ABOUT LIFE INSURANCE

All the human beings on the earth know that they will die in future but they dont want to die. They want to fulfill all the dreams, which they had thought, but there are times when all these dreams cant come true. Death is inevitable and yet we live our lives obvious to reality that may strike- when we have no idea. And when it happens, all the dreams come crashing down. In the words of D S Hansell Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all the parties participating in the scheme Life insurance is the only tool to secure our life in future. It also provides a safe guard to the uncertainty of our life. Life insurance is the cheapest investment tool in which we can earn more in a short period of time.

The function of insurance is to protect you against losses you can't afford. This is done by transferring the risks of a person, business, or organization -- the "insured" -- to an insurance company, or "insurer." The insurer then reimburses the insured for "covered" losses -- i.e., those losses it pays
for under the policy's terms. As the insurance consumer, you pay an amount of money, called a premium, to the insurer to transfer the risk. The insurer pools all its premiums into a large fund, and when a policyholder has a loss, the insurer draws funds from the pool to pay for the loss. Life is full of unexpected events that can create large financial losses. For example, whenever you drive, it is possible that you may have a costly accident. Risks affect you by causing worry about potential loss and how to deal with the consequences. India has traditionally been a high savings oriented country being on par with the thrifty Japan. Insurance sector in the United States of America is as big in size as the banking industry there. This gives us an idea of how important the sector is. Insurance sector channelises the savings of the people to long-term investments. In India where 1

infrastructure is said to be of critical importance, this sector will bring the nations own money for the nation.

The global life insurance market stands at $1,521.2 billion while the non-life insurance market is placed at $922.4 billion. India takes the 23rd position with US $9.933 billion annual premium collections and a meager 0.41% share.

Out of one billion people in India, only 35 million people are covered by insurance.

Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per cent real annual growth in GDP.

This has made the sector the hottest one in India after IT. With social security and security to the public at large being the agenda for opening the sector, the role of the regulator becomes all the more serious and one that would be carefully watched at every step.

HISTORY OF LIFE INSURANCE

Insurance concept had been found out way behind in 13 th and 14th century. The earliest reference to insurance has been found Babylonia, the Greeks and the Romans. The use of insurance appeared in the account of North Italian Merchant Bank that then dominated the international trade in Europe at that time. The oldest and earliest record of insurance come in the form of marine insurance where ships and the cargo were insured against perils such as pirates, storm, mutiny and wars.The first company known as the Sun Insurance Office Ltd. was set up in the Calcutta in the years 1710. After that a number of companies were established for marine and general insurance. 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 riskier for coverage. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The first general insurance company- Tital Insurance Company Limited was established in 1850. Till the end of 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 20's and 30'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 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 nationalised monopoly co-orporation and LIC was born. Nationalisation was justified on the grounds that it would create 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, however, continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The 3

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). The Life Insurance Corporation was established on 01.09.1956 and ahs been the sole corporation to write the life insurance business in India. The Indian insurance industry saw a new sun when Insurance regulatory & Development Authority (IRDA) invited the applications for registration as insurers in August, 2000. With the liberalization and opening up of the sector to private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction co ample opportunities for the professionals.

Insurance
The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death. It is a contract for payment of money to the person assured (or to the person entitled to receive the same) on the occurrence of the event insured against. The common policies available are: Whole Life Policy Endowment policy Money Back policy

Types of Insurance Companies

Insurance companies may be classified as Life insurance companies: which sell life insurance, annuities and pensions products. Non-life or general insurance companies: which sell other types of insurance.

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.

Function of Insurance
Risk Transfer: the primary function of insurance is to act as a risk transfer mechanism. For example, there is a car owner. He has a car valued at Rs. 300,000. A considerable amount of his savings has been invested in its purchase and even the least risk conscious person would recognise that they are at risk in such a situation. The car could be stolen, get damaged in an accident, or catch fire. There could be a serious accident resulting in serious injury to passengers or other people. How will the owner of the car cope with all these potential risks and their financial consequences? Here is the place where insurance comes in to help. Insurance will not, in itself, prevent any of the above risks from occurring, but what it will do is provide some form of financial security. The owner of the car can transfer the financial consequences of the risk to the insurer, in return for paying a premium. Thus, a whole range of benefits flow from this primary function of risk transfer. Creation of the Common Pool: an insurance company takes contributions, in the form of insurance premiums, from many people and pays the losses of the few. The contributions have to be enough to meet the total losses in any one year and cover the other costs of operating the pool, including the profit of the insurer. In operating the common pool, the insurer benefits from the Law of Large Numbers. For example, there are 1000 houses and the insurer expects only one of them to be totally destroyed. The cost of this say will be Rs. 100,000, thus a contribution will have to be made to the pool which will cover this expected loss and all the costs and profit of the insurer. The actual outcome in one year may vary from what is expected, but a small provision in the amount collected from each person insuring will take care of this. Equitable Premiums: when risks of similar type are brought together in a common pool, they do not all represent the same degree of risk to the pool itself. That is, the probability of 5

a loss having to be met by the pool is not equal over all those in the pool. For example, a timber- built house represents a different risk from one of standard brick construction; an 18 year old driver with a fast sports car is different from a 40 year old family man driving a family saloon. Thus, here the insurer is faced with risks of differing magnitude or hazard. The probability of an event occurring is quite different in both pairs. This will have to be reflected in the contributions which each will make to the pool. It would not be equitable to expect the driver of a family saloon to subsidise those who choose to drive fast sports cars. Each person or company, willing to join the pool must be prepared to make an equitable contribution to that pool. Thus, the assessment of risk is extremely important, as the insurer has to ensure that a fair premium is charged, which reflects the hazard and the value which the person or the company brings to the pool.

Classes of Insurance
As insurance has developed, the various types of cover have been grouped into several classes, which have come about by practice within insurance company offices, and by the influence of legislation controlling the financial aspects of transacting insurance. Following are the divisions in which companies organise their business: Fire, including business interruption; Accident, including theft, all risks, goods in transit, glass, money, credit, fidelity; Liability, including employers liability, public liability, products and professional indemnity; Motor; Engineering; Marine and Aviation; Life, Health insurance and Pensions.

The Place and Role of Insurance within the Financial Framework

The Indian insurance industry is developing and its operations affect the countrys economy in a variety of ways: A risk transfer mechanism Loss prevention and reduction Major institutional investment Major employer Contribution to invisible earnings and balance of trade 6

The Insurance Market Comprises of Sellers: insurance companies Buyers: the general public, industry and commerce Middlemen: insurance brokers and agents

Financial viability of insurance companies

Financial stability and strength of an insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.

ADVANTAGES OF LIFE INSURANCE

1. It is superior to an ordinary saving plan: Unlike other saving plans, it affords full protection against risk of death. IN case of death, the full sum assured is made available under a life insurance policy; whereas under saving scheme the total accumulated saving alone will be available. The later will be considerably less than the sum assured. If death occurs during early years. 2.

Easy settlement & protection against creditors: The Life assured can
name persons called Nominee to whom policy money would be payable in the event if his death. The proceeds of a life policy can be protected against the claim of the creditors of the life assured by effecting a valid assignment of the policy.

