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A

Summer Placement Report


on

HDFC Standard Life Insurance Company Limited

Submitted in partial fulfillment for Post Graduate


Diploma in Management
from Aravali Institute of Management, Jodhpur.

Submitted to: Submitted by:


Prof. M. M. Mehta Ravi Agarwal
PGP – 2, PGDM
Roll No. - 01

ARAVALI INSTITUTE OF MANAGEMENT


(An institution of Marwar Education Foundation)
Marwar Bhawan, Polo No. 2, Paota,
Jodhpur (Raj.)

EXECUTIVE SUMMARY

HDFC Standard Life insurance is the oldest life insurance company in the
world. It is the largest insurer in the UK and is the 28 th largest company in the
world. In India, the company is marketing life insurance products and unit
linked investment plans. From my research at HDFC SLIC, I found that the
company has a lot of competition from other private insurers like ICICI, Aviva,
Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete
effectively HDFC SLIC could launch cheaper and more reasonable products
with small premiums and short policy terms (the number of year’s premium
is to be paid). The ideal premium would be between Rs. 5000 – Rs. 25000
and an ideal policy term would be 10 – 20 years.

HDFC must advertise regularly and create brand value for its products and
services. Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use
television advertisements to promote their products. The Indian consumer
has a false perception about insurance – they feel that it would not benefit
them if they do not live through the policy term. Nowadays however, most
policies are unit linked plans where a customer is benefited even if their
death does not occur during the policy term. This message should be
conveyed to potential customers so that they readily invest in insurance.

Family responsibilities and high returns are the two main reasons people
invest in insurance. Optimum returns of 16 – 20 % must be provided to
consumers to keep them interested in purchasing insurance.

On the whole HDFC standard life insurance is a good place to work at. Every
new recruit is provided with extensive training on unit linked funds, financial
instruments and the products of HDFC. This training enables an advisor/sales
manager to market the policies better. HDFC was ranked 13 in the Best
Places to Work survey. The company should try to create awareness about
itself in India. In the global market it is already very popular. With an

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improvement in the sales techniques used, a fair bit of advertising and
modifications to the existing product portfolio, HDFC would be all set to
capture the insurance market in India as it has around the globe.

TABLE OF CONTENTS

Introduction to Insurance 5

Research Design 10

Company Profile of HDFC SLIC 16

Company Profile of Tata AIG LIC 29

POP’s and POD’s 33

Competitive analysis 38

Marketing problems 43

Analysis and Interpretation 46

Future line of research 63

Conclusion 65

References 67

Appendix 68

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ACKNOWLEDGMENT

I would like to thank my project guide Mr. B. K. Panda, Sales Development


Manager HDFC Standard Life Insurance, New Delhi for guiding me through
my summer internship and research project. His encouragement, time and
effort are greatly appreciated.

I would like to thank Prof. Varun Arya, Prof. M. M. Mehta and Mr. Sanjay
Diddee for supporting me during this project and providing me an opportunity
to learn outside the class room. It was a truly wonderful learning experience.

I would like to dedicate this project to my parents. Without their help and
constant support this project would not have been possible.

Lastly I would like to thank all the respondents who offered their opinions and
suggestions through the survey that was conducted by me in Jodhpur.

4
CHAPTER I

INDIAN INSURANCE
INDUSTRY
“AN OVERVIEW”

5
THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

With the largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. It’s a business growing
at the rate of 15-20 per cent annually and presently is of the order of Rs
1560.41 billion (for the financial year 2006 – 2007). Together with banking
services, it adds about 7% to the country’s Gross Domestic Product (GDP).
The gross premium collection is nearly 2% of GDP and funds available with
LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover
while health insurance and non-life insurance continues to be below
international standards. A large part of our population is also subject to weak
social security and pension systems with hardly any old age income security.
This in itself is an indicator that growth potential for the insurance sector in
India is immense.

A well-developed and evolved insurance sector is needed for economic


development as it provides long term funds for infrastructure development
and strengthens the risk taking ability of individuals. It is estimated that over
the next ten years India would require investments of the order of one trillion
US dollars. The Insurance sector, to some extent, can enable investments in
infrastructure development to sustain the economic growth of the country.
(Source: www.indiacore.com)

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was
conceived as a means to provide for English Widows. Interestingly in those
days a higher premium was charged for Indian lives than the non - Indian
lives, as Indian lives were considered more risky to cover. The Bombay

6
Mutual Life Insurance Society started its business in 1870. It was the first
company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General


insurance business in India, on the other hand, can trace its roots to Triton
Insurance Company Limited, the first general insurance company established
in the year 1850 in Calcutta by the British. Till the end of the nineteenth
century insurance business was almost entirely in the hands of overseas
companies.

Insurance regulation formally began in India with the passing of the Life
Insurance Companies Act of 1912 and the Provident Fund Act of 1912.
Several frauds during the 1920's and 1930's sullied insurance business in
India. By 1938 there were 176 insurance companies.

The first comprehensive legislation was introduced with the Insurance Act of
1938 that provided strict State Control over the insurance business. The
insurance business grew at a faster pace after independence. Indian
companies strengthened their hold on this business but despite the growth
that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life
insurers and provident societies under one nationalized monopoly
corporation and Life Insurance Corporation (LIC) was born. Nationalization
was justified on the grounds that it would create the much needed funds for
rapid industrialization. This was in conformity with the Government's chosen
path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till
1972. Their operations were restricted to organized trade and industry in
large cities. The general insurance industry was nationalized in 1972. With
this, nearly 107 insurers were amalgamated and grouped into four
companies- National Insurance Company, New India Assurance Company,
Oriental Insurance Company and United India Insurance Company. These
were subsidiaries of the General Insurance Company (GIC).

