A Project Report On Fundamentals, Products & Prices Of Bajaj Allianz Life Insurance Company Limited.

A Case Study At Bhubaneswar At BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

Submitted by:- PRAMOD KUMAR MALLIK AND SIDHARTH NANDA Under the guidance of : SUJIT ACHARYA

DECLARATION
I hereby declare that this report entitled FUNDAMENTALS, PRODUCTS & PRICES OF BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED, A CASE STUDY AT BBSR is my original work.

CONTENTS
INTRODUCTION. 1.1. Introduction 1.2. Objectives of the Study 1.3. Significance of the Study 1.4. Research Methodology 1.5. Limitations

INTRODUCTION

Life

is

full

of

uncertainties due to different types of risks like death, accidents, loss of health and property, famine, fire, earthquakes and so on. Everyday some unfavourable events do happen which cause anxiety to our life and disturb our peace of mind. Human beings always sought protection from such risks. Insurance is the answer to these types risk and uncertainties. Insurance is based on the principal that a group of persons exposed to similar type of risks join together and pool their resources to help the few unfortunate ones and meet the loss. Insurance is the process in which losses of few are served by many persons who are equally exposed to some risks. Its basic purpose is to derive the plans to meet financial consequences of unfavourable happenings. The unfortunate ones in a group, who suffer from risk, get compensation out of the pooled resources. In a way, the personal who are fortunate and dont face any loss, share the burden of the unfortunate sufferers. As such insurance is a cooperative device to share the sufferings of unfortunate persons in a group. Human beings can never live in isolation because man is a social animal. He always tries to live in community and contributes to societys well- being and gets substance and protection from the society in which he lives. The modern concept of insurances is based on this principle. Insurance is a social device for eliminating or reducing the cost of society for certain types of risks.

Origin of Life Assurance: Life Assurance was born in England when the first policy providing temporary cover for a period of 12 months was issued as early as 1583 A.D. the Amicable Society started granting fluctuating sum on death since 1705 and a fixed sum since 1757. With the development of mortality tables, Life Assurance acquired a scientific character. The Equitable Society founded in 1762 was the first Society established on scientific basis.

In India, after failure of two British companies, the European and the Albert in 1870, which attempted writing business on Indian lives, first Indian Life Assurance Society was formed in the same year called Bombay Mutual Assurance Society Ltd. it was followed by the Oriental Life Assurance Company Limited I 1874, Bharat in 1896and Empire of India in 1897. The Swadeshi

Movement of 1905 provided impetus to the formation of several companies such as the Hindustan Co-operative, the United India, the Bombay Life, the National. Further in the wake of freedom movement number of companies such as the New India, the Jupiter the Lakshmi emerged. The Government

began to exercise a certain measure of control on insurance business by passing the Insurance business by passing the Insurance Act in 1912. For controlling Investment of funds,

expenditure and management, a comprehensive Act 1938. For controlling the affirm, the office of Controller of Insurance was established. The act was extensively amended in 1950. In the year 1955, approximately 170 insurance Offices and 80 provident Fund Societies had been registered for transacting Life Assurance business in India. There were, however, no full guarantees to the policyholders. The concept of trusteeship was lacking. Many Insurance companies went into Liquidation. There were

malpractices in insurance business. For achieving the following purposes it was felt necessary to nationalize the insurance business in India. To provide security to the policyholders. To utilize the funds for nation-building activities. To avoid cut throat competition. To abolish mal-practices. To spread the message of Insurance to the rural areas. Evolution of Life Insurance: The beginning of Life Insurance is almost as old as the story of mankind. The term Life Insurance is, of course, a concept of modern times. But, the search for security commenced with the beginning of human life it self. The recorded beginning of human life itself. The recorded beginning of concept of Life Insurance is about 6000 years old. First Life Policy:

The

earliest

record

Life Insurance Policy was issued on 18th June, 1583 on the Life of William Gybbons, a citizen of London. The policy was procured by Richard Martin. It was under written for 12 months by 16 individuals for an amount of 383-6s-8d with premium @ 8% i.e. 30-13-4. The text of the policy ended with an interesting prayer. God send the said William Gybbons died on May 29, 1584, that is within a year. The underwriters disputed the claim pleading that the insured had survived 12 lunar months of 28 days each. The claim was finally paid through the Court. DEFINITION OF INSURANCE There can be two approaches for defining insurance. One is functional approach other is contractual approach. Definition The functional approach

says insurance may be defined as a social device, whereby a large group of individuals, through a system of equitable contributions may reduce or eliminate measurable risk of economic loss common to all member of the group. In similar sense Disnadle has defined that Insurance is an instrument of distributing loss of few to many. Allen C. Mayer son states Insurance is device for the transfer to an insured of certain risks of economic loss that would otherwise be borne by the insured.