3 . Ready marketability & suitability fir quick borrowing: After an initial period. If the policyholder finds him unable to continue payment of premiums he can surrender the policy for a cash sum. Alternatively, he can tide over a temporary difficulty be taking loan on the sole security of the policy without delay. Further, a life insurance policy is sometimes acceptable as security for the commercial loan. 4.

Tax Relief: The Indian Income Tax Act allows deduction of certain portion of
the taxable income, which is diverted to payment of life insurance premiums from the total income tax liability. When this tax relief is taken into account, it will be found that the assured is in effect paying a lower premium for his insurance.

OVERVIEW
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the countrys GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP. Yet, nearly 80 per cent of Indian population is without life insurance cover, health insurance and non-life insurance continue to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long-term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. With a large capital outlay and long gestation periods, infrastructure projects are fraught with a multitude of risks throughout the development, construction and operation stages. These include risks associated with project implementation, including geological risks, maintenance, commercial and political risks. Without covering these risks the financial institutions are not willing to commit funds to the sector, especially because the financing of most private projects is on a limited or non- recourse basis. Insurance companies not only provide risk cover to infrastructure projects, they also contribute long-term funds. In fact, insurance companies are an ideal source of long-term debt and equity for infrastructure projects. With long-term liability, they get a good assetliability match by investing their funds in such projects.IRDA regulations require insurance companies to invest not less than 15 percent of their funds in infrastructure and social sectors. International Insurance companies also invest their funds in such projects. Insurance is a federal subject in India. There are two legislations that govern the sectorThe Insurance Act- 1938 and the IRDA Act- 1999. 9

INSURANCE IN INDIA
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms. In 1994, the committee submitted the report and some of the key recommendations included: Structure: Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate. Competition: Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry. No Company should deal in both Life and General Insurance through single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies . Regulatory Body: The Insurance Act should be changed .An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) should be made independent. Investments: Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. 10

 GIC and its subsidiaries are not to hold more than 5% in any company (The recurrent holdings to be brought down to this level over a period of time) Customer Service: LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry. The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 Crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.

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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

The Insurance Regulatory and Development Authority Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken by them simultaneously were to provide the supporting systems to the insurance sector and in particular the life insurance companies were 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 that the insurance companies would have a trained workforce of insurance agents in place to sell their products. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 15 life insurance and 9 general insurance companies have been registered. The opening up of the sector is likely to lead to greater spread and deepening of insurance in India and this may also include restructuring and revitalizing of the public sector companies. A host of private Insurance companies operating in both life and nonlife segments have started selling their insurance policies since 2001. Insurance Regulatory and Development Authority (IRDA) is constituted by the Government of India, which governs all the companies that are operating in the insurance sector in India. As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority. The Authority is a ten member team consisting of (a) (b) (c) a Chairman; five whole-time members; four part-time members,

(all appointed by the Government of India.)

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MISSION OF IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

Duties, Power and Functions of Irda

Section 14 of IRDA Act, 2000 lays down the duties, powers and functions of IRDA. The Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. The powers and functions of the Authority shall include: (a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; (b) Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; (c) Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) Specifying the code of conduct for surveyors and loss assessors; (e) Promoting efficiency in the conduct of insurance business; (f) Promoting and regulating professional organizations connected with the insurance and re-insurance business; (g) Levying fees and other charges for carrying out the purposes of this Act; (h) Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938)

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(i) Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (j) Regulating investment of funds by insurance companies;

New products, innovative distribution, and better use of technology are helping the new breed of private life insurers to take market shares away from the monopolist of yesterday. Time was, if you wanted to buy a life insurance policy, you called a LIC advisor referred to you by search of an advisor. He a friend or a relative. These days, you dont have to go in comes after you. There has been a sea change in the life insurance industry. Now private life insurance companies are the market leaders. They use all sort of marketing tricks such as DIRECT MARKETING, ALLIANCE MARKETING and a new BANCASSURANCE. MAX NEW YORK LIFE INSURANCE CO. LTD. is the new dominant player in the life insurance industry. Aggressive selling strategies are the order of the day.

Indian Life Insurance Industry in Present Time:The Government of India liberalized the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, removing all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign and with the growth in this industry many companies entered the life insurance sector. any company with the joint venture of life insurance company can start business of life insurance.

These are following life insurance companies:

(1) MAX New York Life Insurance Ltd. (2) BAJAJ Allianz Life Insurance Company Ltd. (3) BIRLA Sun Life Insurance Co. Ltd (4) HDFC Standard life Insurance Co. Ltd (5) ICICI Prudential Life Insurance Co. Ltd. (6) ING Vyasa Life Insurance Pvt. Ltd. 14

(7) MET Life India Insurance Co. Ltd. (8) KOTAK Mahindra Old Mutual Life Insurance Ltd. (9) SBI Life Insurance Company Ltd. (10) Reliance Life Insurance Co Ltd. (11) AVIVA Life Insurance Co. India Pvt. Limited. (12) SAHARA India life Insurance Co. Ltd. (13) SRI RAM Life Insurance Co. Ltd.

LIFE INSURANCE MARKET

The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population. The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed. The 12 private insurers in the life insurance market have already grabbed nearly 9 percent of the market in terms of premium income. The new business premiums of the 12 private players have tripled to Rs 1000 crores in 2002- 03 over last year. Meanwhile, state owned LIC's new premium business has fallen. Innovative products, smart marketing and aggressive distribution. That's the triple whammy combination that has enabled fledgling private insurance companies to sign up Indian customers faster than anyone ever expected. Indians, who have 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. The growing popularity of the private insurers shows in other ways. They are coining money in new niches that they have introduced. The state owned companies still dominate segments like endowments and money back policies.

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But in the annuity or pension products business, the private insurers have already wrested over 33 percent of the market. And in the popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers. The private insurers also seem to be scoring big in other ways- they are persuading people to take out bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs 50,000. That has risen to about Rs 80,000. But the private insurers are ahead in this game and the average size of their policies is around Rs 1.1 lac to Rs 1.2 lac- way bigger than the industry average.

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INTRODUCTION OF THE COMPANY

The company was founded in 1845 as the Nautilus Insurance Company in New York City, with assets of just $17,000. It was renamed the New York Life Insurance Company in 1849. Its first headquarters were at 112-114 Broadway; the first president was James DePeyster Ogden. The current New York Life headquarters was designed by noted architect Cass Gilbert and completed in 1928. The New York Life building, at 51 Madison Avenue, was constructed during the presidency of Darwin P. Kingsley. He expanded the companys operations and developed new types of insurance. As with other early insurance companies in the U.S., in its early years the company insured the lives of slaves for their owners. In response to bills passed in California in 2001 and in Illinois in 2003, the company reported that Nautilus sold 485 slaveholder life insurance policies during a two-year period in the 1840s; they added that their trustees voted to end the sale of such policies 15 years before the Emancipation Proclamation. The company became known for innovative business practices. In 1860, well before state laws required it, New York Life developed the non-forfeiture option, the predecessor to the guaranteed cash values of modern policies, under which a policy remains in force even if a premium payment is missed. It was also the first American life insurance company to pay a cash dividend to policyholders, and the first U.S. company to issue policies to women at the same rates as men. Susan B. Anthony was one of their first female policy holders, and her father worked for NYLIC. In 1896, New York Life became the first company to insure people with disabilities and the first to issue a policy with a disability benefit that presumes total disability to be permanent after a predetermined period. In the late 1990s New York Life was one of several large mutual life insurers to back a bill that would allow demutualization into a structure known as a mutual holding company (MHC). CEO Sternberg himself argued strongly in favor of the bill, which was ultimately defeated. The NYLIC board of directors 17