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KEY MILESTONES

1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the


government to collect statistical information about both life and non-life
insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act


with the objective of protecting the interests of the insuring public.

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

INDUSTRY REFORMS

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. Since
being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations.

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 online service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured

8
that the insurance companies would have a trained workforce of insurance
agents in place to sell their products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with


premium income at Rs. 1560.41 billion during the fiscal year 2006-2007.
Though the total volume of LIC's business increased in the last fiscal year
(2006-2007) compared to the previous one, its market share came down from
85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to
about 19% in a year's time. The figures for the first two months of the fiscal
year 2007-08 also speak of the growing share of the private insurers. The
share of LIC for this period has further come down to 75 percent, while the
private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players
have entered the market. The restriction on these companies is that they are
not allowed to have more than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments of


Rs. 8.7 billion have poured into the Indian market and 19 private life
insurance companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have


enabled fledgling private insurance companies to sign up Indian customers
faster than anyone expected. Indians, who had always seen life insurance as
a tax saving device, are now suddenly turning to the private sector and
snapping up the new innovative products on offer. Some of these products
include investment plans with insurance and good returns (unit linked plans),

9
multi – purpose insurance plans, pension plans, child plans and money back
plans. (www.wikipedia.com)

CHAPTER II

RESEARCH DESIGN

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RESEARCH DESIGN

INTRODUCTION
A Research Design is the framework or plan for a study which is used as a
guide in collecting and analyzing the data collected. It is the blue print that is
followed in completing the study. The basic objective of research cannot be
attained without a proper research design. It specifies the methods and
procedures for acquiring the information needed to conduct the research
effectively. It is the overall operational pattern of the project that stipulates
what information needs to be collected, from which sources and by what
methods.

TITLE OF THE STUDY

“To Compare the products of HDFC Standard Life Insurance Company


Limited and Tata AIG Life Insurance Company Limited for HDFC
Standard Life Insurance Company Ltd.”

STATEMENT OF THE PROBLEM


This study was undertaken to identify which type of insurance plans HDFC
SLIC should market to beat Tata AIG LIC in India. A survey was undertaken to
understand the preferences of Indian consumers with respect to insurance.
While marketing policies the sole duty of an advisor/ agent is to provide
insurance plans as per customer requirements.

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In effect plans (insurance products) should be flexible to suit individual
requirements. This research tries to analyze some key factors which influence
the purchase of insurance like the term of the policy, the type of company,
the amount of annual premium payable (capacity and willingness to spend),
risk taking ability and the influence of advertising. Solutions and
recommendations are made based on qualitative and quantitative analysis of
the data.

OBJECTIVES OF THE STUDY

 To analysis the product details of HDFC Standard life Insurance


Company limited and Tata AIG life Insurance Company Limited.

 To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard


Life Insurance Company Limited and Tata AIG Life Insurance
Company Limited.

 To find out factors that influence customers to purchase insurance


policies and give suggestions for further improvement.

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data.
Primary data is defined as data that is collected from original sources for a
specific purpose. Secondary data is data collected from indirect sources.
(Source: Research Methodology, By C. R. Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as


well as the personal interview methods of data collection.

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SECONDARY SOURCES

These include books, the internet, company brochures, product brochures,


the company website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe


with a view to draw conclusions about that universe. A sample is a
representative of the universe selected for study.

SAMPLE SIZE
The sample size for the survey conducted was 270 respondents. This

sample size was taken on 95% confidence level and 6 significant level. Data

universe for this sample is 10,00,000 which is approx population of Jodhpur

excluding people below age of 18 years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also
neatly presented with the help of statistical tools such as graphs and pie
charts. Percentages and averages have also been used to represent data
clearly and effectively.

STUDY AREA

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The samples referred to were residing in Jodhpur City. The areas covered
were Shastri Nagar, Sardarpura, Masuriya, Subhash Nagar, City Area and
Kamla Nehru Nagar.

OVERVIEW OF CHAPTER SCHEME

CHAPTER 1:

Introduction to insurance - An overview of the industry in India,


history, key milestones, reforms in the industry, present scenario in India.

CHAPTER 2:

Research Design - Introduction, title of the study, statement of the


problem, objectives of the study, research methodology, sampling, plan of
analysis and study area.

CHAPTER 3:

Company profile of HDFC SLIC – Introduction of HDFC SLIC, products


and services, vision and core values, human resource, organizational
structure, introduction to unit linked funds, national & international
presence of the organization.

CHAPTER 4:

Company profile of Tata AIG – Introduction of Tata AIG, products and


services, vision and core values. The advantages of investing in HDFC
SLIC compared to other financial instruments.

CHAPTER 5:

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Points of Parity and Points of Difference between HDFC SLIC and
Tata AIG LIC – Comparison between different plans, charges, fees,
deductions and riders available with HDFC SLIC and Tata AIG LIC

CHAPTER 6:
Competitive analysis – Information about the plans offered by LIC and
other private insurers in India. Comparisons between the plans to find the
most popular and beneficial plans which HDFC SLIC can incorporate into
their product portfolio.

CHAPTER 7:

Marketing problems - The techniques used to market insurance and


their advantages and disadvantages along with suggestions for
improvement.

CHAPTER 8:
Analysis and Interpretation – A survey on factors that influence people
to purchase Life Insurance Policy.