KINDS OF INSURANCE

Insurance mainly classified into two categories. A) Life Insurance B) General Insurance Life Insurance

can

be

The subject matter of Life Insurance is human life. Most of the insurance policies are combination of savings and security. The insured is promised by the insurance company that during the tenure of insurance in case of his death. His nominee will be paid the insurance amount. According to section 2 (ii) in Insurance Act 1938. Life Insurance is the business of effecting contracts of insurance upon human life including any contract. Whereby the payment of money is assured on death, except death by accident on the happening of any contingency dependent on human life and any contract, which is subject to the payment of premium for a term of the policy, he/she will be paid an amount as per terms of the policy.

General : General Insurance covers all different types of activities performed by human. These are also called as non-life insurance. Types are: House / Office / Factory or any movable Fire Insurance assets destroyed in fire.

Shipment or transportation of goods Marine Insurance by ship, destroyed in catastrophe. Jewellery / cash / household goods stolen Burglary Insurance or robbed. Goods in transit by road or railway Carrier Insurance destroyed. Theft or accident of vehicles Vehicle Insurance. Financial ailments / surgery etc. Health Insurance. SIGNIFICANCE OF THE STUDY Insurance is very cover in

important for modern age. Every human being for his survival need for food, clothing and shelter. These are known as basic or essential human wants without which our existence is meaningless. These human wants give birth to various needs which when satisfied give a sense of satisfaction, if these wants are not fulfilled one feel deprived and unhappy. Insurance is, in fact, PRIVATE PLAYERS IN THE MARKET The new insurance companies used to channels of advertising from newspaper and the television to insurance agents and direct mailers. The new companies focussed their campaigns primarily on building an image of trustworthiness and reliability for themselves. Their advertisements carried messages like the familys happiness. It has

been more than 2 years since private insurance company lunched operations in India, which is depicted in the table. Company Indian Partner Foreign Insurer Birla Sun life Aditya Group Om Kotak Birla Sun Canada Mutual, Life life, Life Area

Kotak Mahindra Old Finance HDFC

South Africa Standard Life, Life UK

HDFC Standard Life ICICI Prudential Max

ICICI

Prudential UK

, Life

New Max India

New York Life Life USA

York Life Tata AIG Tata Group

AIG, USA

Life

&

non life ING Vasya Vasya Bank ING Insurance, Netherlands Bajaj Allianz Bajaj Auto SBI Life SBI Allianz Caediff, France Life Life Life

Insurance

History of Bajaj Allianz Life Insurance 3.1 Business Profile

(a) (b) (c) (d) (e) (f) Bajaj Allianz Ranked No. 1 in new business. Bajaj Allianz issues one million policy Bajaj Allianz set up Ethical fund to attract minorities Bajaj Allianz completes four year with 365% growth. Small Insurance but big on premium. IRDA Position, Bajaj Allianz at No.1 slot for 2007.

BAJAJ ALLIANZ SETS UP ETHICAL FUND TO ATTRACT MINORITIES

Keeping up its social commitment, the Bajaj Allianz Life, the second largest private insurer in India, which largest private insurer in India, which launched four new schemes today in the life Insurance sector, has set up an Ethical Fund, to attract minorities, especially the Muslim community.
BAJAJ ALLIANZ COMPLETES FOUR YEARS WITH 365% GROWTH Bajaj at Allianz Life Insurance the fastest growing life insurance company in India completed its fourth year in October with a bumper growth of 365% for the month of September 2005. For the month of August 2007 the growth registered was 1987. Bajaj Allianz has been sealing new heights month after month. Bajaj Allianz has grown from strength to strength as on close of financial year 2003-04 and was ranked 6th. Today the company is ranked No.2.