subsequently reversed course, with the company strongly and publicly embracing their mutual nature in a series of advertisements. According to their Report to Policyholders 2007, in early 2007 the company's managers became concerned about the state of credit markets, so in February 2007 "based on our belief that the markets were acting irrationally" New York Life decided to move much of its cash flow into safer investments such as US Treasury bonds. "By August 2007, the credit market problems we had feared were front page news," the Report notes. In November 2008, the company announced it will not participate in the Troubled Asset Relief Program. "The company can meet all of its strategic objectives without government capital, its businesses are strong and profitable, and it is committed to remaining a mutual company operating for the sole benefit of its policyholders," states a company press release. New York Life maintains "superior" financial ratings from A.M. Best, Fitch Ratings, Moody's and Standard and Poor's.

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ABOUT THE COMPANY

Max New York Life is a joint venture between Max India Ltd., one of India's leading multibusiness corporate and New York life, a Fortune 100 company. Max New York Life Insurance, incorporated in 2000, is one of India's leading private life insurance companies. The company offers both individual and group life insurance solutions. It has established a wide distribution network across India. Max New York Life has sold well over 2.7 million policies with more than Rs. 77,000 crore in sum assured. It has more than 46,800 agents, who are widely recognized as among the best in the industry. Through its wide network of highly competent life insurance agent advisors and flexible product solutions, Max New York life Insurance is creating a partnership for life with its customers in India.

Max New York Life is also the only private life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is the highest rating, and is a clear assurance of Max New York Life 's ability to meet its obligations to customers at the time of maturity or claims.

Max New York Life Insurance Company

VISON

To become the most admired life Insurance Company in India.

MISSION
Become one of the top quartile life insurance companies in India. Be the brand of first choice. agents. Be the employer of choice. Be a national player. Become principal of choice for

Joint Venture Partner

Max New York Life Insurance Company is a joint venture between New York Life International Inc., a Fortune 100 company and America's largest life insurance provider and 19

Max India Limited one of the leading multi-business corporations in India. Max New York Life Insurance Co Ltd is a Rs. 250 crore joint venture with a paid up capital of Rs. 807 crore. Max India has raised its economic interest in life insurance joint venture with a foreign partner, Max New York Life (MNYL) from 50% to 74%.It is widely known that as per the agreement signed between the two leading giants in 2003, the New York Life was contributing 26 percent in the 26:74 joint venture for every equity investment made. Max was contributing 50 percent and the remaining 24 percent was funded through an advance paid by New York Life to it. New York Life had an option to raise its shareholding in the JV close to 50 percent at the par value, in case of a relaxation up to 26 percent in the FDI sectoral cap in the insurance segment. These terms were approved by the Insurance Regulatory and Development Authority (IRDA) and were highlighted in the successive annual reports of Max India.

Asset under Management

Max New York Life Insurance announced that it has clocked Rs. 2,100 crore in collected premiums for the period Jan - July 2008 recording a growth of 81% over the similar period last year. Of this, first year premiums contributed Rs. 1195crore, while earnings from The company has acquired around 27 lakh renewal premium stood at Rs.905 crore.

policies since inception and is ranked number 3 amongst private life insurers in terms of number of policies sold (YTD June). The Assets Under Management have also increased to over Rs.4138 crore on July 31, 2008 as compared to Rs.2271 crore on July 31, 2007. The capital base of the company is expected to expand to Rs.3600 crore from current equity base of Rs.1,232 crore. New York Life is one of the largest and strongest life insurance companies in the world with more than USD$215 billion assets under management and has received among the highest ratings for financial strength from the life insurance industry's principal rating agencies: A.M. Best (AA+), Standard & Poor's (AA+), Moody's (Aa1), Fitch (AAA). According to Moody's, "New York Life's rating reflects the company's good quality investment portfolio, ample liquidity, and sound capitalization, as well as the good growth potential of its international business. 20

 Strategies
Max New York Life Insurance is further strengthening its investment function, the growth strategy of the company. The company plans to strengthen its investment desk by adding analysts and fund managers and launching more fund options to provide better value to its customers of both ULIP and traditional products. The company also announced completion of one year of its Growth Super Fund, which has provided a return on investment of 20.2% as on 30th May 2008. At a time when equity markets have been volatile, the Growth Super Fund has performed exceptionally well. During the same period CNX 500 recorded a growth of 11.11% and the BSE Sensex a growth of 12.86%. Growth Super is a fund that has the mandate to invest a minimum of 70% in equity and can scale it up to 100%, with the rest invested in debt and cash instruments.

Span of Organization
Max New York Life Insurance has a strong growth focus. The company plans to significantly expand its distribution footprint by opening more than 100 new offices every year for next 3-4 years. The number of agent advisors is expected to touch 2, 00,000 from current 36,500. The growth in agency distribution will be complemented by strong growth in partnership distribution. The company currently has an equity base of Rs.1, 032 crore. To support this growth plan, the shareholders are committed to increase the capital base to Rs. 2,650 crores over the next 3-4 years. There are 13000 employees all over India and 55000 Agent advisors.

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New York Life LLC

New York Life Insurance Company a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. Headquartered in New York City, New York Lifes family of companies offer life insurance, annuities and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds. The mission of New York Life is to maintain its superior 'financial strength', adhere to the highest standards of 'integrity' and demonstrate 'humanity' by treating its customers, agents and employees with compassion, consideration and respect. New York Life is one of the largest and strongest life insurance companies in the world with more than USD$215 billion assets under management and has received among the highest ratings for financial strength from the life insurance industry's principal rating agencies: A.M. Best (AA+), Standard & Poor's (AA+), Moody's (Aa1), Fitch (AAA). According to Moody's, "New York Life's rating reflects the company's good quality investment portfolio, ample liquidity, and sound capitalization, as well as the good growth potential of its international business. As a leader in the insurance industry, New York Life continues to bring to its operations new management concepts, advanced technologies, new distribution and training systems and

Some of the Industry Firsts

First company to provide Freelook period of 15 days to the customer. This was later made mandatory by the regulator First company to start toll free line for agent services First and the only life insurance company in India to implement Lean methodology of service excellence in service industry First life insurance company in India to provide various services to the agents and customers over phone First Indian life insurance company to start service center at the regional level

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First life insurance company in India to be awarded ISO 9001:2000 certification

Awards

Among the top 25 companies to work for in India, according to Businessworld 2003 Great Workplaces of India Among the top five most respected insurance companies in India as per Businessworld 2004 & 2006 survey Won Indo-American Corporate Excellence Award for Best Indo-US company in Financial Services Category in 2006 Received Best Six Sigma Project award at Sakal Six Sigma Excellence Awards 2006 Among top 3 in Asia Life Insurance Company of the Year Award 2007 instituted by Asia Insurance Review Received the Amity Corporate Excellence Award 2007 Received the Outlook Money Award for being among the best new insurers in the country. First life insurance company to be awarded CII-Exim Bank Commendation Certificate for Strong Commitment to Excel - 2008

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PERFORMANCE OF THE COMPANY & LOYALTY SEGMENTATION

A recent survey conducted by Business World to gauge the loyalty and confidence that customers have in their insurance company, placed Max New York Life Insurance right at the Seventh of the heap of private life insurers. Max New York Life Insurance has a base of loyal customers of 45% which is a cut above the insurance industrys loyalty average of 45%. ICICI Prudential, with a C S I ( Customer Satisfaction Index ) score of 45.