CHAPTER 9:
Problems requiring more research – Future line of work

CHAPTER 10:
Conclusion

References
Appendices

15
CHAPTER III

COMPANY PROFILE
OF
HDFC STANDARD
LIFE INSURANCE
COMPANY LTD.
16
17
HDFC STANDARD LIFE INSURANCE COMPANY
LIMITED

INTRODUCTION
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has
since emerged as the largest residential mortgage finance institution in the
country. The corporation has had a series of share issues raising its capital to
Rs. 119 Crores. The gross premium income for the year ending March 31,
2007 stood at Rs. 2,856 Crores and new business premium income at Rs.
1,624 Crores. The company has covered over 8,77,000 lives year ending
March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its
corporate head quarters in Mumbai, India. HDFC also has an International
Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar.
HDFC is the largest housing company in India for the last 27 years.

SNAPSHOT-I
• Incorporated in 1977 as the first specialized Mortgage Company in
India.
• Almost 90% of initial shareholding in the hands of domestic institutes
and retail investors. Current 77% of shares held by foreign institutional
investors.
• Besides the core business of mortgage HDFC has evolved into a
financial conglomerate with holdings In:
 HDFC Standard Life insurance Company- HDFC holds 78.07 %.
 HDFC Asset Management Company – HDFC holds 50.1%
 HDFC Bank- HDFC holds 22.25%.
 Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.

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 HDFC Chubb General Insurance Company – HDFC holds 74%.

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SNAPSHOT-II
• Loan Approvals Rs. 805 billion.
(up to Dec 2007) (US $ 18.30 bn.)
• Loan Disbursements Rs.669 billion
(up to Dec. 2007) (US $ 15.20 bn)
• Housing Units Financed 2.5 million.

• Distribution
 Offices 181
 Outreach Programs 90

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the


Executive Chairman of Housing Development Finance Corporation Limited
(HDFC Limited). He joined HDFC Limited in a senior management position in
1978. He was inducted as a whole-time director of HDFC Limited in 1985 and
was appointed as its Executive Chairman in 1993. He is the Chief Executive
Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered
Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the


Company since November, 2000. Prior to this, he was the Managing Director
of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in
Technology from the Indian Institute of Technology, Bombay and a Masters
Degree in Business Administration from The American University, Washington
DC.

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GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

STANDARD LIFE
Standard Life is Europe’s largest mutual life assurance company. Standard
Life, which has been in the life insurance business for the past 175 years is a
modern company surviving quite a few changes since selling its first policy in
1825. The company expanded in the 19th century from kits original Edinburgh
premises, opening offices in other towns and acquitting other similar
businesses.

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Standard Life Currently has assets exceeding over £ 70 billion under its
management and has the distinction of being accorded “AAA” rating
consequently for the six years by Standard and Poor.

SNAPSHOT

• Founded in 1875, company supporting generation for last 179 years.

• Currently over 5 million Policy holders benefiting from the services


offered.
• Europe’s largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance
sector. Reach of the JV player is highly rated and been conferred with many
awards. HDFC is rated ‘AAA ’ by both CRISIL and ICRA. Similarly, Standard
Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s. These reflect
the efficiency with which HDFC and Standard Life manage their asset base of
Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August
2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple
and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO
of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private
Life Insurance Companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development
Finance Corporation Limited (HDFC Ltd.) India’s leading housing finance
institution and the Standard Life Assurance Company, a leading provider of
financial services from the United Kingdom. Both the promoters are will

22
known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry- all
important factors to consider when choosing your insurer.

BUSINESS GROWTH
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2007
stood at Rs. 2,856 crores and new business premium income at Rs. 1,624
crores.

The company has covered over 8,77,000 lives year ending March 31, 2007.
Company also declared our 5th consecutive bonus in as many years for our
‘with profit’ policyholders.

KEY STRENGTH

Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life
has the financial expertise required to manage long-term investments safely
and efficiently.

Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to
offer complete flexibility combined with a low charging structure.

Strong Ethical Values:


HDFC SLIC is an ethical and Cultural Organization. False selling or false
commitment with the customers is not allowed.

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Most respected Private Insurance Company
HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the
World Class Magazine Business World for Integrity, Innovation and Customer
Care.

CORPORATE OBJECTIVE

Vision

'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best
value for money, and set the standards in the industry'.

'The most obvious choice for all'.

Values

.Integrity
.Innovation
.Customer centric
.People Care One for all
.Teamwork
.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable
tomorrow -- they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life
insurance plans are created keeping in mind the changing needs of family. Its
life insurance plans are designed to provide you with flexible options that
meet both protection and savings needs. It offers a full range of transparent,
flexible and value for money products. HDFC SLIC products are modern and
contemporary unitized products that offer unique customer benefits like

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flexibility to choose cover levels, indexation and partial withdrawals. (Source:
www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE


INSURANCE

Individual Products

Protection Plans
A person can protect his family against the loss of his income or the
burden of a loan in the event of his unfortunate demise, disability or
sickness. These plans offer valuable peace of mind at a small price.
Protection range includes our Term Assurance Plan & Loan Cover Term
Assurance Plan.

Investment Plans

HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet
long term investment needs. This provides attractive long term returns
through regular bonuses.

Pension Plans
Pension Plans help to secure financial independence even after retirement.
Pension range includes Personal Pension Plan, Unit Linked Pension,
Unit Linked Pension Plus.

Savings Plans

Savings Plans offer a flexible option to build savings for future needs such
as buying a dream home or fulfilling your children’s immediate and future
needs.

Savings range includes Endowment Assurance Plan, Unit Linked


Endowment, Unit Linked Endowment Plus, Unit Linked Endowment
Plus II, Money Back,

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Unit Linked Enhanced Life Protection II, Children's Plan, Unit
Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young
Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for
progressive employers who wish to provide the best and most innovative
employee benefit solutions to their employees. It offers different products for
different needs of employers ranging from term insurance plans for pure
protection to voluntary plans such as superannuation and leave encashment.
HDFC SLIC offers the following group products to esteemed corporate clients:

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to


members of a Development Agency for a term of one year. On the death of any

26
member of the group insured during the year of cover, a lump sum is paid to those
member beneficiaries to help meet some of the immediate financial needs
following their loss.

