Introduction

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INTRODUCTION Life Insurance:

Life Insurance could be defined as a policy that will pay a specified sum to beneficiaries upon the death of the insured. It is an agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured. Life Insurance could be said as protection against the death of the insured in the form of payment to a designated beneficiary, typically a family member or business. It is basically risk insurance intended as protection against the financial consequences of the death of the insured person which takes the form of payment of a previously agreed lump sum or pension to a beneficiary, if the insured person dies during the term of insurance. In the case of pure life insurance, without any endowment insurance component, no payments are due if the insured person survives the term of insurance. In big terms Life Insurance is a contract agreement between the certificate holder and the insurance company, providing a specified sum to beneficiaries upon the death of the insured. It is a coverage that pays out a set amount of money to specified beneficiaries upon the death of the individual who is insured. It is a policy that will pay a specified

sum to beneficiaries upon the death of the insured. There are many types of life insurance, including whole life, term life, universal life, etc. It is an insurance relating to a risk depending on human life. This includes contracts providing payment on the insured person's death, endowments providing payment either on survival to a specified date or on earlier death and annuities which are paid throughout the annuitant's lifetime but cease on death. According to an article on site life-line.org Life insurance is the foundation of a sound financial plan. It provides financial security for your family by protecting your financial resources, such as your present and future income, against the uncertainties of life. More specifically, life insurance provides cash to the family after death. This cash (the death benefit) replaces the income one would have provided and can meet many important financial needs. It can help pay the mortgage, run the household, send kids to college, and ensure that dependents are not burdened with debt. The proceeds from a life insurance policy could mean that the family won't have to sell assets to pay outstanding bills or taxes. And also that there is no federal income tax on life insurance benefits. Most people with dependents need life insurance. While there's no substitute for evaluating specific situation, one rule of thumb is to buy life insurance equivalent to five to ten times ones annual gross income. To determine how much, if any, life insurance one needs, then start by gathering all personal financial information and estimating what the family will need after one is gone, including ongoing expenses (such as day care, tuition, or retirement) and immediate expenses at the time of death (like medical bills, burial costs, and estate taxes). The family also may need funds to help them readjust: perhaps to finance a move, or pay expenses while job hunting. Choosing a life insurance product is an important decision, but it can be complicated. As with any major purchase, it is important that one should understand his or her family's needs.

Type of Insurance companies

Insurance companies may be classified into two groups: Life insurance companies, which sell life insurance, annuities and pensions products. Non-life, General, or Property/Casualty insurance companies, which sell other types of insurance. General insurance companies can be further divided into these sub categories. Standard Lines Excess Lines 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. In the United States, standard line insurance companies are "mainstream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies. Excess line insurance companies (also known as Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers.

Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyd's organizations. Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products. Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well. Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the selfinsured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.

The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance. Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background: Heavy and increasing premium costs in almost every line of coverage; Difficulties in insuring certain types of fortuitous risk; Differential coverage standards in various parts of the world; Rating structures which reflect market trends rather than individual loss experience; Insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client. Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claim handling services for insurance companies. These companies often have special expertise that the insurance companies do not have. The financial stability and strength of an insurance company should be a major consideration when buying 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 provide information and rate the financial viability of insurance companies.

Global insurance industry

Global insurance premiums grew by 3.4% in 2010 to reach $4.3 trillion. For the first time in the past three decades, premium income declined in inflation-adjusted terms, with nonlife premiums falling by 0.8% and life premiums falling by 3.5%. The insurance industry is exposed to the global economic downturn on the assets side by the decline in returns on investments and on the liabilities side by a rise in claims. So far the extent of losses on both sides has been limited although investment returns fell sharply following the bankruptcy of Lehman Brothers and bailout of AIG in September 2008. The financial crisis has shown that the insurance sector is sufficiently capitalised. The vast majority of insurance companies had enough capital to absorb losses and only a small number turned to government for support. Advanced economies account for the bulk of global insurance. With premium income of $1,753bn, Europe was the most important region in 2008, followed by North America $1,346bn and Asia $933bn. The top four countries generated more than a half of premiums. The US and Japan alone accounted for 40% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the worlds population but generated only around 10% of premiums. Their markets are however growing at a quicker pace.

PRINCIPALS OF INSURANCE
Insurance involves pooling funds from many insured entities (known as exposures) in order to pay for relatively uncommon but severely devastating losses which can occur to these entities. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be insurable, the risk insured against must meet certain characteristics in order to be an insurable risk. Insurance is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses. Insurability Risks which can be insured by private companies typically share seven common characteristics. 1. Large number of similar exposure units. Since insurance operates through pooling resources, the majority of insurance policies are provided for individual members of large classes, allowing insurers to benefit from the law of large numbers in which predicted losses are similar to the actual losses. Exceptions include Lloyd's of London, which is famous for insuring the life or health of actors, actresses and sports figures. However, all exposures will have particular differences, which may lead to different rates. 2. Definite Loss. The loss takes place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements. 3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The

loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable. 4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer. 5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113) 6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. 7. Limited risk of catastrophically large losses. Insurable losses are ideally independent and non-catastrophic, meaning that the one losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance

in hurricane zones. In the U.S., flood risk is insured by the federal government. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurers capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market. Legal When a company insures an individual entity, there are basic legal requirements. Several commonly cited legal principles of insurance include:[3] 1. Indemnity the insurance company indemnifies, or compensates the insured in the case of certain losses only up to the insured's interest 2. Insurable interest the insured typically must directly suffer from the loss 3. Utmost good faith the insured and the insurer are bound by a good faith bond of honesty and fairness 4. Contribution insurers which have similar obligations to the insured contribute in the indemnification, according to some method 5. Subrogation the insurance company acquires legal rights to pursue recoveries on behalf of the insured; for example, the insurer may sue those liable for insured's loss 6. Causa Proxima or Proximate Cause the cause of loss (the "peril") must be covered under the insuring agreement of the policy, and dominant cause must not be excluded Indemnification To "indemnify" means to make whole again, or to be put in the position that one was in, to the extent possible, prior to the happening of a specified event or peril. Accordingly, life insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event). There are generally two types of insurance contracts that seek to indemnify an insured: 1. An "indemnity" policy and

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2. A "pay on behalf" or "on behalf of"[4] policy. The difference is significant on paper, but rarely material in practice. An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; for example, a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)[4][5] Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language. An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss covered in the policy. When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insurers are used to fund accounts reserved for later payment of claimsin theory for a relatively few claimantsand for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.

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Insurers business model

Underwriting and investing The business model can be reduced to a simple equation: Profit = earned premium + investment income - incurred loss - underwriting expenses Insurers make money in two ways:
1.

Through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks;

2. By investing the premiums they collect from insured parties. The most complicated aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are "winners" (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are "losers" (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income); insurance companies essentially use actuarial science to attempt to underwrite enough "winning" policies to pay out on the "losers" while still maintaining profitability. An insurer's underwriting performance is measured in its combined ratio which is the ratio of losses and expenses to premiums. A combined ratio of less than 100 percent
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indicates underwriting profitability, while anything over 100 indicates an underwriting loss. A company with a combined ratio over 100% may nevertheless remain profitable due to investment earnings. Insurance companies earn investment profits on float. Float or available reserve is the amount of money, at hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest or other income on them until claims are paid out. The Association of British Insurers (gathering 400 insurance companies and 94% of UK insurance services) has almost 20% of the investments in the London Stock Exchange. In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the float method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the United States, due to unpredictable natural catastrophes, have exacerbated this trend. Claims Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for, though one hopes it will never need to be used. Claims may be filed by insureds directly with the insurer or through brokers or agents. The insurer may require that the

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claim be filed on its own proprietary forms, or may accept claims on a standard industry form such as those produced by ACORD. Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. The adjuster undertakes a thorough investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizes payment. Adjusting liability insurance claims is particularly difficult because there is a third party involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge. If a claims adjuster suspects underinsurance, the condition of average may come into play to limit the insurance company's exposure. In managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation; see insurance bad faith.

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Types of Life Insurance

Generally fall into two categories: 1. Term Insurance 2. Permanent Insurance

Term Life Insurance

Term Life Insurance is a type of insurance policy whereby the insured pays a fixed sum for a period of time. This sum remains constant. The premium charged is very nominal. The Policy holders normally survive even after its expiry unless they are affected by fatal disease or injured in an accident. This policy does not cost much. Once the policy expires the insured is also at liberty to renew the same but he will have to pay the revised rates of premium. Such a change could sometimes be too high. This is one of the drawbacks of this policy. But for this factor, it is economical and highly recommended for the salaried youth and middle men. Whole term insurance policy is another classification in term life insurance. In a whole term insurance the insured pays the fixed amount throughout his life. The different categories of term life insurance policy are as follows: Group Term Life Insurance

This type of insurance is taken by the employer for his employees. The employer either pays the premiums from his kitty or by deducting the appropriate amount from the salary of individual employees. This policy provides lot of benefits but it cannot be relied solely to meet your insurance needs. This type of insurance is gaining significance in the developing countries. Level term Life Insurance

This type of insurance requires you to select a particular period and pay premiums for the selected period. The policy automatically matures on the attainment of the selected

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period. Once you select the term say 5 10 or 15 years you cannot revoke it. This type of insurance is ideal for those people who are not able to make long term financial plans.