Bajaj Allianz Life Insurance is the first and only private sector life insurance company to have office in 475 towns across the country offering flexible investment and insurance solutions with world class service. First and only private sector Life Insurance Company to have office in 475 towns across the country offering flexible investment and in insurance solution with world class service. In the last 12 months and has the insured closed to one million lives so far. Bajaj Allianz Life Insurance is consistently working to create livelihood across the country and have recruited 65,000 insurance consultant and 10,000 employees. Bajaj Allianz Unit Gain plus Equity Fund and Unit Gain Equity Fund were rates the 1st and 2nd best performing funds in Life Insurance Industry by outlook Magazine. Bajaj Allianz Life Insurance market share rises to 25.5% in the month of August 05 amongst private sector life insurance. The Key features of the New Unit Gain Super Plan are: It is a unit link plan with minimum term of 10 years and maximum maturity age 70. Guaranteed death benefit. You have the option to choose a host of additional benefit: UL Accidental Death Benefit, UL Accidental Total / Partial Permanent

Disability Benefit, UL Critical illness Benefit and UL Hospital Cash Benefit. It provides you with easy, regular contribution mechanisms to assist you in accumulating funds. Four different options to choose from Promising Club, Silver, Gold, Diamond and Platinum. Shatakveer, Dwi Shatakveer Club
IC club No of Lives Premium(100%RP & 10%Spand Top up) Rs. Rewards Insura nce cover Convention

Promising club Silver Club Gold club Diamond club Platinum club Shatakveer club Dwi- Shatakveer

15 25 50 75 75 100 200

3,00,000 6,00,000 12,00,000 25,00,000 50,00,000 25,00,000 50,00,000

3,000 6,000 15,000 25,000 50,000 30,000 60,000

Rs. 2 lakh 2 lakh 5 lakh 5 lakh 10lakh 10lakh 10lakh

Branch level Branch level Divisional Level Divisional Level Regional Level Regional Level Regional Level

You can adopt your own investment strategy to grow the funds contributed.

Change of 4 investment funds today with flexible investment management: you can change funds at

any time and also invest in the newer funds that would be introduced from time to time. How does the Bajaj Allianz New Unit Gain Super Plan work? The premiums allocated are invested in a fund/ funds of your choice (depending on the allocation rate) and units are allocated depending on the price of units for the fund/ funds. The value of your policy is the total value of units that you hold in the fund/ funds. The insurance cover charges and the additional benefit charges are deducted through monthly cancellation of units. Fund management charge is priced in the unit value. Sum Assured: you can choose a suitable basic sum assured under the New Unit Gain Super plan. Minimum Sum Assured: 5 times the annualised premium. Maximum Sum Assured: y times the annualised premium where y will be as per the following table.

Age Group Y(Time)

0 10

11 30

31 35

36 40

41 45

46 55

56 60

35

40

40

30

20

12

Death Benefit: On death before the age of 7 years: The death benefit will be the NAV of the units in the policy holders account (Fund value) as on the date of receipt of intimation of death at the office. The policy terminates on the death of the life assured. On death after the age of 7 years and before the age of 60 years: The death benefit will be the higher of the sum assured less the value of the units withdrawn by partial withdrawals in the last 24 months prior to the date of death or the NAV of the units in the policyholders accounT(Fund value) as on the date of receipt of intimation of death at the office.

On death of the life assured on or after attaining the age of 60 years: In this case, the death benefit will be the higher of the NAV of the units in the policy holders

account (Fund Value), or the sum assured less all partial withdrawals made within two years before attaining age 60 years, and all the withdrawals made after attaining age of 60 years. UNIT PRICE The unit price of each fund is arrived at by dividing the Net Asset Value (NAV) of the fund by the number of units existing in the fund at the valuation date. The unit price of various funds are as follows:a) Equity Index Fund Rs 30.479 b) Equity Plus Fund Rs 30.342 c) Balanced Plus Fund Rs 18.682 d)Income Plus Fund Rs 12.185

Important Details of the Bajaj Allianz New Unit Gain Super Plan: Minimum age at Entry Maximum age of Entry : 0 (risk commences at age 7) : 60 18 years 70