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Tax Benefits

INCOME TAX GROSS ANNUAL HOW MUCH HDFC STANDARD


SECTION SALARY TAX CAN YOU LIFE PLANS
SAVE?

Sec. 80C Across All income Upto Rs. 33,990 All the life insurance
Slabs saved on plans.
investment of
Rs. 1,00,000.

Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension plans.
slabs. saved on
Investment of
Rs.1,00,000.

Sec. 80 D Across all income Upto Rs. 3,399 All the health
slabs saved on insurance riders
Investment of available with the
Rs. 10,000. conventional plans.

TOTAL SAVINGS
Rs37,389
POSSIBLE
Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399
under Sec. 80 D, calculated for a male with gross annual
income
exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely
tax-free, subject to the conditions laid down therein.

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CHAPTER IV

COMPANY PROFILE

OF

TATA AIG LIFE


INSURANCE
COMPANY LTD.

30
TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture
company, formed by the Tata Group and American International Group, Inc.
(AIG). Tata AIG Life combines the Tata Group’s pre-eminent leadership
position in India and AIG’s global presence as the world’s leading
international insurance and financial services organization. The Tata Group
holds 74 per cent stake in the insurance venture with AIG holding the balance
26 percent. Tata AIG Life provides insurance solutions to individuals and
corporate. Tata AIG Life Insurance Company was licensed to operate in India
on February 12, 2001 and started operations on April 1, 2001.

THE TATA GROUP


The Tata Group is one of India's largest and most respected business
conglomerates, with revenues in 2004-05 of $17.8 billion (Rs. 799,118
million), the equivalent of about 2.8 per cent of the country's GDP. Tata
companies together employ some 215,000 people. The Group's 32 publicly
listed enterprises - among them standout names such as Tata Steel, Tata
Consultancy Services, Tata Motors and Tata Tea - have a combined market
capitalization that is the highest among Indian business houses in the private
sector, and a shareholder base of over 2 million. The Tata Group has
operations in more than 40 countries across six continents, and its
companies export products and services to 140 nations.

AIG
American International Group, Inc. (AIG), world leaders in insurance and
financial services, is the leading international insurance organization with
operations in more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the most
extensive worldwide property-casualty and life insurance networks of any
insurer. In addition, AIG companies are leading providers of retirement
services, financial services and asset management around the world. AIG's

31
common stock is listed on the New York Stock Exchange as well as the stock
exchanges in London, Paris, Switzerland and Tokyo.

Tata AIG has strong brand name and recall factor which most of its
competitors lack in. Other than the public behemoth Life Insurance
Corporation (LIC) of India which has a major hold in the market share (of
approximately 79%), the private players too are having more and more
opportunities to tighten their hold of the market. Of the private players, ICICI
Prudential comes first with an almost 4.50% of the market share followed by
Tata AIG with about 2.10% of the pie. The private players have everything to
work for, especially with LIC not meeting the needs of its clientele with
respect to the services they need. This provides a prospect for the private
sector players to increase their share of the market. Companies with a
familiarity such as Tata AIG can especially achieve their targets due to the
brand image that the Tata group has.
(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of


Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata
AIG Life) as the clear winner in terms of customer satisfaction in the
life insurance category. This is India's first-ever customer satisfaction
study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed
brand name. The ability to provide innovative and customer-focused service
such as allowing the maximum grace period for premium payment has not
only further distinguished Tata AIG Life from other life insurance companies
but also appealed to consumers.

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PRODUCTS & SERVICES:
Corporate life insurance products:
• Employee Benefits
• Credit Life
• Group Pensions
• Workplace Solutions
Individual life insurance products:
• Health First
• Health Protector
• Mahalife
• InvestAssure II, InvestAssure Gold
• Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of
policies to suit the needs and requirements of all age groups viz, children,
students, adults, retirees etc.

The ‘SUPPORT’ arm of Tata AIG Life is constituted of Operations, Human


Resources, Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement
obligations (for the company) which occur in the form of cash outflows, for
the maximum benefit of both the employer and the departing employee.

33
CHAPTER V

POINTS OF PARITY
AND
POINTS OF
DIFFERENCE
BETWEEN

34
HDFC SLIC AND TATA
AIG

35
Points of Parity

Funds available with ULIP Plans

General Description Nature of Investments Risk Category

Primarily invested in company


Equity Funds stocks with the general aim of High
capital appreciation
Invested in corporate bonds,
Income, Fixed Interest
government securities and other Medium
and Bond Funds
fixed income instruments
Sometimes known as Money
Market Funds — invested in cash,
Cash Funds Low
bank deposits and money market
instruments

Combining equity investment


Balanced Funds Medium
with fixed interest instruments

Generally all life insurance companies have three types of fund which are
Equity fund, Debt fund and Balance fund. These fund have different risk
profile. Equity fund has high risk but it gives high return, Debt fund has low
risk so it gives low return and Balanced fund is combination of both Equity
and Debt fund so risk is medium and return is also low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination
of Debt–Equity fund. These are liquid fund, stable managed fund, secure
managed fund, defensive managed fund, balanced managed fund, equity
managed fund, growth fund.