The Rankings
LIC ICICI Prudential HDFC STANDARD TATA AIG AVIVA Life BAJAJ Allianz ING Vysya MAX New York

1 2 3 4 5 5 7 7 CSI SCORE

59 55 52 49 48 48 45 45 Rank

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Loyalty segmentation
LIC ICICI Prudential HDFC Standard AVIVA Life BAJAJ Allianz TATA AIG ING Vysya MAX New York Industry Avg. 22 20 66 16 18 12 20 17 19 15 9 12 0 HIGH RISK 4 33 32 35 34 33 32 40 32 40 5 7 7 8 6 7 6 6 60

43 42 42 41 40 48 50 45 80 100 120

TRAPPED

ACCESSIBLE

TRUE LOYALS

PERFORMANCE MEASURES
Insurance Industry Appl.approval process Medical exam process Insurance policies Advertising promotion Comm.on new policies & scheme Post purchase exp. Ins. Agent/advisor Call center/helpline 61 47 60 50 47 56 58 64 LIC 65 33 60 53 47 52 57 67 ICICI Prudential 67 48 61 57 49 65 64 60 Max New Tata AIG York Life 61 52 58 49 43 58 59 69 57 61 60 53 52 53 60 75 HDFC Standard Life 60 57 66 58 50 60 60 62

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PRODUCTS AND SERVICES

The topics covered under this are: Product Mix Segmentation and positioning strategies Communication strategies and media analysis Distribution and channel management

PRODUCT MIX
Max Vijay -The product
Max Vijay is not just another life insurance plan. Through Max Vijay you can consolidate your loose change to take care of your family's financial and security needs. Every Rupee saved in Max Vijay will gradually help you in fulfilling your protection and long-term dreams.

Affordable
Max Vijay available with three premium payment options of 'Rajat', 'Swarna' and 'Heera' enables the customer to enter the plan at a minimal enrollment premium amount of Rs. 1000, Rs. 1500 and Rs. 2500 respectively. Option of paying subsequent premiums of as low as Rs. 10 makes the value proposition of affordability even stronger. There is a guaranteed Sum Assured along with policyholder's account value in case of natural death and almost double of Sum Assured in case of in case of Accidental Death

Flexible
Max Vijay provides customers the flexibility in financial planning by offering a choice to invest any amount, anytime, anywhere.

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It works like a savings account in which customers can consolidate their loose change for 10 years. This loose change which otherwise disappears in our day-to-day living, can be saved for a better future. After 10 years this saved amount along with some investment returns will be given to customers as maturity benefit for fulfilling their dreams. Insurance in a Box Instant policy issuance and recharge

The MAX VIJAY policy pack would be made available in a box to the customer on the spot. Neither does the product require any financial and medical underwriting nor any supporting documents for age. In terms of documentation, the customer would be required to fill a simple one-page form and submit only an ID proof to own the policy. The policyholder can pay subsequent premiums at the nearest collection point for Max Vijay and will be immediately given an updated account statement through the hand held device.

Accessible - Insurance at the consumer's doorstep

The distribution approach adopted for this product is designed to make insurance available in the remotest area of the country. For the first time in the history of Life Insurance in India, Max New York Life would make insurance available in a box. The policy will have tie up to sell this product across channels including neighborhood, MFIs, NGOs and others.

Lapse-free
The policy will not lapse for non-payment of regular premiums as long as there is sufficient value in the policy account.

Robust backend support through internationally renowned partner

The company has tied-up with IBM to provide end-to-end technology backbone for fulfillment. Apart from this they will facilitate the handheld terminal, which enables data transfer to the back end through GPRS and hence facilitates on the spot policy receipt. Speaking at the Press Conference, Rajit Mehta, Deputy Chief Operating Officer, Max New York Life Insurance said, "Backed by best in class services we have emerged as a leader in setting quality benchmarks, offering the most transparent documentation for our life insurance products with outstanding claims ratio. With the launch of Max Vijay and the 27

superior back end operations associated with it, we have not only simplified the entire buying process for the customer but also turned around in the way insurance is sold and serviced. The unique concept of on the spot premium receipts provides the customer with immediate gratification which until now was missing." Anil Mehta, Senior Director - New Markets SBU, Max New York Life Insurance said, "Every rupee saved in Max Vijay will work to help customers to fulfill their dreams and aspirations". Riding on the natural reach of an existing distribution channel, Max Vijay will be widely accessible to all. Spreading financial security across the country by aggregating the loose change that tends to slip away." With the launch of Max Vijay, there is now a customized product to meet the needs of the masses who wish to invest their small savings.

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Direct Marketing
Max New York Life also markets for its products though different ways like telecalling, mail etc. As mentioned about branch network of Max New York Life above they all are having their staff that is involved in direct marketing for its product. Distribution Strategy of Max New York Life

Tied Agency

Bancassurance & Alliances

Banc assurance
Corporate Agency & Brokers

20% 10%

Direct Marketing
Agency Force 70%

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Tied Agency
In life insurance business wide distribution network and tied agency is biggest source of getting more business for any company so developing them is key to increase share in the life insurance Market. LIC has 10, 02,149 agents and 2048 branch offices as on 31st march 2005. Tied agency is a substantial business channel for Max New York Life because 70% of business of company comes from this channel. Company provides agency to individual whose age is between 25 to 40 years and minimum qualification is 12 pass. As we have seen, companys major business comes from this channel. Max New York Life is immensely concentrating on developing this channel. It has 33,000 advisors and it is planning to extend this number to 54000 by the end of the year 2004-2005. For that Max New York Life does many activity like they do direct marketing, they recruit management trainees on fulltime project they hold seminars, they also keep stall in big events for developing that channel. Unit managers provide major support in developing this channel. Unit manager target is to recruit 30 advisors on 5 - 6 months time. Unit managers have around 25-30 advisors, who are recruited by them. Max New York Life provides lots of benefits to the advisors like flexibility in timing, different motivation factors like money, foreign trips, career building programs permission to access office etc. Company called its offer to business opportunity for individual. People who accept companies business offer and complete 100 hours training of IRDA for getting license to do business of life insurance, they call them advisors of Max New York Life . The project given to the management trainees involves developing business channels called Tied Agency. I did this task for Fifteen Days. I adopted various techniques for data collection which are discussed later in the methodology section. A part from this we were also given an opportunity to present new and develop some creative ideas in order to target HNIs. We came out with some creative ideas like distributing scratch cards at departmental stores, petrol pumps etc. and we also fixed up the limit of money spent by the people so targeted only the higher segment. Max New York Life has recruited and trained over 33000 insurance agents to interface with and advise customers. Further, it leverages its state of the art IT infrastructure to provide superior quality of service to customers. 30