Minimum age at Maturity : Maximum Age at Maturity : Minimum term : 10

The minimum age at entry for all additional benefits is 18 years. The maximum age at entry for all additional benefits is 50 years. Death Benefit: You can choose a sum assured (Level of Protection) that you want in the New Unit Gain Premier SP Plan. Minimum Sum Assured 1.25 times the single premium Maximum sum Assured Y times the single premium where y will be as
per the following table. Age Group Y (Time) 10 10 7 5 3* 2* 0 17 18 35 36 45 46 50 51 55 56 60

* Multiplier may be increased to 5 in special cases on case to-case basis. Mortality Charges:

The mortality charge would vary according to the attained age of the life assured at the time of deduction of the monthly cost of insurance as per the table below. Sample standard rates are given in the table below.
Age Mortality charge per annum per thousand of sum at risk 20 1.57

30 40 50 60

1.74 2.82 6.53 15.56

Risk of investment in the Units of the Plan: The Proposer / Life Assured is aware that the investment in the Units is subject to the following, amongst other risks and agrees the he is making the investment in the Units with full knowledge of the same. Bajaj Allianz New Unit Gain Premier SP is only the name of the product and does not in any way indicate the quality of the policy, its future prospects or returns.

HEALTH CARE
What is Bajaj Allianz Health Care? This is a three year health insurance plan, providing comprehensive health cover with life insurance benefit. You can choose the amount of cover for each benefit separately in multiplies of the minimum cover amount, subject to a maximum multiple of 10.
Feature Life Cover Hospital Cash (HC) Maximum Cover Rs.10,000 Equal to Room Charges (Max. Rs. 500 per day and Max. Rs.1000 per day in ICU), Maximum Rs.30, 000 in a policy. Post Hospitalisation Benefit 50% of claim settled for HC per day, maximum 5 days in

a policy year. Surgical Benefit Critical Illness Cover Equal to Surgical Expenses. Rs.50, 000 per policy year. Rs.50, 000 during the policy term.

Accidental Permanent Total/ Rs.50, 000 payable on total disability and Rs.25, 000 Partial Disability ( APT/PD) payable on partial disability.

The benefits payable for all policies under Bajaj Allianz Health Care plan put together will not exceed the maximum available under Bajaj Allianz Health Care. Indicative premiums (Inclusive of Service Tax) Age For (Male) 20 30 40 45 50 1010 1114 1593 2080 2704 Minimum Cover For Minimum Cover

(Female) 1071 1202 1484 1767 2135

Benefits: Live Cover is payable on death of the life assured.

Minimum sum Assured = 5 times Annualised premium. Maximum Sum Assured = Y times the annual premium where y will be as per the following table:

Age Group

0 30 31 35

36 40

41 45

46 55

56 60

Y (Time)

125

90

60

40

20

15

Benefits available under the plan

Death Benefit:

On death before the age of 7 years: The death benefit will be the NAV of the units in the policy holders account (Fund value) as on the date of receipt of intimation of death at the office. The policy terminates on the death of the life assured.

On death after the age of 7 years and before the age of 60 years: The death benefit will be the higher of the sum assured less the value of the units withdrawn by partial withdrawals in the last 24 months prior to the date of death or the NAV of the units in the policyholders account (Fund value) as on the date of receipt of intimation of death at the office.

On death of the life assured on or after attaining the age of 60 years: In this case, the death benefit will be the higher of the NAV of the units in the policy holders account (Fund Value), or the sum assured less all partial withdrawals made within two years before attaining age 60 years, and all the withdrawals made after attaining age of 60 years.

Cash withdrawal option: There is no maturity date for this plan. There is no surrender value available before 3 full years

premium are paid. Anything after payment of 3 full years premiums. You may withdraw money depending on your requirements. Through partial of complete surrender of units. In case of partial withdrawal, a minimum balance of Rs.10, 000/across all funds must be maintained and the minimum withdrawal amount is Rs.1, 000/-. Premium Apportionment: The policy holder may at any policy anniversary change the apportionment percentage of his/ her premium to the Fund he/ she wishes to invest. The premium

apportionment to any fund in which the policy holder wishes to invest must be at least 5 % of the premium. The company will reserve the right to revise the minimum apportionment percentages upon giving written notice of not less than three months subject to obtaining clearance from the IRDA. Fund Value: The fund value is equal to the number of units under this policy multiplied by the unit price on the relevant valuation date.