Indexation
You have the option to increase your regular premiums by an indexation rate
at any policy anniversary to protect the real value of your investment against
inflation. The rate of indexation will be in line with the increase in the Whole
Sale Price Index (or in the event that this Index ceases to be published such
other index as the Company may select for this purpose). The base sum
assured and sum assured of any attached rider would also be increased by
the corresponding indexation increase.

36
Charges, Fees and Deductions in ULIP

• Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums,


the remainder is invested to buy units. The Allocation charges are
guaranteed for the entire duration of policy term.

• Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less

the Fund Value pertaining to regular premiums). It will be deducted by

monthly cancellation of units from the accumulation unit account. The

Mortality Charge shall remain guaranteed throughout the policy term.

• Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced

Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while

calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a.

subject to prior approval by the IRDA.

• Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each

year. PAC will be deducted monthly by cancellation of units from the

accumulation unit account. If premiums are discontinued, this charge would

reduce to 60% of the charge applicable for the premium paying policies

• Surrender Charge

37
This is the charge that applies when the policy is surrendered. It is equal to
50% of the difference between regular premiums expected and those paid in
the first year of the contract.

• Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax
Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns
on investment on maturity of the policy are also tax free.

Riders and Bonuses

HDFC Standard Life Tata AIG Life


Insurance Insurance
Free Look Period 15 days 15 days
Based on company's Based on company's
Reversionary Bonus
performance performance
Based on company's Based on company's
Terminal Bonus
performance performance
TOP UP Minimum Rs. 5000 Minimum Rs. 5000

Riders
Gives on diagnosis of Gives on diagnosis of
Critical Illness (CI)
anyone anyone
Benefit
of 6 critical illness of 12 critical illness
Additional Term
Provides Provides
Benefit (ATB)
Accidental Death
Provides Provides
Benefit (ADB)
Double Benefit Provides Does not provide
Triple Benefit Provides Does not provide
Payer Benefit Rider
Does not provide Provides
(PBR)
Waiver of Premium
Provides Provides
(WOP) Benefit

38
Points of Difference

HDFC Standard Life Tata AIG Life


Insurance Insurance
Grace Period 15 days 31 days
Policy Administration
Rs. 60 per month Rs. 55 per month
Charge
10% on sum-assured
Guaranteed Bonus Does not give
after 10 year
0.25% after every 4th
Loyalty Bonus 0.1% every year
year
Total 24 free switches
4 free switches per
Fund Switching in a policy
year after this
Charge after this Rs. 100 per
Rs. 250 per switch
Switch
50% of all premium 30% of all premium
Guaranteed Surrender
paid excluding 1st paid excluding 1st
value
premium premium
Fund Management 0.80% per annum 1.75% per annum
Charge on the fund value on the fund value
First 2 Premium
Total 12 free Premium
Redirection in a
Redirection
Premium Redirection year is free after this
in a policy after this
Charge Rs. 1000
Rs. 250 per Premium
per Premium
Redirection
Redirection
Last Year Return 42.70% 72%

We see that both the life insurance companies’ products are almost
same. They have same charges, fees and deductions. There is slightly
difference in charges and maximum limits of all charges are fixed by
IRDA. Before buying any life insurance policy one should check charges
and fees on policy and company’s overall performance and return
given to its consumer.

39
CHAPTER VI

COMPETITIVE

ANALYSIS

40
COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments
of partial survival benefits as long as the policy holder is alive. 20% of the
sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is
payable at the 20th year along with accrued bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15
and 20 years and the balance 40% plus the accrued bonus becomes payable
at the 25th year. An important feature of these types of policies is that in the
event of the death of the policy holder at any time within the policy term the
death claim comprises of full sum assured without deducting any of the
survival benefit amounts which have already been paid. The bonus is also
calculated on the full sum assured.

HDFC SLIC does not have a money back policy. It could offer a money back
plan and capture some portion of this market. While marketing insurance
products I found that many customers wanted to purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions –
whole life plans, term assurance plans, money back plan for women, child
plans, plans for the handicapped individuals, endowment assurance plans,
plans for high worth individuals, pension plans, unit linked plans, special
plans, social security schemes – diversified portfolio of products. HDFC SLIC
could diversify its product portfolio. It could add more plans for high worth
individuals and women.

ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger
between ICICI Bank which is the biggest private bank in India and Prudential
Plc which is a global life insurance company.

41
The company has an investment plan which is market related – Invest Shield
Life. In this plan even if the market falls, the premium will be returned to
investors. It is a guaranteed plan which ensures the company carefully
invests your money. The stock market performance of ICICI Prudential is
much better than HDFC SLIC. The returns on the growth fund were 46.28%
compared to the 42.70% offered by HDFC SLIC. Customers are attracted by
higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in


movies, television, newspapers, magazines, bill boards, radio etc. The
company has an excellent brand ambassador – Mr. Amitabh Bacchan. His
promotion of the company builds trust and faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It
is 35% during the first year, 15% in the next year and 3% from the third year
onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the
policies are not accessible to the lower strata of the society. (Source:
www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The
Aditya Birla Group, one of the largest business houses in India and Sun Life
Financial Inc., a leading international financial services organization. The local
knowledge of the Aditya Birla Group combined with the expertise of Sun Life
Financial Inc., offers a formidable protection for your future. (Source:
www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000
employees across all its units worldwide. It is led by its Chairman - Mr. Kumar
Mangalam Birla. Some of the key organizations within the group are Hindalco
and Grasim.