HISTORICAL BACKROUND
New Delhi July 24, 2008: Max New York Life Insurance Co. Ltd, one of Indias leading insurance companies today, with the introduction of MAX VIJAY, revolutionized the way insurance is procured, sold and serviced. The product not only fulfils the customers primary need of protection, but also facilitates long-term savings. It has been designed specifically for the underserved segment of the society to meet the unique challenges of unpredictability in life and their income flow. A unique technology driven distribution and service model will ensure reach of Max Vijay to the customers even in the remotest of places. Max Vijay has been designed keeping in mind the lifestyle, income patterns and needs of the rural and semi-urban population. It empowers millions of Indians to benefit from the economic boom in financial services that was hitherto denied to them. Announcing the launch, Chairman, Max New York Life Insurance Mr. Analjit Singh commented: "MAX VIJAY empowers millions of Indians, who may not be a part of the economic growth scenario that the country is witnessing today, to participate in this revolution and realize their dreams. The business model leverages innovation at every step be it product design, technology, distribution or service delivery to ensure a comprehensive offering for the common man." "Deeply rooted in the understanding of this segment, 'Max Vijay-Insurance Savings Box' or "Bima Gullak" combines the best of insurance and savings and gives customers a means to aggregate his earnings in a structured and well-planned manner. This is yet another step in our journey of becoming the most admired life insurance company in India," he further added.

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FEATURES OF INDIAN INSURANCE INDUSTRY

Low market penetration. Ever-growing middle-class components in population. Growth of consumer movement with an increasing demand for better insurance products. Inadequate application of information technology for business. Adequate fillip from the Govt. in the form of tax incentives to the insured. 59% of the advisors are satisfied by the commission provided by the co. Those who are not satisfied said that the commission provided is very low as compared other players in the industry. Most of the advisors are satisfied by the working conditions.

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MAJOR PLAYERS IN INSURANCE SECTOR

LIFE INSURANCE BUSINESS Life Insurance Corporation Max New York Life ICICI Prudential Life insurance HDFC Standard Life Insurance Oriental Insurance Company Birla Sun Life Insurance OM Kotak Mahindra Life Insurance Reliance Life Insurance Allianz Bajaj Life Insurance General Ins. Dabur CGU Life Insurance ING Vyasa Life Insurance SBI Life Insurance PNB Life Insurance BOB Life Insurance United India Insurance Company Reliance General Insurance ICICI Lombard Insurance Royal Sundaram Alliance Bajaj Allianz General Insurance National Insurance Company. New India Insurance Company NON LIFE INSURANCE BUSINESS General Insurance Corporation

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Introduction of Traditional Life Insurance Plan

Term Life Insurance Endowment Life Insurance Whole Life Insurance Investment options available

Traditional Life Insurance

Traditional products consisting of Term Insurance, Endowment and Whole Life Policies 1

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1. Term Life Insurance: Term insurance is issued for a specific period, or term. This term usually ranges from 1 to 30 years. We may choose the length of the term that best suits us. Term insurance is considered an affordable insurance choice. If we are young with a family and need a large amount of protection without paying high premiums, this type of life insurance may be of interest to us. Under a Term policy, in case of death during the term of the policy, our beneficiary receives the cash payment equal to the insurance amount, or death benefit. The death benefit amount is chosen when we buy the policy. Term insurance protection ends when the period or term is over, and only pays out in case of death. For this reason this product type offers higher protection at a lower cost. It is a pure risk transfer product. Term insurance can be divided into three main types: level term, increasing term, and decreasing term. Level term means that the death benefit remains the same throughout the term of the policy. Increasing term means the death benefit gets larger throughout the term of the policy. Decreasing term means the death benefit gets smaller.

The above chart shows durations of our most popular term life insurance products

2. Endowment Life Insurance: Endowment life insurance generally guarantees that a sum of money will be available to us or our beneficiaries, whether we live until the policy ends (or matures,) or in case of an untimely death. Endowment insurance usually provides a guaranteed death benefit and has a savings component called the cash value.

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Generally, if we buy an endowment policy and keep it until maturity, it will provide a lump-sum cash payout equal to the insurance amount, or death benefit. In case of death before maturity, the death benefit would be paid to our beneficiary. Endowment insurance can be useful for people who know that they will have to incur a specific expense in the future like a wedding or college tuition. They know that regardless of what the future may hold, the expense will have to be paid. Endowment insurance allows them to be certain that the money will be there.

3. Whole Life Insurance: Whole life insurance has many of the same features as Endowment insurance, but it is designed to remain in force during the insured's entire lifetime. Like Endowment insurance, it provides a guaranteed death benefit, and has a savings component called the cash value. As we pay our premiums, a portion of each payment is set aside to create the cash value. The insurance company typically invests the cash value, which continues to grow as long as the policy is in force. Some of the advantages of a policy's cash value are that: We can cancel or surrender the policy in total or in part and receive the cash

value; however, since this is a long-term policy, in the early years the cash value may be small or even equal to zero. If we find that we need to skip a premium payment, we can use the cash value to

continue our current insurance protection for some time. In most cases, we may borrow from the insurance company, using the cash value

in our life insurance as collateral.

Other types of whole life insurance:

1-Universal Life Insurance: Universal life insurance has all the features of Whole life insurance. In addition to those features, it offers flexibility in premium payment and face amount, and it provides current interest rates. Unlike whole life and term, Universal life allows us, after payment of our initial premium, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums. We can also reduce or increase the death benefit more easily than under traditional whole life policy. 36

2-Variable Universal Life Insurance:

Variable universal life insurance has all the features of Universal life insurance coverage, but, instead of earning an interest rate, its cash value is linked to nonguaranteed equity investment funds, bond investment funds, or similar investments. Our premiums will be invested in the various investment options that we have chosen, and we assume the investment risks. The amount of the policy benefit is dependent on the performance of our investments.

Investment options available in traditional plan

The Indian debt market offers the following investment options:

1- Central Government Securities

Securities issued by the central government have the highest safety because there is no risk of default. If pushed to the wall, the government can print currency notes to meet its obligations. Local currency issues of the central government are also referred to as sovereign borrowings. These are the most liquid securities of the debt market.

2- State Government Securities

The yield on state government securities is generally higher than that available on central government securities. They are also less liquid.

3- Public Sector Bonds

In order to ensure that capital investment by public sector undertakings does not become a drag on the resources of the national economy, such undertakings have been given the liberty to borrow from the market. Such borrowings are in the form of taxable bonds or tax-free bonds.

4- Bonds issued by Domestic Financial Institutions

IDBI, HDFC and such other institutions use the local bond market as a significant source of funds. Their borrowings are normally in the form of unsecured bonds in the nature of promissory notes. 37

5- Corporate Debentures
Private corporate issuers use the bond market as a means of directly tapping investors for resources, instead of going through financial institutions. The objective is to lower cost of funds in the short term, and to build brand equity in the market in the long term.