Permanent insurance
Permanent Life Insurance is an expensive Policy. This Policy cannot be stopped on any occasion as long as the premiums are paid regularly and you don't want to end the policy. In a permanent Life Insurance policy you pay premiums for an indefinite period irrespective of the fact they exceed the amount to be distributed to your dependents in case of death.

Such surplus will be deposited by the company in a separate account. They will yield higher returns if the company performs well. A share of the profits is periodically dispatched to you. You have the option of raising loans out of those funds or accumulate them back in the account. In case you decide to end the policy you will paid back with the surrender value .If the insurer decides to retain the profits made from your investment with him then you are not required to pay income tax for that amount. There is a possibility like, when you withdraw certain amount of money within the given limit you need not pay income tax for that amount. But when you deposit money in the bank you have to pay income tax irrespective of the fact you utilize it or not.

If the insurer decides to retain the profits made from your investment with him then you are not required to pay income tax for that amount. There is a possibility like, when you withdraw certain amount of money within the given limit you need not pay income tax for that amount. But when you deposit money in the bank you have to pay income tax irrespective of the fact you utilize it or not.

It is however advised not to choose permanent insurance if your motive is solely investments and tax exemptions. In that case it is advised to invest in some form of cheap

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investments and make use of other financial instruments for saving tax because the basic objective of insurance is neither investment nor tax exemption.

Important features of Insurance:

State insurance departments regulate the type of investments companies are permitted to make;

Investment profiles of companies differ depending on what type of insurance they underwrite;

Each state enforces laws to protect consumers against unfair discrimination in the provision of insurance;

Consumers who do not qualify for property insurance in the private market may obtain it through insurance industry operated plans;

The insurance industry does not benefit from federal deposit insurance. Insurance companies pay for insolvencies in the industry through a system of state Guaranty Funds.

Advantages & Disadvantages of Life Insurance

Life insurance, too many, is a necessary evil. Many policyholders swear by it to protect their families from loss of income and hefty debt obligations in the event of their untimely death. With several types of life insurance on the market, generally speaking, two varieties still remain the most popular: term and whole life, or "cash value" life insurance. Both varieties have pros and cons. Identification Cash value life insurance are policies where in which premiums are used to pay for the cost of insurance, while a portion is placed into attached investment vehicles that grow over time. Some popular cash value life insurance products include variable life, whole life, universal life and paid-up insurance. Despite minor differences, these insurance

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plans are essentially the same. All cash value life insurance policies contain a death benefit and a cash account that's added to when a client makes a premium payment.

Term life insurance is significantly different than its cash value counterpart. Term life insurance does not contain a cash value account. Premiums are used solely to pay for the cost of coverage. These premiums maintain the level of coverage for a specific "term." At the end of a policy's term, a new policy must be purchased. Benefits Both cash value life and term life insurance have their benefits. The most significant benefit of cash value life insurance is its ability to offer coverage for the entire life of the policyholder. Many people take advantage of buying this type of insurance when they are young when they need it most. Cash value accounts may also be borrowed against or drawn from during the life of the policy. Policyholders are also not required to pay taxes on any interest or earnings attached to cash value accounts.

Individuals and corporations also benefit from term life insurance. The biggest advantage of term life is the often very cheap premiums, especially when a person is young and healthy. It is possible, in many situations, to purchase significantly large face value amounts for monthly costs of $20 to $30. Term life is good for covering obligations that will eventually end, such as mortgages, automobile loans and educational needs. Warning With the benefits of both cash value and term life insurance come a few disadvantages. The most significant disadvantage of cash value life insurance is the often inconsistency in premiums. Most cash value policies contain required premiums that can increase over time. This can make the policy quite expensive for someone on a budget who wishes to purchase enough coverage to benefit his family in the event of his death. Although many policies contain riders in which dividends from cash accounts can be used to pay premiums, such an instance almost always results in taking funds away from

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the cash value or investment account. There is also never a guarantee that sufficient funds will be available to cover missed premiums in the event a policyholder falls short. There are also several disadvantages of term insurance, the first being that it is not permanent. Although a policyholder may enjoy extremely cheap premiums when she is young, term products expire after a certain number of years, or when the insured reaches a certain age. When a policy expires, a new one must be purchased. This means that a person must qualify for a new program based on her current age and health in order for coverage to continue. This almost always results in much higher premiums or Uninsurability. Some term insurance does, however, contain "re-up" or "renewal" options that may not require proof of that the customer is insurable to continue coverage. Misconceptions When we think of life insurance, we think of a death benefit being paid to a beneficiary upon the death of a policyholder. Although this is true, it is important to know that with some insurance, especially many cash value policies, it's often not that simple.

With many cash value life policies, only a single payout is made upon a policyholder's death, regardless of what the cash value account is worth when he dies. For example, if an individual owns a whole life policy with a death benefit of $100,000 and a cash value account worth $25,000, it is common for beneficiaries to expect a payout of $125,000. This is commonly not the case. In this example, a beneficiary would commonly only receive a total of $100,000. Because the cash value account is worth $25,000, the insurance company would only pay $75,000 as a death benefit, with the other $25,000 coming from the cash value account. With some products, however, beneficiaries are, in fact, entitled to receive death benefits in addition to cash value accounts when their loved one dies. However, usually an amount equal to the policy's face value is paid upon death. It is important to know this information before purchasing cash value life insurance. Considerations It is recommended that you consult with an experienced insurance agent before buying life insurance. It is important to find a life product that is tailored to the specific needs of

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the individual policyholder and his family. For example, an individual may only need to protect his family from large mortgage obligations for 10 or 15 years. If an individual wishes to be covered by a policy for the remainder of his life, then a cash value policy may be in order. Research also shows that using life insurance policies as investment vehicles is not a wise move. Long term, it is much more profitable to buy term insurance and take advantage of low premiums and invest in mutual funds or stocks that are not attached to insurance policies.

Effects on Society
Insurance can have various effects on society through the way that it changes who bears the cost of losses and damage. It can increase fraud. On the other hand, it can help societies and individuals prepare for catastrophes and mitigate the effects of catastrophes on both households and societies. Insurance can influence the probability of losses through moral hazard, insurance fraud, and preventive steps by the insurance company. Insurance scholars have typically used morale hazard to refer to the increased loss due to unintentional carelessness and moral hazard to refer to increased risk due to intentional carelessness or indifference.
[6]

Insurers attempt to address carelessness through inspections, policy provisions

requiring certain types of maintenance, and possible discounts for loss mitigation efforts. While in theory insurers could encourage investment in loss reduction, some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures - particularly to prevent disaster losses such as hurricanes because of concerns over rate reductions and legal battles. However, beginning around 1996 insurers began to take a more active role in loss mitigation through building codes.

Insurance and its Benefit to Society

A benefit society or mutual aid society is an organization or voluntary association formed to provide mutual aid, benefit or insurance for relief from sundry difficulties. Such

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organizations may be formally organized with charters and established customs, or may arise ad hoc to meet unique needs of a particular time and place. Benefit societies can be organized around a shared ethnic background, religion, occupation, geographical region or other basis. Benefits may include money or assistance for sickness, retirement, education, birth of a baby, funeral and medical expenses, unemployment. Often benefit societies provide a social or educational framework for members and their families to support each other and contribute to the wider community. Examples of benefit societies include trade unions, friendly societies, credit unions, selfhelp groups, landsmanshaftn, immigrant hometown societies, Fraternal organizations such as Freemasons and Oddfellows and many others. Peter Kropotkin posited early in the 20th century that mutual aid affiliations predate human culture and are as much a factor in evolution as is survival of the fittest. A benefit society can be characterized by Members having equivalent opportunity for a say in the organization Members having potentially equivalent benefits. Aid would go to those in need (strong helping the weak) Collection fund for payment of benefits Educating others about a group's interest Preserving cultural traditions Mutual defense

Many of the features of benefit organizations today have been assimilated into organizations that rely on the corporate and political structures of our time. Insurance companies, religious charities, credit unions and democratic governments now perform many of the same functions that were once the purview of ethnic or culturally affiliated mutual benefit associations. But new technologies have provided yet more new opportunities for humanity to support itself through mutual aid. Recent authors have described the networked affiliations that

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produce collaborative

projects such

as Wikipedia as

mutual

aid

societies.