Investment options: Bajaj Alliance offers you choice of 6 funds. You can choose to invest fully in any one fund or allocate your premiums into the various funds in a proportion that suits your investment needs. All the funds will be managed by asset managed of Bajaj Allianz, backed with the rich

experience of Allianz AG, one of the largest asset managers of Bajaj Allianz ,backed with the rich experience of Allianz AG , one of the largest asset managers in the world today, managing assets worth more than Euro 989 billion (Rs.49,54,560 crore). The Six Funds offered are as under: 1. Liquid Fund Risk

Profile Low: The objective of this fund is to have a

fund that

guarantees invested capital through investments in liquid money market and short term instruments. Not more than 20% of the apportioned premium can be put in this fund. Income Fund - Risk profile Modern: The objective of this fund is to provide accumulation of income through investment in high qualify fixed income securities. This fund will have an exposure of maximum 20% in money market instruments and minimum 80% in G-Secs, bonds and fixed deposits. 2. Equity Growth Fund Risk Profile Very High: The

1.

objective of this fund is to provide capital appreciation through investment in selected equity stocks that have that have the potential for capital appreciation . This fund will have an exposure of maximum 20% in bank deposits

and money market instruments and minimum 80% in equities. 3. Equity Index Fund Risk Profile High: the objective of this fund is to provide capital appreciation through investment in equities forming part of NSE NIFTY. This fund will have an exposure of maximum 15% in bank deposits and money market instruments and minimum 85% in equities. 4. Accelerator Mid cap Fund Risk Profile Very High: The objective of this fund is to achieve capital appreciation by investing in a diversified basket of mid cap stocks and large cap stocks. This fund will have an exposure of maximum 20% in bank deposits and money market instruments and minimum 80% in equities. Out of the equity investment at least 50% will be in mid cap stocks. 5. Balancer Fund Risk Profile Moderate: The objective of this fund is to provide a balanced investment between long term capital appreciation and current income between investment in the units of our NIFTY Index Fund and

Income Fund. Indicative portfolio allocation: Units of NIFTY Index Fund 30% to 50% Units of Income Fund 50% to 70%.

UNIT PRICE The unit price of each fund is arrived at by dividing the Net Asset Value (NAV) of the fund by the number of units existing in the fund at the valuation date. The unit price of various funds are as follows (as on 15th may 08):a) Liquid Fund- Rs 11.693 b) Income Fund- Rs 12.501 c) Equity Growth Fund Rs 14.582 d) Equity Index Fund - Rs 16.431 e) Accelerator Midcap Fund - Rs15.604 f) Balanced Fund Rs 11.501 Important details of the Bajaj Allianz New Unit gain Plus plan Minimum age at Entry Minimum term : : 0 (risk commences at age 7) 10 : 60

Maximum age of Entry

Minimum age of entry for all additional benefits: 18 years

Maximum age of entry for UL Mahila Gain I and II : 40 & 45 years respectively. Maximum age at entry for all additional benefits: 50 years. Minimum age at Maturity : Maximum Age at Maturity : 18 years 70

UL Mahila Gain I & II benefits are available till age 45 and 55 respectively. All other additional benefits are available till age 65.

Premium Payment Mode For your convenience, we have provided 3 regular premium payment modes that can be yearly, half yearly and Quarterly. We also offer a monthly premium payment mode with salary deduction scheme and ECS. In addition, you also have the option to pay top ups to increase your investments. The minimum regular premium is rs.15, 000/- for the Annual Mode, Rs, 7,500/for Half Yearly, Rs. 3750/- for quarterly and Rs.1, 500/- for the monthly mode. The minimum top up premium is rs.5000/Days of Grace

Before the payment of full 3 years premiums, regular premiums must be paid when due to keep the police in force. A grace period of not more than 30 days for all modes other the monthly and not more the 15 days for monthly mode will be allowed.

Termination of the Policy The policy will terminate on occurrence of any of the following. The units in the policy are fully surrendered. The account value becomes equal to one annual premium under the policy due to non payment of regular premiums. The death of the Life Assured. On maturity.

