of the Sum Assured
Death benefit Higher of Sum Assured or value of Death during the first 6 months -
units. 30% 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.
Withdrawal benefit Partial or complete withdrawals are Premature withdrawal allowed
available from the 3rd year onwards after one year (after applying
bid-offer spread.
Contribution Minimum: Rs. 18,000 p.a. Not specified
Flexible Flexibility to increase or decrease in
contribution contribution Not available
Investment options Maximiser, Balancer, Protector &
Preserver. Balanced, Secured & Risk
Increase / Decrease Available. Not available
of death benefit

Bonus units Available Not Available.


Top-up Available. Minimum top-up of Rs. Available (Charges: 1.5% of the
5000. Charges - 1% of top-up. top-up)
4 free switches a year, with the No free switches. Cost of
minimum switch amount being Rs. switching is 2% of the fund
Switch 2000. value.
Surrender value The policy will acquire a surrender Partial surrender up to 50% of
value after 3 complete premium- bid value of units allowed after 3
paying years. The surrender value is years from date of
100% of the value of investments. commencement
Initial Charge % Allocation of the premium Not Disclosed
18000- 49,999: 1st year - 80%; 2nd
year - 92.5% ; 3rd year onwards -
96%.
50000 and above: 1st year - 82%;
2nd year - 92.5%; 3rd year onwards -
96%.
Admin Charge None Not applicable

54
Other Charges Not applicable Not applicable
The annual administrative and fund
management charge is 2.25% for
Maximiser, 2.25% for Balancer,
Fund Management 1.50% for Protector & 0.75% for
Charges Preserver. 1% of the fund per annum

IFETIME SUPER VS HDFC LINKED

Features LifeTime Super HDFC Linked


Age 0 - 60 years 18 - 60 years
Term Minimum premium payment term of 10 - 30 years
3years
Sum Assured Choose your sum assured, subject to Only 5,10, 20 (age-based)
a minimum sum assured of Rs. 1 multiples are allowed as Sum
lakh Assured.
Survival benefit Value of units (3rd year onwards) Value of units
Death benefit Higher of Sum Assured or value of Higher of Sum Assured or value
units. of units.
Withdrawal benefit Partial or complete withdrawals are Partial withdrawal available
available from the 3rd year onwards from the 3rd year onwards,
provided that the Value of Units
does not go below the Sum
Assured.
Contribution Minimum: Rs. 18,000 p.a. Minimum: Rs. 10,000 p.a.
Flexible Flexibility to increase or decrease in Available
contribution contribution.
Investment options Maximiser, Balancer, Protector & 5 Fund Options- Balancer,
Preserver. Defensive Managed, Safe

55
Managed, Liquid & Growth
Increase / Decrease Available. Not available
of death benefit
Bonus units Available Not available
Top-up Available. Minimum top-up of Rs. Available
5000. Charges - 1% of top-up.
Switch 4 free switches a year, with the Switches are free as of now. But
minimum switch amount being Rs. the company reserves the right
2000. to put a charge on the switches.
Surrender value The policy will acquire a surrender The surrender charge is 25% of
value after 3 complete premium- 3 years outstanding regular
paying years. premium. No charges after 3
years
Initial Charge % Allocation of the premium Charges
18000- 49,999: 1st year - 80%; 2nd 1st yr-27%, 2nd yr- 27%, 3rd yr
year - 92.5%; 3rd year onwards - onwards- 1%
96%.
50000 and above: 1st year - 82%;
2nd year - 92.5%; 3rd year onwards -
96%.
Admin Charge None Admin charges of Rs.180 fixed
charge per annum.
Other Charges Not applicable Not applicable
Fund Management The annual administrative and fund Investment charge of 0.80% of
Charges management charge is 2.25% for the Fund Value across all the
Maximiser, 2.25% for Balancer, funds.
1.50% for Protector & 0.75% for
Preserver.
Rider ADBR, CIBR & MSAR ABR & CIBR