In

modern Asia rotating credit associations organized within communities or workplaces were widespread through the early 20th century and continue in our time. [1]Habitat for Humanity in the United States is a leading example of shared credit and labor pooled to help low-income people afford adequate housing. In post-disaster reactions, formal benefit societies of our time often lend aid to others outside their immediate membership, while ad hoc benefit associations form among neighbours or refugees. Ad hoc mutual aid associations have been seen organized among strangers facing shared challenges at such disparate settings as the Woodstock Music and Arts Festival in New York in 1969, during the Beijing Tiananmen square protests of 1989,for neighbourhood defence during the Los Angeles Riots of 1992,and work of the organization Common Ground Collective which formed in New Orleans after Hurricane Katrina in 2005. The Rainbow Family organizes gatherings in National Forests of the United States each year around age old models of ad hoc mutual aid.

Controversies
Religious concerns Muslim scholars have varying opinions about insurance. Insurance policies that earn interest are generally considered to be a form of riba (usury) and some consider even policies that do not earn interest to be a form of gharar (speculation). Some argue that gharar is not present due to the actuarial science behind the underwriting. Jewish rabbinical scholars also have expressed reservations regarding insurance as an avoidance of God's will but most find it acceptable in moderation. Some Christians believe insurance represents a lack of faith and there is a long history of resistance to commercial insurance in Anabaptist communities (Mennonites, Amish, Hutt rites, Brethren in Christ) but many participate in community-based self-insurance programs that spread risk within their communities.

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Insurance insulates too much By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer), a concept known as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability. For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by or at the direction of the insured. Even if a provider were so irrational as to want to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal. Complexity of insurance policy contracts Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold. For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, it should be noted that in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an
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insured to purchase more insurance than might be necessary at a higher price. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible. Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company. An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers and/or agents. However, such a consultant must still work through brokers and/or agents in order to secure coverage for their clients. Redlining Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry. In July, 2007, The Federal Trade Commission released a report presenting the results of a study concerning credit-based insurance scores and automobile insurance. The study found that these scores are effective predictors of the claims that consumers will file. All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available. In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led

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to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used. An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination. What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large). Insurance patents New assurance products can now be protected from copying with a business method patent in the United States. A recent example of a new insurance product that is patented is Usage Based auto insurance. Early versions were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009).

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Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area. Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp. There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2010. Inventors can now have their insurance U.S. patent applications reviewed by the public in the Peer to Patent program. The first insurance patent application to be posted was US2009005522 Risk Assessment Company. It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies. The insurance industry and rent seeking Certain insurance products and practices have been described as rent seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.

BENEFITS OF LIFE INSURANCE

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Life insurance, especially tailored to meet the financial needs of customers. Need for Life Insurance Today, there is no shortage of investment options for a person to choose from. Modern day investments include gold, property, fixed income instruments, mutual funds and of course, life insurance. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets. Let us look at these unique benefits of life insurance in detail:Asset Protection From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation. The core benefit of life insurance is that the financial interests of ones family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer. Goal based savings Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence.

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Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. Life insurance is the only investment option that offers specific products tailor made for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met.

Life Stage

Primary Need

Life Insurance Product

Young & Single Young & Just married Married with kids Middle aged with grown up kids Across all lifestages

Asset creation Asset creation & protection Children's education, Asset creation and protection Planning for retirement & asset protection Health plans

Wealth creation plans Wealth creation and mortgage protection plans Education insurance, mortgage protection & wealth creation plans Retirement solutions & mortgage protection Health Insurance

1. Superior to Any Other Savings Plan:

Unlike any other saving plan, a life insurance policy affords full protection against risk of death. In the event of death of a policyholder, the insurance company makes available the full sum assured to the policyholders near and dear ones. In comparison, any other saving plan would amount to the total saving accumulated till date. If the death occurs prematurely, such savings can be much lesser than the sum assured. Evidently, the potential financial loss to the family of the policyholder is sizable.

2. Encourages and Forces Thrift:

A savings deposit can be easily withdrawn. The payment of life insurance premiums, however, is considered sacrosanct and is viewed with the same seriousness as

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the payment of interest on a mortgage. Thus, a life insurance policy in effect brings about compulsory savings.

3. Easy Settlement and Protection against Creditors:

A life insurance policy is the only financial instrument the proceeds of which can be protected against the claims of a creditor of the assured by effecting a valid assignment of the policy.

4. Administering the Legacy for Beneficiaries:

Speculative or unwise expenses quickly cause the proceeds to be squandered. Several policies have foreseen this possibility and provide for payments over a period of years or in a combination of installments and lump sum amounts.

5. Ready Marketability and Suitability for Quick Borrowing:

A life insurance policy can, after a certain time period (generally three years), be surrender for a cash value. The policy is also acceptable as a security for a commercial loan, for example, a student loan. It is particularly advisable for housing loans when an acceptable LIC policy may also cause the lending institution to give loan at lower interest rates.

6. Disability Benefits:
Death is only the hazard that is insured; many policies also include disability benefits. Typically, these provide for waiver of future premiums and payments of monthly installments spread over certain time period.

7. Accidental Death Benefits:

Many policies can also provide for an extra sum to be paid (typically equal to the sum assured) if death occurs as a result of accident.

8. Tax Relief:
Under the Indian Income Tax Act, the following tax relief is available:
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(a) 20% of the premium paid can be deducted from your total income tax liability. (b) 100% of the premium paid is deductible from your total taxable income. When these benefits are factored in, it is found that most policies offer returns that are comparable/or even better than other saving modes such as PPF, NSC etc. Moreover, the cost of insurance is a very negligible.

Working of Insurance Business Insurance companies receive premium from a large number of people buying insurance. The more customers an insurer has, the lower the premiums can be, and the less likely that insurer is to take a loss that wipes everyone out. Insurance is fundamental to every aspect of modern life and commerce.

INSURANCE AS AN INVESTMENT TOOL:

Insurance invests in the economy. Insurance provides funds to help businesses grow and create jobs. Premium funds that are not immediately needed are lent to government and businesses. Lending to municipalities, in the form of bonds, provides local governments across the United States with the means to build, maintain and repair municipal infrastructure schools, roads, bridges, sewers, airports.. Funds are also lent to businesses, providing them with the means to purchase buildings, equipment and supplies. Along with housing interests, the insurance industry is probably the most active voluntary investor in low- and moderate-income communities, particularly those located in urban areas. Compared to less-developed countries, the developed countries enjoy a higher standard of living, partly because these funds are available from insurance companies. Support the provision of credit

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Insurance provides support for credit. Even though mortgage lenders approve an applicant for a home loan based on the applicants credit worthiness, most lenders also require that the dwelling be covered by homeowners insurance. Likewise, a business applying for a loan to purchase inventory might be required to show that the inventory is insured before the loan is granted. Reduces anxiety Insurance also reduces anxiety because the insured knows insurance will provide indemnification if a covered loss occurs. By shouldering the burden of unexpected or catastrophic losses, insurance helps businesses avoid bankruptcy and keeps workers employed and local economies healthy. It also contributes to a stable society where people can plan for the future without an undue fear of catastrophic loss.

Insurance and Risk Management Planning Insurance and Risk Management Planning is the process of identifying the source and extent of an individuals risk of financial, physical, and personal loss, and developing strategies to manage exposure to risk and minimize the probability and amount of potential loss.

Insurance and Risk Management Planning in the Context of Personal Financial Planning

In personal financial planning (PFP), risk management and insurance planning results in clients who are aware of the range of significant risks to their financial wellbeing and who are adequately and properly protected from the loss that could result from those risks. Periodic reviews help clients understand that life changes, such as a job change or divorce, affect risk management and insurance coverage.

Risk Management Strategies

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Risk Management is much broader than the purchase of insurance policies, involving strategies such as:

Risk avoidance is just that, avoiding the risk associated with a specific task, activity or project. Often, following the review of a contract, it is determined that a project is just too risky. The client may decide not to bid the work at all, or remove that element of the work from their bid, sometimes using an alternate deduct to delineate the exclusion. Risk avoidance is strictly a business decision, and sometimes a very good strategy if construction documents are unclear, ambiguous or incomplete. Risk Abatement is the process of combining loss prevention or loss control to minimize a risk. This risk management strategy serves to reduce the loss potential and decrease the frequency or severity of the loss. Risk abatement is preferably used in conjunction with other risk management strategies, since using this risk management method alone will not totally eliminate the risk. Risk Retention is a good strategy only when it is impossible to transfer the risk. Or, based on an evaluation of the economic loss exposure, it is determined that the diminutive value placed on the risk can be safely absorbed. Another consideration in retaining a risk is when the probability of loss is so high that to transfer the risk, it would cost almost as much as the cost of the worst loss that could ever occur, i.e., if there is a high probability of loss, it may be best to retain the risk in lieu of transferring it. Risk Transfer is the shifting of the risk burden from one party to another. This can be done several ways, but is usually done through conventional insurance as a risk transfer mechanism, and through the use of contract indemnification provisions.