6- Commercial Paper
These are issued by companies to finance their short-term working capital needs. The tenor usually varies from 30 days to 6 months.

7- Certificate of Deposit
These are issued by banks and financial institutions. Banks issue CDs for a maximum of 1 year, while financial institutions issue CDs for a minimum of 1 year and maximum 3 years.

8- Floating Rate Notes

Regular interest bonds / debentures can be issued as: Fixed rate instruments, where the issuer pays a fixed rate of interest irrespective of the interest rates prevailing in the market from time to time; or Floating rate instruments, where the issuer pays a rate of interest that varies with the market interest. The interest is also referred to as coupon.

9- Zero coupon / deep discount instruments

These do not entail any regular interest payment; instead the difference between the redemption value and the investment amount represents interest income for the investor.

10. Indira Vikas Patra

This small savings investment option generally offers an attractive interest rate. Although the income is taxable, this remained a popular investment option because 38

no record of the investors is maintained. This also compounds the problems associated with loss of certificates.

11. Kisan Vikas Patra

This too is a small savings investment option with a similar structure. However, investors have the comfort of a record being maintained of their investments. So, if they lose their certificates, the investment does not become a dead loss.

12. Post Office Deposits

These can be savings or time deposits. PO Time Deposits are a very popular investment option.

13- RBI Relief Bonds

The return offered on these bonds is tax free. The Finance Minister, in his Budget for the financial year 2002-03, has limited investments in relief bonds to Rs 200,000 per investor per annum. The period of 12 months commenced on March 1, 2002. The limit is however not applicable for investments by retiring or already retired persons of government, public sector undertakings, banks, local bodies and private sector enterprises.

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INTRODUCTION OF ULIP PLAN

Features of ULIP Benefits of ULIP Reasons why ULIP Preferred ULIP Portfolio

INTRODUCTION OF ULIP PLAN

Unit linked insurance plan (ULIP) Unit linked guidelines were notified by IRDA on 21st December 2005. It is a life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time. Unit Linked Insurance Plan (ULIPs) are insurance policies that combine risk coverage with investing in the stock/debt markets. In effect, they are designed to behave as normal insurance policies plus mutual funds. An investor contribution to ULIPs gets invested in specific types of portfolios that he/she chooses. The policy typically pays back based on market returns on investments at the end of the it insured period. an Therefore, forms

interesting savings instrument that can get good risk cover.

Features of ULIPs include:

1. Units allotted under ULIP schemes have Net Asset Values (NAV) declared regularly, like a mutual fund 2. Investors can invest 40

across types of portfolios

similar to mutual funds - growth equity, balanced, debt funds, etc. Investors can move across portfolios, typically at nominal costs 3. Investors can invest as a lump sum (single premium) or make premium payments on an annual, half-yearly, quarterly or monthly basis. Premium amounts can be changed over the course of ULIPs life 4. Investments qualify under Section 80C of the Income Tax Act. Maturity proceeds from ULIPs are tax free. There are no long term capital gains tax and 10% short term capital gains tax on equity portfolios within ULIP. For debt funds, long term capital gains tax is 10% while short term is at the investors marginal tax rate. 5. However, charges charged by insurance companies can be quite confusing therefore, investors should compare them with similar mutual funds to see if charges quoted are reasonable. Despite their interesting structure and potential benefits, investors are better off clearly understanding portfolio types offered, performance of fund managers and expenses/fees before investing in ULIPs.

ULIP provides multiple benefits to the consumer

Life protection Investment and Savings Flexibility Adjustable Life Cover Investment Options Transparency Options to take additional cover against

Death due to accident Disability Critical Illness Surgeries Liquidity Tax planning

Reasons why ULIPs Preferred

We have seen the popularity of ULIPs in the recent past that they have outpaced the growth of regular endowment plans. We take a look at the most important reasons why ULIPs score over endowment plans.

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The power of equity- Simply put, ULIPs are life insurance plans, which
have a mandate to invest up to 100% of their corpus in equities. While individuals have the choice to shift between equity and debt, several studies have shown that equities are best equipped to deliver better returns compared to their fixed-return counterparts like bonds and government securities. And given the fact that life insurance is a long-term contract, equity-oriented ULIPs augur well for the policyholder.

1. Flexibility- While ULIPs offer the opportunity to invest up to 100% in

equity, it is also true that ULIPs provide individuals the flexibility to shift to up to 100% debt. It is entirely upon the individual how he wishes to allocate his premiums between equity and debt. This is not the case with endowment type plans- individuals can't choose their investment avenues and have to be content with the insurance company's investment decisions which revolve largely around debt. ULIPs are available in 3 broad variants: 'Aggressive' ULIPs, which invest up to 100% of their corpus in equities, 'Balanced' ULIPs which invest up to 60% of their corpus in equities and 'Conservative' ULIPs which invest up to 100% of their corpus in debt instruments and the money market instruments. Individuals are free to decide where they want to invest their money. For example, individuals with an appetite for risk can invest their entire money in equities while conservative individuals have the option to park their money in balanced or conservative ULIPs.

That apart, ULIPs also provide individuals with the flexibility of terminating/resuming premiums, increasing/decreasing premiums and paying top-ups (i.e. a one-time sum over and above the regular premium) whenever possible. These options are not available in regular endowment plans.

2. Transparency- For the first time, ULIPs introduced transparency into the
manner in which life insurance products were being managed. This is something that was missing in conventional savings-based insurance products (like endowment/ money-back/ pension plans). Unit linked plans brought transparency into the scheme of things. Today, if an individual wants to invest in a ULIP, he knows upfront what percentage of the premium is being invested, what are the charges being levied and where his monies are being invested. This is a welcome change for the policyholder. Another advantage ULIPs offer is that they enable insurance seekers to compare plans across companies and help him buy a plan that fits well into his portfolio. Also ULIPs disclose their portfolios at regular intervals, so we know exactly where our money is being invested.

3. Liquidity- ULIPs offer liquidity to the individual. He can withdraw money

anytime he wishes to once the initial years' premiums are paid. He will not be levied with any surrender charges i.e. he stands to get the full market value of his investments, net of charges, till date. This is unlike conventional endowment plans where individuals tend to lose out on surrender charges on surrendering their policies. Besides, part surrender is also allowed in ULIPs. Simply put, part surrender allows individuals to withdraw a part of their corpus and thus keep the policy alive, albeit with some adjustments. This helps individuals tide over a situation where they need cash but have few 'liquid' investments at their disposal.

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4. Allows fund switching- You can switch from one fund to another in
ULIPs. This allows you to ensure that the investment fund that you have chosen is in-sync with your prevailing risk appetite and market sentiments. Your risk capacity does not remain constant but changes to mirror your changing life situation. If the markets sentiment changes, you can switch from a debt-oriented fund to a balanced/equity oriented fund and vice versa. Most ULIPs allow 3-4 free switches a year and beyond that at a minimal cost. This becomes important as ULIP is a long term protection instrument with a minimum lock-in of three years and has surrender penalties for terminating the long term contract before the agreed duration.