42
Sun Life Financial Inc. and its partners today have operations in key markets
worldwide, including Canada, the United States, the United Kingdom, Hong
Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had
assets under management of over US$343 billion, as on 31st March 2007.
The company is a leading player in the life insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology


to build world class processing capabilities. BSLI has covered more than a
million lives since inception and its customer base is spread across more than
1000 towns and cities in India. All this has assisted the company in
cementing its place amongst the leaders in the industry in terms of new
business premium income. The company has a capital base of 520 crores as
on 31st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is
100 years of age. There are guaranteed returns of 3% p.a. net of policy
charges after every 5 years from the eleventh policy year onwards. However
the charges are very high. The initial charges for the first year are 65%.
Hence the fund value is greatly reduced.

BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of
experience in over 70 countries and Bajaj Auto, a trusted automobile
manufacturer for over 55 years in the Indian market. Together they are
committed to offering you financial solutions that provide all the security you
need for your family and yourself. Bajaj Allianz is the number one private life
insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced
a whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices
across India. It offers travel insurance, motor insurance, home insurance,
health and corporate insurance. The mortality charges are lower than HDFC

43
SLIC. The entry age could be zero years which allow even new born babies to
be insured. (Source: www.bajajallianz.com)

TATA AIG

Tata Aig is a joint venture between the Tata group and American International
Group Inc. In one of the plans the company offers hospital cash benefit
wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5
lakhs in case the person suffers from any critical illness. Annual premium is
much less (about Rs. 6712) to avail such a good benefit. Charges are
relatively low compared to HDFC SLIC for some policies.

The company offers high coverage plans at low cost. There is a plan even for
a policy term of 1 year. Your family can continue to enjoy their current
lifestyle even in the case of something happening to you. These plans are
very flexible and HDFC SLIC could adopt this idea of insuring individuals for
short periods of time. For example; there is a family of four. The only earning
member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He
is able to repay the loan with his current salary in 15 years. The problem
arises if something were to happen to him within these fifteen years. Not only
will the family face the emotional and financial loss of their father but they
will also have to repay the home loan or risk being homeless. (Source:
www.tataaig.com)

44
CHAPTER VII

MARKETING

PROBLEMS

45
MARKETING PROBLEMS

The old and out dated technique of tele marketing is used to prospect
customers. More modern techniques must be adopted. The company must
sponsor shows and give presentations in corporate houses. The financial
health check must be performed for every prospect to assess his/her true
financial position and needs. Some of the advisors skip this vital step and the
prospect ends up with a plan they do not appreciate and soon surrender or
discontinue.

Some of the main problems in marketing the policies are:

 Large amount of competition (18 players in the market)

 Other brands are well advertised and have higher recall value

 LIC is considered a safer option

 Face competition from banks and mutual funds

 High premium policies are difficult to market

 Incorrect perception about insurance

 Interested prospects might have a lack of time and postpone

investments

 Customers get defensive if you cold call

 Short term plans are available only at large premium

 Customers do not have risk appetite to invest in shares

 Some prospects have already invested and are not interested in

further investments

 Consumers don’t want to undertake medical examinations

 Large amount of documentation

46
 Customers do not like their money locked up for many years

 Lack of awareness about the unit linked funds in the market

 No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT

 Advertise about the company and its products – it motivates

individuals to purchase insurance

 Create a positive perception about insurance

 Speak about the good features a plan offers like high returns, life

cover, tax benefits, indexation, accident cover while prospecting

customers

 Try to sell the product/plan which the consumer requires and not the

plan where the advisors benefit is higher

 Improve the efficiency in operations

 Bring out policies with small premiums payable for short periods of

time – Rs. 5000 – Rs. 10000 per annum for 10 years

 Attract the youth of India with higher returns on investment as returns

are the motivating factor which influence purchase of insurance

 Promote insurance in colleges and corporate houses

 Promote HDFC SLIC as an Indian Company to build trust

 HDFC SLIC could have a brand ambassador or a mascot to promote its

services

 Should have partial withdrawals from the first year onwards

 Tap the rural market where there is large potential

47
 Diversify product portfolio

 Make products more straight forward – reduce complexities

CHAPTER VIII

ANALYSIS

&

INTERPRETATION

48
ANALYSIS & INTERPRETATION
“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS


TABLE 1:

Age group No. of Respondents


18 - 25 years 127
26 - 35 years 67
36 - 49 years 46
50 - 60 years 24
More than 60 years 6

CHART 1:

49
Analysis:
From the chart above we find that 47% of the respondents fall in the age
group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17%
fall in the age group of 36 – 49 years.

Therefore most of the respondents are relatively young (below 26 years of


age). These individuals could be induced to purchase insurance plans on the
basis of its tax saving nature and as an investment opportunity with high
returns.

Individuals at this age are trying to buy a house or a car. Insurance could help
them with this and this fact has to be conveyed to the consumer. As of now
many consumers have a false perception that insurance is only meant for
people above the age of 50. Contrary to popular belief the younger you are
the more insurance you need as your loss will mean a great financial loss to
your family, spouse and children (in case the individual is married) who are
financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

50
TABLE 2:

Particulars No. of Respondents


Male 193
Female 77

CHART 2:

CUSTOMER PROFILE OF SURVEYED RESPONDENTS


TABLE 3:

Customer profile No. of respondents


Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14

CHART 3:

51
Analysis:
From the chart above it can clearly be seen that 43% of the respondents are
working professionals, 23% are students and 18% are into business.
Therefore the target market would be working individuals in the age group of
18 – 25 years having surplus income, interested in good returns on their
investment and saving income tax.

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR


NAME
TABLE 4:
Person who have life insurance policy
Yes 103
No 167

CHART 4:

52
ANALYSIS:
This graph shows that out of total 270 respondents only 103 or 38%
respondents have life insurance policy in their name. Rest all don’t have a
single policy in their name. So there is a very big scope for life insurance
companies to cover these people. So in future business of life insurace will
gro further.