Risk Allocation is the sharing of the risk burden with other parties. This is usually based on a business decision when a client realizes that the cost of doing a project is too large and needs to spread the economic risk with another firm. Also, when a client

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lacks a specific competency that is a requirement of the contract, e.g., design capability for a design-build project. A typical example of using a risk allocation strategy is in the formation of a joint venture.

Insurance as a Risk Management Strategy

Insurance is just one aspectbut a very critical aspectof risk management planning. A key aspect of insurance planning understands what is available from insurance companies to assist in offsetting the economic losses associated with a particular risk. From this point you can assist your clients to inventory what risks are to be protected, identify gaps in coverage, evaluate alternative insurance policies, and select and acquire the appropriate policies.

How Insurance Companies Work

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Unlike banks, insurance companies are chartered to provide insurance. They generally do not extend credit and are often precluded from doing so by law and regulation. Because property/casualty policies are short-term usually one-year state insurance laws require most property/casualty investments to be short-term and highly liquid. Legally permissible investments include cash, mutual funds, Treasury bills and notes, mortgage-backed securities, specified types of debt securities, and preferred stock. Generally, property and casualty insurers cannot invest in real estate, other than their own buildings and property. To illustrate the short-term nature of property/casualty investments, consider that in an average year, out of $100 paid in homeowners premiums, the industry pays out $74 in claims. 3 The remainder goes to agent commissions, administrative expenses, operating costs, and, in good years, policyholder protection funds 4 which protect against future catastrophic loss. When catastrophes strike, such as fires, hurricanes, or earthquakes a greater percentage of premiums will be paid out in claims. Over time, customers receive back the vast majority of premiums in claims
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payments. The billions of dollars paid by the industry in claims is itself "reinvestment" in the local community when disaster strikes. This reinvestment not only benefits policyholders, it benefits the people who rebuild the structure after the tornado, fix the car damaged by hail or sell the appliances and cabinets needed to repair the kitchen damaged by fire. Life insurance companies primarily issue life insurance policies and annuities. Policyholder premiums are invested in compliance with state insurance laws for the benefit of policyholders to ensure that the company can meet its obligations under the terms of the policies. As they do for property/casualty companies, state insurance laws establish the types and amounts of permissible investments for life companies. Legally permissible investments include cash, mutual funds, Treasury bills and notes, mortgage-backed securities, corporate stock and other types of equity and debt securities, loans, and real estate. Reflecting the long-term nature of a life insurance policy, life insurance companies generally are permitted longer-term investments than those permitted for property/casualty companies.

How Insurance is regulated

Insurance regulation is conducted by each state through its department of insurance, run by a commissioner or director who may be elected, or appointed by the governor. Insurance departments are charged with regulating the safety and soundness of insurance companies and consumer protection. Primarily the home state regulator, who leads safety and soundness examinations and reviews investments and the adequacy of policy reserves, conducts safety and soundness regulation. Each state regulator must license any company that wants to do business in his or her state, and review and approve rates and policy forms to be used by any licensed company. Unlike banks and thrifts, most insurance companies have no geographic community. Insurance companies must be "domiciled" in a single state and are primarily regulated by the home state regulator. They must be licensed in every state in which they do business. However, there may be no connection between a companys physical location and its home state or other states in which it is

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licensed. For example, an insurance company may be domiciled in Illinois, have its headquarters in California, and be licensed for business in 40 states. In the case of automobile insurance, the company likely would have claims offices and perhaps agents in each of the states in which it is licensed. In the case of more specialized coverage such as directors and officers liability insurance, a company may not have a physical presence in any of its licensed states. In a competitive environment, some insurance company failures will inevitably occur. However, unlike banks, thrifts and credit unions, the insurance industry does not have a government-backed fund to handle insolvency. Instead, each state has a life insurance guaranty fund and a property/casualty insurance company guaranty fund. The guaranty funds ensure that the insolvent company is retired from the market in an orderly manner that gives maximum protection to the public.

Development of Insurance in India

A thriving insurance sector is of vital importance to every modern economy. First because it encourages the savings habit, second because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long-term investible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related.
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This characteristic of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations. This is the most compelling reason why private sector (and foreign) companies which will spread the insurance habit in the societal and consumer interest are urgently required in this vital sector of the economy. With the nation's infrastructure in a state of imminent collapse, India couldn't have afforded to be lumbered with sub-optimally performing monopoly insurance companies and therefore the passage of the Insurance Regulatory & Development Authority Bill on December 2, 1999 heralds an era of cautious optimism where stakes are high for all parties concerned. For the Govt. of India, Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers, investments must start yielding returns and for the domestic insurance industry - their market penetration should remain intact. On the fringe, the customer is pondering whether all the hype created on liberalization will actually benefit him. The IRDA Bill provides for the establishment of an authority to protect the interests of the holders of insurance policies, to regulate, promote and insure orderly growth of the insurance industry and amend the Insurance Act, 1938, the Life Insurance Act, 1956 and the General Insurance Business (Nationalization) Act, 1972. The bill allows foreign equity stake in domestic private insurance companies to a maximum of 26 per cent of the total paid-up capital and seeks to provide statutory status to the insurance regulator. Before privatization, insurance business in India was pegged at $ 6.6 Billion whereas industry leaders expected at that time that privatization will increase it to $ 40 Billion within next 3-5 years.

HISTORY OF THE INSURANCE SECTOR

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of

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insurance in the form of marine trade loans and carriers contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies245 Indian

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and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be

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permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. Today there are 14 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 14 life insurance companies operating in the country. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country. Some of the important milestones in the life insurance business in India are:-

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1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 India, foreign insurers & provident societies takeover by the central Government and Nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all Classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973.

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.

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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 1999, the committee submitted the report and some of the key recommendations included:

I) 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

II) 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 a single entity Foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market Only one State Level Life Insurance Company should be allowed to operate in each state

III) Regulatory Body

The Insurance Act should be changed An Insurance Regulatory body should be set up

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Controller of Insurance (Currently a part from the Finance Ministry) should be made independent.

IV) Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time)

V) 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

INSURANCE REGULATION & DEVELOPMENT BILL

On Oct. 21st, 1999, the government finally offered IRDA bill for the consideration of the new parliament. The new bill knows called insurance Regulatory Authority Bill
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1999. Bills to provide for establishment of an authority to protect the interest of holders of insurance polices and to regulate promote and insure orderly growth of the industry.

IRDA
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)

Expectations
What about IIRM The law of India has following expectations from IRDA 1. To protect the interest of and secure fair treatment to policyholders; 2. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy; 3. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates; 4. To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard; 5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
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6. To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; 7. To take action where such standards are inadequate or ineffectively enforced; 8. To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), 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;

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(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; (i) 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); (j) 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; (k) Regulating investment of funds by insurance companies; (l) Regulating maintenance of margin of solvency; (m)Adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) Supervising the functioning of the Tariff Advisory Committee; (o) Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f); (p) Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) Exercising such other powers as may be prescribed.

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INDIAN INSURANCE: AT THE CROSSROADS

I am grateful to the New India Assurance Company Limited for inviting me to this special function organized on the occasion of launching a new financial product for credit insurance by the Honorable Union Minister of Finance. It is fitting that New India Assurance, the first insurer fully set up by Indians in 1919 and the country's largest nonlife insurer today should lead the way in product innovation. All of us present here are thankful to the Honorable Finance Minister for taking some time off from his extremely busy schedule and making himself available for launching of this new insurance product. In an uncertain world, most of us would like to smoothen our lives (and Consumption patterns) by balancing the favorable and unfavorable events. Insurance allows individuals to transfer risks by participating in risk pooling arrangements, in which each one sets aside a bit for the rainy day when times are good and draws on the fund in adversity. Thus, risk pooling advantages, by their very nature, increase when the number of participants increase and the risks they face are uncorrelated. Insurers provide a medium for risk pooling. Obviously, the price of insurance - the premium is intrinsically related to the probability of the adverse situation arising. If the number of insurers increase, it is then more likely that the premium would be actuarially fair, as competition preclude monopolistic rents that could be charged by the insurer. The opening up of the insurance industry in less developed countries - and in India - is the cumulating of a long debate. The proponents of liberalization have argued that a free market would ensure the benefits of competition. Those opposed to liberalization have pointed out that the very need for nationalization arose in the Indian insurance sector because of a string of failures. It is, therefore, necessary to recognize that the present program of liberalization would be successful, if and only if, we are able to build the proper safeguards for the functioning of the industry. Viewed in this light, the