5. Capital Guarantee- Certain ULIPs, offer you the benefit that

irrespective of the market conditions prevailing at the time of maturity, you will receive a certain guaranteed amount. This guarantee comes into effect when the value of your invested amount is below the guaranteed value. In the reverse scenario, you get the amount as per your portfolio value. In either case you get an amount which is higher of the guaranteed amount or your portfolio value. For the first time buyers into any market linked products Guaranteed Maturity Value proves to be a major comfort protection of the downside with the upside remaining intact.

The NAV is calculated in the following manner: Net Asset Value (NAV) =
(Market Value of investment held by the fund +/- the expenses incurred in the purchase/sale of assets + value of Current Assets + any accrued income net of fund management charges - value of Current Liabilities- Provisions) divided by Number of outstanding units in the Fund. Because of the sheer benefits associated with ULIPs, an insurance portfolio without this type of policy is truly incomplete.]

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RESEARCH METHOLOGY Title of the Study

CORPORATE STUDY OF ULIP IN REFERENCE OF TRADITIONAL PLANS OF INSURANCE POLICY

Duration of the project

Durations of the project was short 45 days in summer vacation from 18 May to 2 July

To get knowledge about insurance sector To know the various insurance products available in the market. To know the investment opportunities available to the insurance holder. To compare the traditional & ULIP plans of various Private life insurance companies of India. To know the market trend. To understand the customer opinion about the insurance plans.

Type of Research

The type of research used in this project is Descriptive in nature. Descriptive research is used to obtain information concerning the current status of the phenomena to describe "what exists" with respect to variables or conditions in a situation. In this research I have used some variables like premium amount, flexibility, sum assured etc. To find out the preference of general public for the 2 insurance product i.e ULIP and traditional life insurance plan. 45

Sample Size
large sample give more reliable result than small sample, so for this reason I had taken around 50 people to whom I should focus upon.

Sample method
In this project I have used Non-probability Convenience sampling. I have selected the samples according to my convenience, ease and economy of reaching subjects and my appropriateness. I have taken sample people who are In the age group 25 to 55 year old Private as well as government employee Professional people People who invest their income etc.

Scope of the study

A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are trying to gain market share in this rapidly improving market. The study deals with Reliance in focus and the various segments that it caters to. The study then goes on to evaluate and analyze the findings so as to present a clear picture of trends in the Insurance sector.

Limitations of the study

As the movement throughout the city is not possible due to certain constraints so the movement was quite restricted.

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People are not ready to go for training. As the training period is of 15 days and it involves full day, so it becomes difficult for them to leave their offices or shops for such a long time.

The compulsion of selling 12 policies in a year also restricts them from becoming advisors. If they do not fulfill this target, then their license is cancelled after a year.

Lack of trust on any company of Private Sector. Lack of knowledge about the products of Max New York Life and their total and blind faith on LIC. Sometimes, fresh graduates want to become advisors but the company denies making them an advisor as they are very fickle-minded and also unreliable.

There is a problem in targeting Chartered Accountants. ICAI, which is the governing body of Chartered Accountants, does not allow them to become advisors. However, now they have permitted some CAs to become advisors, but these are only those ones who are doing jobs somewhere and not allowed the ones who are doing their practice. So, still this decision is very dicey.

Sometimes, even those people want to become advisors for the company who are not a localite but then the major problem that they face is that they have got no natural market, so they are very susceptible about their performance and whether they will be able to generate business for the company or not, so they avoid to take up this challenge.

It was a great problem to get appointments from people in the month of March as most of them were busy in filing their returns. Some people ask about comparative analysis with LIC. Some people consider IRDA fees of Rs. 1000 as a constraint. Non-availability of part-time training. All small towns are not open for doing this business. One person cannot take Life Insurance Agency of two different Companies. Time constraint is the biggest constraint in taking up the study. 47

Sample size was too short to reveal the actual preferences of people towards ULIP and traditional life insurance plan.

The sample people were from Jaipur only, but other metropolitan cities people can make a better picture for this project.

People were hesitated to give information about the investment avenue they opt for, may be they felt insecure to give such information.

DATA INTERPRETATIONS & ANALYSIS

(Through Secondary Data) Chart 1 Investment pattern of interviewee

The above investment chart shows that people highly invest in insurance sector (with 43%) as compared to other investment options.

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Chart 2 Investment pattern of interviewee in ULIPs & Traditional Insurance plan according to their income level

The above chart shows the preference for ULIP & Traditional insurance plan of various income group people, it shows that low income level people prefer to invest in Traditional insurance plan due to low premium , low risk & high sum assured, but the high income group people whose salary is above 5lakh prefer to invest in ULIP insurance plan as they are more risk bearing people and also enjoy high return when the market is on boom . Moderate income group people are indifferent among the ULIP & Traditional insurance plan that is all depend on the market situations also

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Chart 3 Investment pattern of interviewee in ULIPs & Traditional Insurance plan according to their occupation

The above chart shows that Government employee are less risk averge so they invest in traditional insurance plan as compared to private employee who can bear risk to earn high on their investment. Self employed & others too prefer to invest in traditional insurance plan.

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Chart 4Factors that attracts interviewee to invest in ULIPs

The above ranking chart shows that for investing in ULIPs people give high preference to risk factor as it is an risky investment , after that comes flexibility for switching from 1 plan to another, surrendering inbetween ect..then comes sum assured the total amount which they get after completion of maturity peroid or on the happening of some incidence. Under ULIPs people give less preference to premium & life protection.

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Chart 5 Factors that attracts interviewee to invest in traditional Insurance plan

The above chart shows the ranking of various factors which people prefer to invest in traditional insurance plan. People give high preference to life protection as it is the basic aim of the traditional life insurance, then comes the premium which is less as compared to ULIPs , then comes sum assured which is very huge amount that people gets on the happening of some event. Risk factor has given low ranking beacause it a risk free investment similarly it is an inflexible investment as compared to ULIPs.

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FINDINGS & ANALISIS

(Through Primary Data)

Investment tool Tax saving tool Security

16% 14% 70%

COMMENT:- Most of the people, almost 70% people told that insurance is a security tool.

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raph depicting the %age of people who are insured.

Insured Uninsured

75% 25%

COMMENT:- As can be seen from the graph, mostly people are insured.

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Graph despicting the %age of people who are associated with MAX New York life insurance company.
Associated Not associated 72% 28%

COMMENT:- Large number of people are associated with Max New York life insurance company.

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How many people know that Max New York is the No.2 private life insurance company?
KNOW DONT KNOW 51% 49%

COMMENT:- 51% People know that Max New York is the no.2 life insurance company. It shows that people are aware about the company.

The %age of People who are working with Max New York Life.
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Less than 1 year 1-2 years 2-3 years More than 3years

8% 16% 46% 30%

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% LES S THE N 1 1-2 YEA RS YE AR 2-3 YEA RS MORE THEN 3 YEA RS S eries1

COMMENT:- The majority of people who are working with Max New York 23 years.

Purpose of buying an insurance products.

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SUCRITY INVESTMENT TAX BENEFIT OTHER

46% 30% 18% 6%

COMMENT:-Most of the people buy an insurance product to secure their life.

Product which are sold most.

Smart kid plan 38%

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Unit link plan Annuity plan

35% 27%

COMMENT:- People buy mostly smart kid plan.