MARKET SHARE OF LIFE INSURANCE COMPANIES


TABLE 5:

LIFE INSURER NUMBER OF POLICIES


HDFC STANDARD LIFE 4
BIRLA SUN LIFE 3
AVIVA LIFE INSURANCE 6
BAJAJ ALLIANZ 7
LIC 55
TATA AIG 6
ICICI PRUDENTIAL 12
ING VYSYA 6
BHARTI AXA 2
OTHERS 2

CHART 5:

53
Analysis:
In India, the largest life insurance company is Life Insurance Corporation of
India. It has been in existence in India since 1956 and is completely owned by
the Government of India. Today the organization has grown to 2048 offices
serving 18 crore policies and has a corpus of over 340000 crore INR.

54
ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) No. of respondents

Rs. 5000 - Rs. 10000 40

Rs. 10001 - Rs. 15000 26

Rs. 15001 - Rs. 24900 18

Rs. 25000 - Rs. 50000 10

Rs. 50001 - Rs. 60000 4

Rs.60001 - Rs. 80000 2

Rs. 80001 - Rs. 100000 3

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

Analysis:

55
From the chart above we find that, 39% of the respondents surveyed pay an
annual premium less than Rs. 10001 towards life insurance. 25% of the
respondents pay an annual premium less than Rs. 15001 and 17% pay an
annual premium less than Rs. 25000. Hence we can safely say that HDFC
SLIC would be able to capture the market better if it introduced
products/plans where the minimum premium starts at Rs. 5000 per annum.
Only 19% of the respondents pay more than Rs. 25000 as premium and most
products sold by HDFC SLIC have Rs.12000 as the minimum annual premium
amount. They should introduce more products like Easy Life Plus and Safe
Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a.
respectively. This would definitely increase their market share as more
individuals would be able to afford the policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan No. of Respondents


Term Insurance Plans 105
Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19

56
CHART 7:

POPULAR LIFE INSURANCE PLANS

Analysis:
From the chart given above we can clearly see that 45% of the respondents
hold endowment plans and 39% of the respondents hold term insurance
plans. Endowment plans are very popular and serve two purposes – life cover
and savings.
If the policy holder dies during the policy term the nominee gets the death
benefit that is, sum assured and accumulated bonus. On survival the policy
holder receives the survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower
premium for a higher sum assured. Term insurance is the cheapest form of
insurance and helps the policy holder insure himself for a relatively low
premium. For the returns sensitive investor term plans do not find favor as
they do not offer a return in case the individual does not die during the policy
term.

57
AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:

Awareness of Unit Linked Plans No. of Respondents


Yes 154
No 116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis:
From the chart given above we find that 57% of the respondents are aware of
unit linked life insurance plans and 43% are not aware of such plans. These
plans should be promoted through advertising. The company can advertise
through television, radio, newspapers, bill boards and pamphlets. This would
increase awareness and arouse curiosity in the minds of the consumer which
would enable the company to market its products more effectively.

Unit – linked plans are those where the benefits are expressed in terms of
number of units and unit price. They can be viewed as a combination of
insurance and mutual funds. The number of units a customer would get
would depend on the unit price when they pay the premium.

58
When the policy matures the individual gets his fund value. The value of his
fund is calculated by multiplying the net asset value and number of units
held by them on that day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

TABLE 9:

Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

59
Analysis:
From the graph above, we can clearly see that 41% of the respondents would
be willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 %
would be willing to spend between Rs. 6001 – Rs. 10000 per annum. Only
15% would be willing to spend more than Rs. 25000 per annum as life
insurance premium.

We could say that the maximum premium payable by most consumers is less
than Rs. 25000 p.a. This is further reduced as most customers have already
invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18


insurance companies in India inclusive of LIC. Hence to capture a larger part
of the market the company could introduce more reasonable plans with
lesser premium payable per annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 10:

Ideal policy term No. of respondents


3 - 5 years 51
6 - 9 years 41
10 - 15 years 95
16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13

CHART 10:

60
CHART SHOWING IDEAL POLICY TERM

Analysis:
From the chart given above it can be seen that 35% of the respondents
prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and
15% prefer a term of 6 – 9 years. This means that HDFC SLIC could introduce
more plans wherein the premium paying term is less than 15 years.

The outlook of insurance as a product should be changed from something


which you pay for your whole life (whole life policy) and do not receive any
benefit (the nominee only receives the benefit in case of your death) to an
extremely useful investment opportunity with the prospects of good returns
on savings, tax saving opportunities as well as providing for every milestone
in your life like marriage, education, children and retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 11:

61
Parameter No. of Respondents
Advertisements 35
High returns 84
Advice from friends 46
Family responsibilities 89
Others 16

CHART 11:

Analysis:
From the chart above it can be seen that 33% of the respondents purchase
life insurance to secure their families, 33% take life insurance to get high
returns, 17% purchase insurance on the advice of their friends and 13%
purchase insurance because of the influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that
occurs to the family in case of the uncertain death of the policy holder. But
now a days this trend is changing. Along with protection (life cover), a
savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy
holders get the option to choose where their money will be invested. They

62
can invest their money in the equity market, debt market, money market or a
combination of these. The debt and money markets usually have low risk
attached whereas the equity market is a high risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 12:

Type of Company No. of Respondents Percentage

Government Owned Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 12:
PREFERRED COMPANY TYPE OF THE RESPONDENTS

Analysis:
From the graph above we find that 60% of the respondents preferred to
purchase insurance from a government owned company, 29% of the

63
respondents preferred to purchase insurance from a public limited company
and only 4% of the respondents preferred a foreign based company. Heavy
advertising through television, newspapers, magazines and radio is required.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 13:

Expected Returns No. of respondents


Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22

CHART 13:

Analysis:
From the chart above it can clearly been seen that 18% of the respondents
would like 16 – 20% returns, 17% would like returns between 21 – 25% and

64
17% would like returns of 11 – 15% on their investments. Therefore the
average return on investment should be at least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want
some guaranteed returns. Therefore the bulk of investment should be made
in the balanced fund with 50% debt and 50% equity. The returns on the
Secure Fund are guaranteed as these involve investment is government
securities and the debt market. But the returns on these instruments are low
(8 – 10%). If the company invests in shares, returns are higher (39%) but
correspondingly risk borne by the policy holder is also higher. Therefore a
good combination of the two instruments is often a wise choice.