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on-going program of insurance liberalization has to be evaluated from two angles: first, the benefits to the economy and second, the sustainability of the competitive process, especially, given the past history of insolvency before the nationalization of the insurance industry. In a sense, the liberalization of the insurance sector is as much a challenge to the insurers as to the supervisors, including the Reserve Bank of India, especially in view of the emergence of the banc assurance market. The scope for product innovation is underscored by the fact that the insurance business is often classified in great detail in many developed countries, on the basis of business specialization and risk and claims characteristics, with niche insurers operating in some of the segments. For instance, the European Directive on Life and Non-Life Insurance classify the life business into 7 classes (including unit linked insurance and 2 pensions) and non-life insurance into 17 classes (including credit insurance) for independent authorization. Of course, in India, although the insurance sector is bifurcated into life and general by the Insurance Act, the insurance companies have already taken up a number of businesses. The credit insurance business - which offers protection to suppliers of goods and services against the effects of debtor insolvency, in cases of domestic credit, export credit and political risk, individually and increasingly comprehensively has grown rapidly in the past three decades - especially in Europe - with a worldwide premium of around US $ 5 billion according to a recent study commissioned by the International Credit Insurance Association. Bouts of economic crises have enlarged the scope of credit insurance from the original role of protecting the capital at risk in accounts receivable to an essential part of comprehensive credit and financial management. The credit insurance expansion has been in terms of both new players in both the private and the public sectors and new products. Credit insurance has also recently been used to enhance asset securitization deals. The prerequisite of risk management is, of course, information. In order to develop an institutional mechanism for sharing of credit related information, the Credit Information Bureau has been recently set up by the State Bank of India, in collaboration with HDFC Limited and foreign technology partners. As the insurance business spreads

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to newer activities, it would be a good idea to build up a co-operative database of their particular risk and claim characteristics. For instance, in case of credit insurance, British credit insurers do contribute to an international database through which commercial.

Insurance companies in India

In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% and general insurance premiums account to 0.65% of India's GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies to solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flourishing market amongst global insurance companies. However, the largest life insurance company in India is still owned by the government. The history of Insurance in India dates back to 1818, when Oriental Life Insurance Company was established by Europeans in Kolkata to cater to their requirements. Nevertheless, there was discrimination among the life of foreigners and Indians, as higher premiums were charged from the latter. In 1870, Indians took a sigh of relief when Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates. Onset of the 20th century brought a drastic change in the Insurance sector. In 1912, the Govt. of India passed two acts - the Life Insurance Companies Act, and the Provident Fund Act - to regulate the insurance business. National Insurance Company Ltd, founded in 1906, is the oldest existing insurance company in India. Earlier, the Insurance sector had only two state insurers - Life Insurers i.e. Life Insurance Corporation of India (LIC), and General Insurers i.e. General Insurance Corporation of India (GIC). In December 2000, these subsidiaries were de-linked from parent company and were declared independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited

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and United India Insurance Company Limited.

LIFE INSURERS Public Sector Life Insurance Corporation of India Private Sector Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Company Limited HDFC Standard Life Insurance Co. Limited ICICI Prudential Life Insurance Co. Limited ING Vysya Life Insurance Company Limited Max New York Life Insurance Co. Limited MetLife Insurance Company Limited Om Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Company Limited TATA AIG Life Insurance Company Limited AMP Sanmar Assurance Company Limited Dabur CGU Life Insurance Co. Pvt. Limited GENERAL INSURERS Public Sector National Insurance Company Limited New India Assurance Company Limited Oriental Insurance Company Limited United India Insurance Company Limited Private Sector Bajaj Allianz General Insurance Co. Limited ICICI Lombard General Insurance Co. Ltd.

Websites

www.licindia.com

www.allianzbajaj.co.in www.birlasunlife.com www.hdfcinsurance.com www.iciciprulife.com www.ingvysayalife.com www.maxnewyorklife.com www.metlife.com www.omkotakmahnidra.com www.sbilife.co.in www.tata-aig.com www.ampsanmar.com www.avivaindia.com

www.nationalinsuranceindia.com www.niacl.com www.orientalinsurance.nic.in www.uiic.co.in

www.bajajallianz.co.in www.icicilombard.com

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IFFCO-Tokio General Insurance Co. Ltd. Reliance General Insurance Co. Limited Royal Sundaram Alliance Insurance Co. Ltd. TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd. Export Credit Guarantee Corporation HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India

www.itgi.co.in www.ril.com www.royalsun.com www.tata-aig.com www.cholainsurance.com www.ecgcindia.com

www.gicindia.com

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COMPANY

PROFILE

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HDFCSLIC
(HOUSING DEVELOPMENT FINANCE CORPORATION LTD. STANDARD LIFE INSURANCE COMPANY)

HOUSING DEVELOPMENT FINANCE CORPORATION LTD.

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Founded in 1977, HDFC is today the market leader in housing finance in India and has extended financial assistance to more than 15 lacks homes. HDFC has more than 110 offices in Dubai and 3 more services associates insurance Kuwait, Qatar and Sultanate of Oman. HDFCs assets based amount to over 15,000 crore. Its financial strength is reflected in highest safety rating of FAAA and MAAA awarded by CRISIL and ICRA- two of Indias leading credit rating agency respectively, for the last 6 years consecutively, it has a depositor base of over 11 lacks customer and a deposit agents force of over 46,000 of the total deposit, 73% are sourced from individual and trust depositories, which demonstrates the tremendous confidence that retail investors have insurance the company. HDFC- Promoted companies have emerged to meet the investors and customers needs. HDFC bank is for commercial banking, HDFC mutual fund products, to be followed very shortly by HDFC Standard Life Insurance Company for the life endurance and pension products. Being an institution that is strongly committed to the highest of quality and excellence, HDFC has won several accolades in the past few years. One such award is the Ramakrishna Bajaj National Quality Award for the year 1999. This award was instituted to Award Recognition to Indian Companies for business excellence and quality achievement. HDFC is the only company so far to receive this award in the service category. Helping Indians experience the joy of home ownership. The road to success is a tough and challenging journey in the dark where only obstacles light the path. However, success on a terrain like this is not without a solution. As we found out nearly three decades ago, in 1977, the solution for success is customer satisfaction. All you need is the courage to innovate, the skill to understand your clientele and the desire to give them your best. Today, nearly three million satisfied customers whose dream we helped realize, stand testimony to our success.

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Our objective, from the beginning, has been to enhance residential housing stock and promote home ownership. Now, our offerings range from hassle-free home loans and deposit products, to property related services and a training facility. We also offer specialized financial services to our customer base through partnerships with some of the best financial institutions worldwide.

Objectives & background

Housing Finance Sector Against the milieu of rapid urbanization and a changing socio-economic scenario, the demand for housing has grown explosively. The importance of the housing sector in the economy can be illustrated by a few key statistics. According to the National Building Organization (NBO), the total demand for housing is estimated at 2 million units per year and the total housing shortfall is estimated to be 19.4 million units, of which 12.76 million units is from rural areas and 6.64 million units from urban areas. The housing industry is the second largest employment generator in the country. It is estimated that the budgeted 2 million units would lead to the creation of an additional 10 million manyears of direct employment and another 15 million man-years of indirect employment. Having identified housing as a priority area in the Ninth Five Year Plan (1997-2002), the National Housing Policy has envisaged an investment target of Rs. 1,500 billion for this sector. In order to achieve this investment target, the Government needs to make low cost funds easily available and enforce legal and regulatory reforms. Background HDFC was incorporated in 1977 with the primary objective of meeting a social need that of promoting home ownership by providing long-term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. 100 million. Business Objectives

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The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.. Organizational Goals HDFCs main goals are to a) develop close relationships with individual households, b) maintain its position as the premier housing finance institution in the country, c) transform ideas into viable and creative solutions, d) provide consistently high returns to shareholders, and e) to grow through diversification by leveraging off the existing client base.

Organization and Management

HDFC is a professionally managed organization with a board of directors consisting of eminent persons who represent various fields including finance, taxation, construction and urban policy & development. The board primarily focuses on strategy formulation, policy and control, designed to deliver increasing value to shareholders.

STANDARD LIFE INSURANCE COMPANY (SLIC)

The Standard Life Assurance Company ("Standard Life") was established in 1825 and the first Standard Life Assurance Company Act was passed by Parliament in 1832. Standard Life was reincorporated as a mutual assurance company in 1925. The Standard Life group originally operated only through branches or agencies of the mutual company in the United Kingdom and certain other countries.

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Its Canadian branch was founded in 1833 and its Irish operations in 1838. This largely remained the structure of the group until 1996, when it opened a branch in Frankfurt, Germany with the aim of exporting its UK life assurance and pensions operating model to capitalize on the opportunities presented by EC Directive 92/96/EEC (the Third Life Directive) and offer a product range in that market with features which local providers were unable to offer. In the 1990s, the group also sought to diversify its operations into areas which complemented its core life assurance and pensions business, with the intention of positioning itself as a broad range financial services provider. Banking, Healthcare & Investments The group set up Standard Life Bank, its UK mortgage and retail savings banking subsidiary, in 1998 and Standard Life Investments, which had previously been the inhouse investment management unit of the groups life assurance and pensions business, was separated into a distinct legal entity in the same year, with the aim of establishing it as an independent investment management business providing services to both the group and third party retail and institutional clients. The group acquired Prime Health Limited (subsequently renamed Standard Life Healthcare) in the United Kingdom in 2000. Standard Life Healthcare expanded in March 2006 with the acquisition of the PMI business of First Assist.