Revival of the Policy It is possible to revive a policy that has lapsed due to non payment of premiums within 2 years from such date of lapse. You have to give a written application to the company to revive the policy with only one full year premium. The revival will effected subject to underwriting. Tax Benefits The regular premiums (other than the charges on additional benefits for UL Critical illness Benefit, UL Mahila Gain and UL Hospital Cash benefit) are eligible for tax relief under Sec. 80(C) of IT Act, as of now. Death Benefit and withdrawals (partial or full) is tax free under section 10(10) D of the income Tax Act, if the premiums paid in any year do not exceed 20% of the Sum Assured. In case of change in any tax laws relevant to the policy holder or the fund performance, the same will be applied as per regulation prevailing at that point of time.

The other products which are offered by Bajaj Allianz Life Insurance Company Limited are as follows:a) Super Saver: Regular saving is the best tool to protect ones family. We at BALIC realize the value of your saving & present a nonlinked, participating regular premium endowment plan, which will help you save regular amounts for a safer tomorrow.

OPPORTUNITIES:

There is a steady increase in the demand of products at Sambalpur as well as in the country that has raised the development of new variety of insurance products.

Due to continue change in the living condition of people due to rapid industrialisation in the western part of the state leads to a great demand of its insurance products.

THREATS: With opening of insurance market Bajaj Allianz facing a stiff competition from life insurance corporation Ltd. And other private players like ICICI Prudential, HDFC Life, SBI Life, Birla Sun Life, Reliance Life Insurance etc. Some of its products like Term care, Risk care, Health Care, has having its better substitutes in the other insurance companies. The CRM (Customer relationship management) strategy of Bajaj Allianz Life Insurance has to be developed due to highly competitive insurance market in India as well as at Sambalpur.

SUGGESTIONS
I obtained the following suggestion during my survey: Socially and economically backward classes of Sambalpur to be given due weightage and for this low cost policies to be included in the product line. Maximizing the mobilization of saving by offering attractive policies. For ensuring adequate safety of investments and steady return on them, it is necessary to diversify the investment portfolio in terms of units, industries and regions. The investment of product to the best advantage of investors, keeping in view the national priorities. Steps should be taken for reducing the amount of premium. To train the agents perfectly regarding the Life Insurance Products. To improve the advertisement media conspicuously and

technically. Long term defaulters should be given a chance for under for future continuing their scheme. Settlement of claims should be made quickly and loan facilities should be given with low interest rates.

All the plans, policies and programs regarding Life Insurance Schemes should reach everybody especially in rural areas.

The given insurance companies should be frequent interaction between policy holders, agents, marketing managers and lastly the management.

Insurance companies should open the branches in the rural areas. So that the rural people will bet benefits. To be more friendly, helpful, and careful and target oriented.

CONCLUSION
After FDI cap has been removed form the insurance sector up to 26%. Many foreign companies entered into India and made joint venture with Indian majors. Bajaj Allianz Life also started its operation in March 2001 in India. Company also proved itself one of the competent insurance companies. Because goodwill and faith is very much necessary to get the customers. Bajaj Allianz also received that goodwill and faith through its efficient sales force and operation department. In time service, customized products, flexibility in the products, better technology, and massive network are to key areas in which Bajaj Allianz Life lead. During my research it is also found that many people faith on Bajaj Allianz Life because it is a subsidiary of Bajaj, one of the trusted family name in the field of automobiles. Better return in investment and flexible products fascinate many people to go with Bajaj Allianz Life. As now a day people does not only want to do life Insurance, they want something more that in insurance plus investment. Which Bajaj Allianz provides through its customized products. Even in ULIP policies there is a flexibility to change the investment to different funds as prescribed in the brochure. It is also found that most of the people come to know about Bajaj Allianz Life from their friends and relatives. Major respondents rated the company as GOOD. It is also found that most of the people go for Bajaj Allianz Life

because of its better return in investment. Followed by better service and reliability.

BIBLIOGRAPH
BIBLIOGRAPHY

1. Life News of Bajaj Allianz Life Co. Ltd. 2. Hand Book on Life Insurance, Pioneer Institute of Insurance 3. www.bajajallianz.co.in 4. www.google.com