65
CHAPTER IX

FUTURE LINE OF

RESEARCH

66
FUTURE LINE OF RESEARCH

The future topics for research in the organization could be setting up of an


appropriate ad campaign. It is very vital to the companies’ success that the
people of India know about HDFC SLIC, its products and their special features
and how insurance in general can help them in their future. The
advertisements have to be emotionally appealing. They might also include a
celebrity. The brand name of HDFC could be used to give a push to HDFC
SLIC and its products. The general perception of insurance as “inauspicious”
should be done away with and individuals and corporations accept insurance
on power with other investment opportunities.

The other area of research could be in the management of funds HDFC SLIC
possesses and how it can maximize returns for its investors. A research
project could be undertaken on how to ensure that the money gets invested
in the right companies and earns a medium – high return on investment.
Another area of research could be an analysis of the sales and marketing
techniques used by HDFC SLIC. A large number of changes could be
introduced and this would help in saving operating costs and improving the
efficiency of the firm.

67
CHAPTER X

CONCLUSION

68
CONCLUSION

HDFC standard life insurance is first life insurance company in India. It has
businesses spread out across the globe. It was registered on 23rd December
2000. It currently ranks number 4 amongst the insurers in India (Source:
annual premium provided by the company)

The company faces a large amount of competition. To sustain itself it must


promote its products through advertising and improve its selling techniques.
Consumers must be aware of the new plans available at HDFC SLIC. The
medium of advertising used could be television since most of its competitors
use this tool to promote their products. The company must be promoted as
an Indian company since consumers seem to have more trust in investing in
Indian firms.

The unit linked concept must be specifically promoted. The general


perception of life insurance has to change in India before progress is made in
this field. People should not be afraid to invest money in insurance and must
use it as an effective tool for tax planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller
policy terms. There are individuals who are willing to pay small amounts as
premium but the plans do not accept premiums below a certain amount. It
was usually found that a large number of males were insured compared to
females. Individuals below the age of 30 (mostly male) were interested in
investment plans. This was a general conclusion drawn during prospecting
clients.

69
REFERENCES

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

Magazine –

Insurance World

The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

70
A SURVEY ON ‘INSURANCE INDUSTRY’

Dear Sir/Madam,

I am a student of Aravali Institute of Management, Jodhpur. As part of the


requirements for my Post Graduation Diploma in Management I am required
to do a research based project. Kindly spend a few minutes of your valuable
time and fill in this questionnaire.

Do you have a life insurance


policy/investment plan in your name?

o Yes o No

If yes which company’s insurance policies do


you hold?
o Aviva Life
o HDFC Standard Insurance
Life Insurance o Bajaj Allianz Life
o Birla Sun Life Insurance
Insurance o LIC
o Tata AIG Life o ING Vysya Life
Insurance Insurance
o ICICI Prudential o Bharti Axa Life
Life Insurance Insurance
o Others (specify name)

What is the approximate premium paid by you


annually (in Rupees)?

o Rs. 5,000 – Rs. o Rs. 50,001 – Rs.


10,000 60,000
o Rs. 10,001 – Rs. o Rs. 60,001 – Rs.
15,000 80,000
o Rs. 15,001 – Rs. o Rs. 80,001 – Rs.
25,000 1,00,000
o Rs. 25,001 – Rs.
50,000
o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you


best in your current stage of life?
o Life Insurance o Pension Plans
o Life Insurance o Child Plans
and Investment
Plans

71
o Tax saving plans

Are you aware of the new unit linked


insurance plans in the market?

o Yes o No

How much would you be willing to spend per


annum if you were to go for an
investment/insurance plan?

o Less than Rs. o Rs. 25,001 – Rs.


6,000 50,000
o Rs. 6,001 – Rs. o Rs. 50,000 – Rs.
10,000 1,00,000
o Rs. 10,001 – Rs. o More than Rs.
25,000 1,00,000
Which according to you is an ideal policy
term? (Number of years you would be willing
to pay premium)

o 3 to 5 years o 21 to 25 years
o 6 to 9 years o 26 to 30 years
o 10 to 15 years o More than 30
o 16 to 20 years years
o Whole life policy

What motivates you to purchase


insurance/investment plans?

o Advertisements o Advice from


o High Returns friends
o Family
responsibilities
o Others (specify)

In which kind of company would you prefer to


make a purchase of insurance?

o Government o Private
owned Company
company o Foreign based
o Public Limited company
Company

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Typically what kind of returns would you look
at from your investments? (Please note:
Higher returns involve greater risk)

o Less than 5% o 21% - 25%


o 6% - 10 % o 26% - 30%
o 11% - 15 % o 31% - 40%
o 16% - 20 % o 41% - 50%
o More than 50%

Personal Details:

Name:

Address:

Age: Contact No. :

Profile of
respondent:
• Student • Business
• Housewife • Self – Employed
• Working • Government
Professional Service
Employee

Date:

73