56
SUPER PREMIER LIFE VS BAJAJ ALLIANZ UNITGAIN PLUS

Features Super Premier Life Bajaj Allianz Unitgain Plus


Age 18 - 60 years 0 - 60 years
Term Premium paying term of 3 years, 5 Minimum premium payment
years, 7 years or 10 years. term of 3 years
Sum Assured Sum Assured multiple is 1 - 25 times Minimum Sum Assured is 5
the annual premium times the premium paid.
Survival benefit Value of units Anytime after payment of 3
full year's premiums.
Death benefit Higher of Sum Assured decreased by
the amount of withdrawals made or Higher of Sum Assured or
value of units. value of units
Withdrawal benefit Partial withdrawals are available after Partial or complete
the 3rd policy year and after payment withdrawals are available after
of 3 years' premiums. Complete the 3rd years contribution
withdrawals are available after the 1st
year premium. However surrender
penalties will apply.
Contribution Minimum: Rs. 60,000 p.a. Minimum: Rs. 10,000 p.a.
Flexible Available
contribution Available
Investment options Maximiser, Balancer, Protector & Equity Index Fund, Equity Plus
Preserver. Fund, Debt Fund, Balanced
Fund, Cash Fund
Decrease in death Available. Available
benefit
Bonus units Available. Not available
Top-up Available. Minimum top-up of Rs. Available. Charge are 2% of
5000. Charges - 1% of top-up. the top-up amount
Switch 4 free switches a year. Three free switches every year.
Surrender value The policy will acquire a surrender Withdrawals are only allowed
value from the 1st year onwards. after payment of 3 full year's

57
premiums
Initial Charges % Allocation of the premium % Allocation of the premium
3 year premium paying term 1st year - 76%; 97% from year
2 onwards
Rs. 60.000 - Rs. 4,99,999: 1st year:
87%; 2nd and 3rd year: 96%
Rs. 5,00,000 and above: 1st year: 89%;
2nd and 3rd year: 96%
5, 7 and 10 year premium paying term
Rs. 60.000 - Rs. 4,99,999: 1st year:
88%; 2nd and 3rd year: 97%; 4th and
5th year: 98%;6th year onwards: 100%
Rs. 5,00,000 and above: 1st year: 90%;
2nd and 3rd year: 97%; 4th and 5th
year: 98%; 6th year onwards: 100%
Admin Charge Admin charge of Rs. 60 / month Annual admin charges of Rs.
20
Fund Management The annual investment charge is 1.50% 1.5% p.a. for a Equity Plus
Charges for Maximiser, 1.00% for Balancer, Fund, 1% p.a. for Equity Index
0.75% for Protector & Preserver. Fund, No specific charges in
case of Balanced Fund, 0.7%
p.a. for Debt Plus Fund and
0.7% in case of Cash Plus
Fund.
Rider ADBR & CIBR ABR, ADBR, CI & Hospital
Cash Benefit

STUDY TAX PLANNING SOLUTIONS


AVAILABLE IN THE MARKET

TAX BENEFITS ON INSURANCE AND PENSION

58
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:

• Life insurance plans are eligible for deduction under Sec. 80C
• Pension plans are eligible for a deduction under Sec. 80CCC
• Health riders are eligible for deduction under Sec. 80D
• 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 2007-08 are as follows:

Rate of tax
Total Income (Rs.)
Senior citizen Women below 65 Others
years
Upto Rs 1,00,000/- Nil Nil Nil
Above Rs 100,000/- to 145,000/- Nil Nil 10%
Above Rs 145,000/- to 150,000/- Nil 10% 10%
Above Rs 150,000/- to 195,000/- Nil 20% 20%
Above Rs 195,000/- to 250,000/- 20% 20% 20%
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).
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

59
Any sum received under a Keyman 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.

60
CHAPTER-6

61
DATA ANALYSIS & FINDINGS

1). Are you interested in products offered by the ICICI PRUDENTIAL?

Yes 61%

No 22%

Will think 17%

17%

Yes
No
22% Will think
61%

INTERPRETATION

The good thing is that atleast the corporates were quite eager to find out what ICICI
PRUDENTIAL has to offer whereas the major 39 % of the corporates were not even
interested in the products as they are quite satisfied by the LIC and they are not in
breaking their long relationship with them. The private players will have to play a
long battle in order to ensure that they are serious player in the market. Basically
corporates think that its too early to invest in private companies as they have just
entered the scene and they are unsure of the security they will have about their
investment.

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2). Are you satisfied with your present insurer?

YES 65%
No 35%

35%

Yes
No

65%

INTERPRETATION

Here is where the challenge is. Inevitably most of the players are very satisfied with
their present insurer which makes it more tough for the private players to attract the
corporates. The remaining 35 % are also not very dissatisfied by the services but they
are just open to new avenues and are looking forward that private companies come
with good offers so that they may shift to them. Thus private players will have to be
very proactive and in this regard since LIC is the leader and ICICI PRUDENTIAL is
lagging behind its competitors in terms of competition.

3). Where would you like to insure if given chance?