Standard Life Asia Limited/Joint ventures The groups Hong Kong subsidiary, Standard Life Asia Limited (SL Asia), was incorporated in 1999 as a joint venture and became a wholly-owned subsidiary of Standard Life in 2002. The groups operations in Hong Kong were established to give the group a presence in the Far East from which it could expand into China. The groups joint ventures in India with Housing Development Finance Corporation Limited (HDFC) were incorporated in 2000 (in relation to the life assurance and pensions joint venture) and 2003 (in relation to the investment management joint venture). The groups
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joint venture in China with Tianjin Economic Development Area General Company (TEDA) became operational in 2003. Standard Life International Limited The group also incorporated Standard Life International Limited (SLIL) in 2005 for the purposes of providing the group with an offshore vehicle, based in Ireland, through which it could sell tax-efficient investment products into the United Kingdom. Sales of these products commenced in 2006. Service Company Following the groups strategic review in 2004, the group established a service company structure for the provision of central corporate services to the groups business units. Standard Life Employee Services Limited (SLESL) supplies a wide range of central services to the rest of the group, including IT, facilities, legal and human resources services, and employs staff working in the groups UK and Irish operations (other than SLI, SLB and SLH, which employ their staff directly). This service company structure was created to enable Standard Life to comply with regulatory restrictions on the provision of non-insurance services and to exploit group-wide synergies.

Structure of Standard Life plc The following is a simplified structure diagram Standard Life plc owns all of the businesses and companies in the group. Standard Life plc is a holding company which is owned by its shareholders (including those Eligible Members who received and retained shares received as a result of demutualization).

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Alternative textual explanationStandard Life plc structure

Underneath Standard Life plc are Standard Life Healthcare Limited, Standard Life Investments (Holdings) Limited (and underneath it, Standard Life Investments Limited), Standard Life Oversea Holdings Limited, Standard Life Employee Services Limited, Standard Life Assurance Limited and Standard Life's Joint Venture interest in China

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Underneath Standard Life Oversea Holdings are Standard Life Asia Limited and Standard Life Financial Inc (and underneath it, The Standard Life Assurance Company of Canada). Underneath Standard Life Assurance Limited are Standard Life Direct Limited, Standard Life Savings Limited, Standard Life Direct Limited, Standard Life Trustee Company Limited, Standard Life Bank Limited, Standard Life Pensions Funds Limited, Standard Life International Limited and The Standard Life Assurance Company 2006, which currently holds Standard Life's Joint Venture interests in India.

THE PARTNERSHIPS
HDFC and Standard Life commenced discussions about possible joint venture, to enter the life insurance market, in Jan. 1995. It was clear from the outset that both companies shared similar values and benefits and a strong relationship quickly formed. In Oct.1995 the companies signed a 3 year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC. Further strengthening the relationship. A small project term was set up in UK and India and set about preparatory work. Among other things, the team conducted market research, looked at possible information technology, documented high level business process maps and set about preparing the first project plan. The next three years were filled uncertainty, due to change in insurance Govt. and both ongoing delays in getting the insurance bill passed in parliament. Despite this both companies remained firmly committed to venture. In Oct.1998, the joint venture agreement was removed and additional resources made available. Around this time Standard Life purchased 2% Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury Department to advise them upon their investment insurance India.

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One of many success stories over the last few years has been the actuarial student program. The program was designed to identify high caliber individuals who would be sponsored by Standard Life to study for their actuarial qualification in the UK. The new company has 1 Indian actuary and 5 actuarial students in the team. With a further 2students undergoing training in the UK. Both parent companies strongly believe the program will benefit the new company. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in Jan.2000 and expect team form the UK joined a hand picked team form HDFC to form the core project term based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC bank. In further development standard Life to participate insurance. The Assets Management Company promoted by HDFC to enter the mutual fund market. The mutual fund market was launched on 20th July 2000 and on 10th Nov.2000 assets under the management reached Rs. 1,063 crores. The company was incorporated on 14th Aug. 2000 under the name of HDFC Standard Life Insurance Company Limited. The ambition of the company from as far as back as Oct. 1995 was first to be private company to reenter in the life insurance market in India. On 23rd of Oct.2000, this ambition was realized when HDFC Standard Life Insurance Company Limited were only life company to be granted a certificate of registration.

HDFC are main shareholders in HDFC Standard Life Insurance Company Limited with 81.4% while Standard Life own 18.6% given Standard Lifes existing investment in the HDFC Group. This is maximum investment allowed under current regulations.

HDFC Standard Life Insurance Company Ltd.

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HDFC Standard Life Insurance Company Ltd. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), India's leading housing finance institution and a Group Company of the Standard Life, UK. HDFC as on March 31, 2007 holds 81.9 per cent of equity in the joint venture. Key strengths Financial Expertise As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage long-term investments of customers safely and efficiently. Range of Solutions The company have a range of individual and group solutions, which can be easily customized to specific needs. The companys group solutions have been designed to offer customers complete flexibility combined with a low charging structure. Track Record so far The companys gross premium income, for the year ending March 31, 2010 stood at Rs. 2, 856 crores and new business premium income at Rs. 1,624 crores. The company has covered over 8, 77,000 lives year ending March 31, 2010.

Companys Parentage
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HDFC Limited. HDFC is Indias leading housing finance institution and has helped build more than 23, 00, 000 houses since its incorporation in 1977. In Financial Year 2003-04 its assets under management crossed Rs. 36,000 Cr. As at March 31, 2004, outstanding deposits stood at Rs. 7,840 crores. The depositor base now stands at around 1 million depositors. Rated AAA by CRISIL and ICRA for the 10th consecutive year Stable and experienced management High service standards Awarded The Economic Times Corporate Citizen of the year Award for its long-standing commitment to community development. Presented the Dream Home award for the best housing finance provider in 2004 at the third Annual Outlook Money Awards.

Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life group has been looking after the financial needs of customers for over 180 years It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and health-care needs Its investment manager currently administers 125 billion in assets It is a leading pensions provider in the UK, and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pensions provider at the Financial Adviser Service Awards for the last 10 years running.

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The '5 Star' last 10 years,

accolade has also been awarded to Standard Life Investments for the and to Standard Life Bank since its inception in 1998. Standard awarded the 'Best

Life Bank was

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

Values
Values that we observe while working : Integrity Innovation Customer centric People Care One for all and all for one Team work Joy and Simplicity

Accolades and Recognition

Rated by 'Business world' as 'India's Most Respected Private Life Insurance Company' in 2004 Rated as the "Best New Insurer - 2003" by Outlook Money magazine, Indias number 1 personal finance magazine

Brief Profile of The Management Team

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Mr. Amitabh Chaudhry Managing Director and Chief Executive Officer Mr. Amitabh Chaudhry is the Managing Director and Chief Executive Officer of HDFC Standard Life. Before joining HDFC Standard Life in Janaury 2010, he was the Managing Director and CEO of Infosys BPO and was also heading an Independent Validation Services unit in Infosys Technologies. Mr. Chaudhry started his career with Bank of America delivering diverse roles ranging from Head of Technology Investment Banking for Asia, Regional Finance Head for Wholesale Banking and Global Markets and Chief Finance Officer of Bank of America (India). He moved to Credit Lyonnais Securities in 2001 in Singapore where he headed their investment banking franchise for South East Asia and structured finance practice for Asia before joining Infosys BPO in 2005. Mr. Chaudhry completed his Engineering in 1985 from Birla Institute of Technology and Science, Pilani and MBA in 1987 from IIM, Ahmedabad.

Mr. Paresh Parasnis Executive Director and Chief Operating Officer Mr. Paresh Parasnis is the Executive Director and Chief Operating Officer of HDFC Standard Life.

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A fellow of the Institute of Chartered Accountants of India, he has been associated with the HDFC Group since 1984. During his 16-year tenure at HDFC Limited, he was responsible, for driving and spearheading several key initiatives. As one of the founding members of HDFC Standard life, Mr. Parasnis has been responsible for setting up branches, driving sales and servicing strategy, leading recruitment, contributing to product launches and performance management system, overseeing new business and claims settlement, customer interactions etc.