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Graph depicting the %age of company which has best products available in the market.
UTI Max New York IDBI HDFC 30% 25% 17% 28%

HDFC 28%

UTI 30%
UTI IDBI Max HDFC

Max New 25%

IDBI 17%

COMMENT:People think that UTI Insurance company has best products.

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CONCLUSIONS
This project served as a great learning experience for me. It gave me an in-depth view of the insurance plans. I came to know that lots of investment opportunities available to different income group people. If we want to invest less but expect high sum assured then traditional insurance plan is best. Traditional insurance protection ends when the period or term is over & only pays out in case of death. For this reason this product type offers higher protection at a lower cost. On the other hand ULIPs provides benefits of protection & flexibility in investment. ULIPs are insurance policies that combine risk coverage with investing in the stock/ debt markets. In effect, they are designed to behave as normal insurance policies plus mutual funds. Traditional plans are simple to sell and are easily accepted by customers due to its presence all these years. ULIPs need understanding of Equity and Debt markets and in-depth knowledge of various competitive investment products and insurance plans too, to provide the best customized solution. Besides, Commissions are higher in traditional plans. ULIP is the future of the insurance industry as convenience and flexibility will be preferred over the rigid terms and conditions of traditional insurance plans. Also lower returns offered by traditional plans will slowly but surely force individuals to look at unit-linked plans considering the potential for higher returns. In conclusion, ULIPs will continue to be a favorite option among investors. The downfall of the market did not have a negative impact on unit-linked plans and the strong approach of the people towards it proves that quite robustly. Probably, laypeople are finding it exciting to explore more options. After all it is worth to take a bit of risk to get those extra bucks!! 61

1. I found that in insurance sector a person should have great Communication and convergence skill. 2. Max New York Life has interested and profitable plans for different age group. 3. There is lots of scope of life insurance in India only 2.5 people are secure with life insurance so the insurance sector is in its blooming stage this boom will increase in 2-3 years. 4. Good profile insurance advisor could do the better job. If Max New York mentions the level of advisor, they may give great sales to the company. 5. Max New York Life has tough competition with LIC as well as BAJAJ ALLIANZ, BIRLA SUNLIFE INSURANCE, SAHARA, ING VYASA, OM KOTAK MAHINDRA, HDFC INSURANCE, SBI LIFE AND RELIANCE LIFE INSURANCE. 6. Max New York Life has great goodwill in market. In liberalized Indian market there are approximately 13 big companies and Max New York Life is the No. 2 private insurance company. 7. If the company starts to concentrate on village segment market then company may get great business. 8. I got the good profile people near my bank and share market. When I concentrated on the 20-25 years age group people I found good results. 9. In the age group people made interest to purchase the kids plan and pension plan and money back plan. 10. In the age group of 30-35 yrs the people who are earning more then 3 lacs p.a made interest to purchase ULIP. 11. People made interest in the business opportunity of Max New York Life because there are lots of chances to increase earning and make high place in the company.

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RECOMMENDATION & SUGGESTIONS

ULIPs need more promotion & awareness among people since traditional policies were the taste & flavor of the lay people, so it is the safest choice that an individual could think of because of the maturity returns.

It is recommended to sell ULIP & Traditional insurance plan for the longer period , as entering in the market with short term investment goals is not fruitful for the company as well as the for the investors.

The charges on the ULIPs should be minimum as possible as compared to competitors because India is a cost conscious market. Since the insurance plan is benefited if it is taken for long term , so the target customers should be between 35 to 40 years age bracket & in the middle to high income group people.

The company should have built up a strong agent network & should give a handsome commission to its agents. Provide lower premium policies so that we could target middle class people and generate good cash flow for further growth.

As per BCG matrix to ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. Max New York has high-growth product in urban market but company should follow the low growth product strategy also in urban market.

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Start advertisement campaign again on television, radio and Internet also. Do intensive marketing for business opportunity and products both. Keep more seminar and target LI/GI agents, CAS, Tax consultant financial investor etc. Provide best motivation to Agency holders. Build trust upon customers through services and transparency in investment and other policy. Provide all branches in local language. Provide part time training. Focus on any mass marketing activity for generating awareness of company among people and offering them business opportunity too. Hold stall activity in different places. Try to collect data of Life/General insurance agents across India and invite them to associating with Max New York Life Insurance Co.

After going through the above table regarding market share of various companies in the financial year 2003-04, there is no reason why Max New York Life should rejoice of being the number one company in the country. The growth that companies like BIRLA SUNLIFE, SBI LIFE INSURANCE, BAJAJ ALLIANZ, OM KOTAK MAHINDRA, AVIVA, ING VYASA, METLIFE & SANMAR have produced that can be quite a big unseen threat for the company in the coming years. So the company should start thinking of what they want from the market & where they want to see themselves after a span of 10 years because if the popularity of these companies continues then one day they will become good competitors of Max New York Life & consequences can be quite disturbing for the company.

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SWOT analysis
Strength
Strong brand name Exellent market coverage A well motivated sales force Good organisational o environment Innovative products Good tied as well as alternative distribution channel. Good customer relationship

Opportunities
Insurance is an emerging sector Due to increase professional courses , there is lots of scope for getting skillful well motivated salesforce. There is insurance trend in the market as public are highly self-motivated to get insurance product due to life protection as well as tax saving purpose. Sales can be increase In international market due to increase in foreign partner share from 26% to 49%.

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 Weaknesses
Late entry into insurance sector Strong competitors like LIC, mahindra, ICICI ect. Lack of faith by customers due to private sector industry Inadequete investment in R&D. More number of lapses of insurance policy due to high premium charges

Threats
As insurance is very attractive sector so there will be more chances of new entrant in this industry Chances of dominance by foreign partner due to increase in the share from 26% to 49%. People are attracting towards more profitable investment like Birla, tata, HDFC, SBI, AVIVA etc. More chances of risk due to volatility of market.

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QUESTIONNAIRE
TO PROMOTE THE CONCEPT OF INSURANCE FROM MAX NEW YORK LIFE AS A BUSINESS OPPORTUNITY AND CREATING AWARENESS.

Name: Age: Tel no: Q1. According to you what is Insurance? o Investment tool o Tax saving tool o Security o All of the above Q2. Are u insured? o Yes o No

Qualification: Profession:

Q3. Are you associated with Max New York Life insurance co.? o Yes o No If yes, then how?

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Q4. For how long are you working with Max New York Life ? o Less than 1 yr. o 1-2 yr. o 2-3 yr. o More than 3 yrs. Q5. What is the purpose of buying an insurance product by Customers? o Tax benefit o Investment o Security o Any other Q6. Products which are sold most? o Unit link plan o Smart kit plan o Annuity plan Q7. Rate the products of Max New York Life in comparison to its Competitors? (Best = 4 pts Good = 3 pts Average = 2 pts Poor = 1 pt) o Best o Good o Average o Poor

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BIBLIOGRAPHY
Web sites www.maxnewyork.com www.irdaindia.org Insurance plus Business India Economic Times Material provided by the company survey www.google.com Annual report of Max New York Life Insurance Company Brochures and pamphlets of Max New York Life Insurance Company

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