63
LIC - 60
ICICI - 10
BAJAJ ALLIANZ - 5
TATA AIG - 15
SBI - 8
KOTAK MAHINDRA - 2

60
60

50

NO 40
OF
PEOPLE 30
15
20 10
8
5
10 2

0
LIC SBI TATA AIG ICICI BAJAJ KOTAK
MAHINDRA

COMPANIES

INTERPRETATION

Thus we see that the companies are comfortable in having business with govt. owned
companies as they feel its safe & secure to have business with them which is followed
by SBI as it is the biggest bank and then followed by TATA AIG as the name TATA
is associated with it which commands huge premium in the market . Whereas in the
case of ICICI PRUDENTIAL the figures represent mediocre performance after
compelling and coxing the corporates and creating a strong impression whether they
feel interested in doing business with the company.

4). What is people’s main concern while taking a insurance policy (ULIP)?

64
A) Security 40%
B) Returns 28%
C) Tax rebate 32%

50%
40%
%AGE

30%
Series1
20%
10%
0%
SECURITY RETURNS TAX
REBATE
FACTOR

INTERPRETATION

People invest in insurance mainly because of security concern.

5). Are you aware of LifetimeSuper introduced by ICICI Prudential limited?

65
Yes 58%

No 42%

%AGE OF PEOPLE
80%

60%

40% Series1

20%

0%
YES NO
RESPONSE

INTERPRETATION

The awareness level among the corporate about ICICI PRUDENTIAL offering
services is very low and the company needs to work on it. Today is the world of
marketing thus it is recommended that company should become more media friendly
by advertising more through television channels, radio, newspapers, magazines,
journals &editorials.

66
CHAPTER-7

67
LIMITATIONS

• The geographical area was very much limited to residential area & so the
results are not particularly reflection of the current behavior.

• Biases and non-cooperation of the respondents.

• Due to limited time period and constrained working hours for most of the
respondents, the answers at times were vague enough to be ignored.

• Most of the people in India take their policies in the period preceeding
March(for tax saving purposes) & so the response to initial contacts were not
all encouraging and that has been the primary reason in the inability to
quantify the results large enough so as to reduce any relevant outcomes.

• Most of the results that are spelt out have been of qualitative aspects.

• People are not interested in giving personal opinion.

68
69
RECOMMENDATIONS

• More emphasis should be on promotional activities.

• Plenty of advertisement should be done through T.V, Newspaper and Radio as


these media’s are having maximum recall value.

• Total financial planning and advice should be given to every customer.

• More business opportunity seminars should be conducted to make people


aware of the offer given.

• The company should quite frequently send their agent to the customer so that
they should be aware of the latest offer.

• The company should attempt to open more and more of its branches in the
country so as to promote their product publicity.

70
71
CONCLUSION

LIC enjoys credibility over other private players in the industry People look
for security over returns in market linked plans .Lifetime is the most popular
product among the people who are aware about ICICI Prudential’s products.
People are now showing more interest in ULIP as compared to some of the
traditional plans.
ICICI PRUDENTIAL has to counter the distribution network of LIC .The
product profile of ICICI PRUDENTIAL is not very comprehensive

72
73
BIBLOGRAPHY

• www.iciciresearchcenter.org
• www.tata-aig.com
• www.iciciprulife.com
• www.personalfn.com

74
75
ANNEXURE

Do you have any life insurance policies?


Yes No

If Yes: -
Name of the Company ________________
Name of the plan _________________
Annual Amount of premium _________________
Term of plan _________________

1. Are you satisfied with present insurer?


A) YES B) NO

2. Which are the main issues that you take into consideration
while purchasing any life insurance policy?
A) Security
B) Returns
C) Tax saving
D) Others please specify_________

3. Are you aware of Unit Linked Insurance Plans offered by various companies in
India?
A) ICICI B) OM KOTAK MAHINDRA

C) TATA AIG D) BAJAJ ALLIANZ


E) LIC F) SBI
G) MAX NEW YORK H) BIRLA SUNLIFE

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4. Do you know how a Unit Linked Insurance Plan works?
A) YES B) NO

5. Can you please highlight risk attached with them?


A) HIGH
B) MODERATE
C) LOW
6. What is your perception about the Unit link insurance plans, are they give you
a sense of security?
A) YES
B) NO
7. Are you aware of Lifetime pension plan introduced by ICICI Prudential
limited?
A) YES
B) NO
8. If you are given a choice, which one you take:
A) ICICI B) OM KOTAK MAHINDRA

C) TATA AIG D) BAJAJ ALLIANZ


E) LIC F) SBI
9. What other plans or flexibility you expect from Insurance companies?
A) Fewer premiums
B) More returns
C) Complementary gifts
10. Are you interested in buying products of ICICI Prudential?
A) YES
B) NO

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