Ms. Vibha Padalkar Chief Financial Officer Ms.Vibha Padalkar is the Chief Financial Officer of HDFC Standard Life. Ms. Padalkar joined HDFC Standard Life in August 2008 after a seven year stint as Executive Vice President-Finance at WNS Global Services, a NYSE listed leading global business process outsourcing company. Vibhas key achievement during her tenure at WNS was to lead a team that successfully completed the Groups IPO on the New York Stock Exchange in a short span of six months. Prior to WNS, Vibha was with Colgate Palmolive India for 7 years, including a short posting to the Group's New York headquarters. Ms.Padalkar became a member of the Institute of Chartered Accountants in England and Wales in 1992, after having completed the last part of her schooling as well as college education in London.

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Mr. Sharad Gangal General Manager, Human Resources and Administration Mr. Sharad Gangal is the General Manager HR and heads the vertical in HDFC Standard Life. Mr. Gangal joined HDFC Standard Life in July 2007 with rich experience of more than 25 years in spearheading various departments of Human Resources arena in the FMCG and pharmaceutical industry. Before HDFC Standard Life, he was associated with Cadbury India for 11 years followed by a stint at Cadbury Australia, Asian Paints for 5 years and Boehringer Mannhein for seven years. Mr. Gangal is a Post Graduate in Human Resources. Employee engagement and Change Management are his areas of specialization.

Mr. Vikram Mehta General Manager, Sales and Marketing Mr.Vikram Mehta heads the Sales and Marketing function for HDFC Standard Life. Mr. Mehta joined HDFC Standard Life in February 2009. Before joining HDFC Standard Life, he was associated with Citibank for 16 years serving various responsibilities including the Head for Direct Sales - Citibank Credit Cards division in Germany, Regional Director East - Citibank NA, India, and Acquisitions Head Credit Cards, Central and Eastern Europe cluster. Mr. Mehta started his career with Reckitt and Colman (now Reckitt Benckiser) in 1988, and was associated with the company for 4 years. He has been a part of FMCG and banking industry for over 20 years.

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Mr. Mehta has completed Chemical Engineering from the Indian Institute of Technology (IIT) Delhi and holds a PGDM from IIM Calcutta.

Mr. Prasun Gajri Chief Investment Officer Mr. Prasun Gajri is the Chief Investment Officer of HDFC Standard Life. Mr. Gajri joined HDFC Standard Life in April 2009 with a rich experience of 14 years in investments and banking industry. He started his career in 1995 with Citibank and was associated with it for over 6 years delivering various roles. He joined Tata AIG Life Insurance Company in October 2001 to start the investment function and stayed there until April 2009, the last role being that of the Chief Investment Officer. He holds a PGDM from IIM Ahmedabad and is also a CFA Charterholder.

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Products
At HDFC Standard Life, we offer a bouquet of insurance solutions to meet every need. We cater to both, individuals as well as to companies looking to provide benefits to their employees. This section gives you details of all our products. We have incorporated various downloadable forms and product details so that you can make an informed choice about buying a policy. For individuals, we have a range of protection, investment, pension and savings plans that assist and nurture dreams apart from providing protection. You can choose from a range of products to suit your life-stage and needs. For organizations we have a host of customized solutions that range from Group Term Insurance, Gratuity, Leave Encashment and Superannuation Products. These affordable plans apart from providing long term value to the employees help in enhancing goodwill of the company.

Individual Products
We at HDFC Standard Life realize that not everyone has the same kind of needs. Keeping this in mind, we have a varied range of Products that you can choose from to suit all your needs. These will help secure your future as well as the future of your family.

Protection Plans You can protect your family against the loss of your income or the burden of a loan in the event of your unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Our Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan. Investment Plans Our Single Premium Whole of Life plan is well suited to meet your long term investment needs. We provide you with attractive long term returns through regular bonuses.

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Advantages:

This participating plan is a Whole of Life plan aimed at providing long-term real growth for your money By nature, this is a whole life policy where the term extends for the life However, you can decide on the policy term by using a feature built into it. For a period of 4 weeks, after any one of the 10th, 15th, 20th and subsequent five-year anniversaries, you can choose to receive the Sum Assured plus any attaching bonuses, in full. Once money has been received, your policy will cease or you may also continue the policy for your whole life

You can terminate the policy any time, after it has been in force for at least 6 month and receive a surrender value. We will pay discretionary surrender value based on our experience. However, after completion of 3 years there will be a guaranteed surrender value of 50% of premium paid. In addition to the guaranteed surrender value, we may pay additional discretionary surrender value based on our experience. Contract ends on the payment of the same

Currently Section 80C benefit is available for the premium paid under the plan to the extent of 20% of the Sum Assured. In the event of a death claim the money paid is exempt as per Section 10(10D), of the Income Tax Act 1961

Pension Plans Our Pension Plans help you secure your financial independence even after retirement. Our Pension range includes our Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus.
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Savings Plans Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home or fulfilling your childrens immediate and future needs. Our Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Money Back Plan, Childrens Plan, Unit Linked Youngstar, Unit Linked Young star Plus .

Group Products
One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. We offer different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. We now offer the following group products to our esteemed corporate clients: Group Term Insurance Group Variable Term Insurance Group Unit-Linked Plan An investment solution that provides funding vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes.

UNIT LINKED YOUNG STAR PLAN

The HDFC Unit Linked Young Star Plan gives you: An outstanding investment opportunity by providing a choice of thoroughly researched and selected investment. Valuable protection in case of the insured parents unfortunate demise. Very flexible benefit combinations and payment options.

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 Flexible additional benefit options such as critical illness cover.

4 easy steps to your own plan

Step 1 Choose the premium you wish to invest. Step 2 Choose the amount of protection (Sum assured) you desire. Step 3 Choose the additional benefit options you desire. Step 4 Choose the investment fund or funds you desire.

Step 1: Choose your regular premium

This is the premium you will continue to pay each year of the policy. The minimum regular premium is Rs.10, 000 per year. You can pay quarterly, half yearly or annually.

Step 2: Choose your level of protection

You can choose any amount of Sum Assured with: A minimum of 5 times your chosen regular premium. A maximum of 40 times your chosen regular premium.

You can reduce but not increase the sum assured.

Step 3: Choose additional plan benefits

In addition to maturity benefit, you can choose from these benefit options. Life Option- Death Benefit Life & Health Option- Death Benefit + Critical Illness Benefit

Step 4: Choose your investment funds.

Choosing your investment option is important. We have 6 funds that give you: The potential for higher but more variable returns over the term of your policy; or More stable returns with lower long-term potential.

Your investment will buy units in any of 6 funds designed to meet your risk approach. All units in a particular fund are identical.

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You can choose from all or any of the following 6 funds. Fund Details Asset Class Bank Govt. deposits & Securities Money Market Fund Composition
Liquid Fund Secure Fund Defensive Fund Extremely low capital risk. More capital stability than equity funds. *Access to better longterm returns through equities. *Significant bond exposure keeps risk down. Balanced Managed Fund *Increased equity exposure gives better long-term return. *Bond exposure provides Growth Fund some stability. *For those who wish to maximize their returns. *100% investment insurance high Indian equities. --100% Very high -40% to 70% 30% to 60% Very high 100% ---100% 70% to 85% --15% to 30% Low Low Modera te

Equit Risk y & Return Rating

& Bonds

Benefits From the plan:

Death Benefit:

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 The company will pay the Sum Assured to the beneficiary. Your family need not pay any further premiums. The company will pay future premiums on your behalf.

Any Critical Illness Cover terminates immediately.

Critical Illness Benefit:

The company will pay the Sum Assured to the beneficiary. Your family need not pay any further premiums. The company will pay future premiums on your behalf. The Death Cover terminates immediately.

Changes in the Payment of Premium:

You can increase or reduce*, stop* or restart your regular premiums at any time. You must have paid 3 years regular premiums and your fund must have a value above Rs.15, 000.

Changes in Investment Decisions:

You can change your investment fund choices in two ways. Switching: you can move your accumulated funds from one fund to another anytime. Premium Redirection: you can pay your future premiums into a different selection of funds, as per your need.

Additional single premiums:

You can, very cost effectively, invest any extra money you have to enhance the longterm return and provide the little extras your child deserves. You can invest more than your regular premiums anytime. The minimum additional single premium amount is only Rs.5, 000.

Surrendering the Policy:

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 You can choose to surrender the policy at any time. The surrender value will be the value of the units in the fund less any surrender charges. If you have paid 3 years of regular premiums, there will be no surrender charges.

Tax Benefits (Based on current tax laws)

You will be eligible for tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Under Section 80C, you can save up to Rs.33, 660 from your tax each year (calculated on the highest tax bracket) as premiums up to Rs.1,00,000 are allowed as a deduction from your tax income. Under Section 10 (10 D), the benefits you receive from this policy are completely tax-free.

Accessing Money Easily

You can make lump sum withdrawals from your funds at any time provided: The minimum withdrawal amount is Rs.10, 000. After the withdrawal, the fund less any due charges exceeds both Rs.15,000 and the surrender charges in force at the time of the withdrawal.

Eligibility
The age and term limits for the insured parent for taking out a Unit Linked Young Star Plan are as shown below.

Benefit Options

Term Period (Yrs.) Min. Max.

25 25

Age at Entry (Yrs.) Min.

18 18

Maximum Age at Maturity (Yrs.)

75 65

Max.
60 55

Life Option Life & Health Option

10 10

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Beneficiaries
The beneficiary (your child) is the sole person to receive the benefit under the policy. Where the beneficiary is less than 18 years of age the benefit will be paid to the Appointee.

Charges Applicable under the Policy

The charges under the policy are deducted to provide for the benefits and the administration provided by the company.

Premium Allocation Charge:

This is a premium-based charge. After deducting this charge from your premiums, the remainder is invested to buy units.

Premium Paid During Tear (Rs.)

Up to 1 ,99,999 From 2,00,000 to 4,99,999 Regular From 5,00,000 to 9,99,999 Premiums 10,00,000 and above Single Premium Top-Up(s)

Investment Content Rate (ICR) 1st & 2nd yrs. 3rd year onwards
70.00% 80.00% 85.00% 90.00% 97.50% 99.00% 99.00% 99.00% 99.00% 99.00%

Fund Management Charges (FMC)

The daily unit price already includes a low fund management chare of 0.80% per annum of the funds value. In the long term, the key to building great maturity values is a low FMC.

Cancellation or Surrender Charges

On cancellation or surrender of the policy before 3 years of regular premiums have been paid, the company will make a charge of 30% of the outstanding premiums due for the remainder of this 3-year period.

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Other Charges
Administration Charge
A charge of Rs.20 per month is charged to cover regular administration costs. The company makes the charge by canceling units in each of the funds you have chosen, in the proportion you have chosen.

Risk Benefit Charges

Every month the company makes a charge for providing you with the death or critical illness cover you have selected. The amount of the charge taken each month depends on your age. The company takes the charge by canceling units in each of the funds you have chosen, in the proportion you have chosen.

Fund switching Charges, Premium Redirection or Alteration Charges

Premium alterations include stopping and restarting your regular premium after 3 years. The company does not charge for any of these options currently. The company deserves the right to introduce such charges after approval from the IRDA.

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Icici prudential

ICICI bank

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Overview
Formerly Industrial Credit and Investment Corporation of India is India's largest private sector bank by market capitalization and second largest overall in terms of assets. Total assets of Rs. 3,562.28 billion (US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank also has a network of 1,700+ branches (as on 31 March, 2010) and about 4,721 ATMs in India and presence in 18 countries, as well as some 24 million customers (at the end of July 2007). ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. (These data are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank has got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of India Limited, and its ADRs on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK (the subsidiary through which the HiSAVE savings brand is operated), offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South

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Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a 1.29% increase in total income to Rs. 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's current and savings account (CASA) ratio increased to 30% in 2008 from 25% in 2007. ICICI Bank is one of the Big Four Banks of India with State Bank of India, Axis Bank and HDFC Bank. History of ICICI Bank 1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. 1994: ICICI established Banking Corporation as a banking subsidiary.formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. 2001: ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. 2002: The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international expansion by opening representative offices in New York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank.

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2003: ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.

2004: ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa. 2005: ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.

2006: ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur. 2007: ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, ICICI also received permission from the government of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.

2008: The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt. 2009: ICICI made huge changes in its organistion like elimination of loss making department and restreching outsourced staff or renegotiate their charges in consequent to the recession. In addition to this, ICICI adopted a massive approach aims for cost control and cost cutting. In consequent of it, compesation to staff was not increased and no bonus declared for 2008-09.

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Prudential finance
Prudential Financial, Inc. is a Fortune Global 500 and Fortune 500 company whose subsidiaries provide insurance, investment management, and other financial products and services to both retail and institutional customers throughout the United States and in over 30 other countries. Principal products and services provided include life insurance, annuities, mutual funds, pension- and retirement-related investments, administration and asset management, securities brokerage services, and commercial and residential real estate in many states of the U.S. It provides these products and services to individual and institutional customers through distribution networks in the financial services industry. In 1981, the company acquired Bache & Co., a stock brokerage service now operating as a wholly owned subsidiary. Prudential has operations in the United States, Asia, Europe and Latin America and has organized its principal operations into the Financial Services Businesses and the Closed Block Business. Prudential is composed of hundreds of subsidiaries and holds more than $2 trillion of life insurance. Its logo is the Rock of Gibraltar.

History
Started in Newark, New Jersey in 1875, Prudential Financial, Inc. as it is known today was originally called the "The Widows and Orphans Friendly Society" and was founded by John F. Dryden, who later became a U.S. Senator. It sold one product in the beginning, burial insurance. John F. Dryden was president of Prudential until 1912. He was succeeded by his son Forrest F. Dryden, who was the president until 1922. A history of The Prudential Insurance Company of America up to about 1975 is the topic of the book Three Cents A Week, referring to the premium paid by early policyholders. Prudential's logo, The Rock of Gibraltar, is one of the most recognized corporate symbols in the world. The use of the rock began after an advertising agent passed Laurel Hill, a volcanic neck, in Secaucus, New Jersey on a train in the 1890s. The related slogans "Get a Piece of the Rock" and "Strength of Gibraltar" are also still quite widely associated with Prudential, though current advertising uses neither of these.

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Prudential has evolved from a mutual insurance company (owned by its policyholders) to a joint stock company. It is now traded on the New York Stock Exchange under the symbol PRU. The Prudential Stock was issued and started trading on the New York Stock Exchange on December 13, 2001. On October 16, 2007 the Fox Business Channel picked Prudential as part of its Fox50 Index. In 1999, Prudential sold its healthcare division, Prudential HealthCare, to Aetna for $1 billion. On May 1, 2003, Prudential formalized the acquisition of American Skandia, the largest distributor of variable annuities through independent financial professionals in the United States. The combination of American Skandia variable annuities and Prudential fixed annuities was part of Prudentials strategy to acquire complementary businesses that help meet retirement goals. In April 2004, the company acquired the retirement business of CIGNA Corporation. On August 1, 2004, the U.S. Office of Homeland Security announced the discovery of terrorist threats against the Prudential Financial headquarters in Newark, New Jersey, prompting large-scale security measures such as concrete barriers and internal security changes such as X-ray machines. On August 28, 2006, federal and state securities regulators and the Department of Justice announced parallel settlements and a total of $600 million in monetary sanctions against Prudential Securities, Inc. (now known as Prudential Equity Group ) for misconduct relating to improper market timing. On November 28, 2007, Prudential Financial board of directors elected a new CEO "The board of directors of Prudential Financial Inc. has elected a new chief executive officer. Vice chairman John R. Strangfeld will take the reins of the Newark-based insurance and financial services company on Jan. 1. Strangfeld, 53, currently runs all of Prudential's U.S. businesses. He succeeds Arthur F. Ryan, who is retiring as CEO at the end of 2007. Strangfeld also will become chairman after Ryan retires from that job in May 2008.

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Icici prudential

Overview:
ICICI Prudential is a joint venture between ICICI Bank and Prudential plc engaged in the business of life insurance in India. ICICI Prudential is the largest private insurance company and second largest insurance in India after LIC. ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).ICICI Prudential Life's capital stands at Rs. 37.72 billion (as on March, 2008) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the year ended March 31, 2008, the company garnered Retail New Business Weighted premium of Rs. 6,684 crores, registering a growth of 68% over the last year and has underwritten nearly 3 million retail policies during the period. The company has assets held over Rs. 30,000 crore as on April 30, 2008.ICICI Prudential 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 ICICI Prudential's ability to meet its obligations to customers at the time of maturity or claims. For the past seven years, ICICI Prudential Life has retained its leadership position in the life insurance industry with a wide range of flexible products that meet the needs of the Indian customer at every step in life. Since the liberalization of Indian Insurance sector, ICICI Prudential Life Insurance has been one of the earliest private players. Since the time, ICICI Pru Life has been the leader

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in terms of market share as indicated by the IRDA (Insurance Regulatory and Development Authority, the regulator for Indian Insurance Industry) at its website. Arguably the most innovative Indian Life insurer in terms of customer services and products, ICICI Prudential has one of the largest distribution and servicing network with over 2,000 proprietary offices & customer touch points across India. The 30,000 employee strong organization has one of the largest agency distributions in the industry. With a growing product range to match the complex needs of the demanding customers in a growing economy, the organization also has a history of successful. During 2007-08, the organization's focus on rural business has proved its complex project execution capability and strong partnerships for customer servicing. In June, 2009 ICICI Prudential Life Insurance has decided to snap its tie up with TTK Healthcare to settle insurance claims of its users.

The ICICI Prudential Edge - What makes us No. 1

The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it product development, distribution, the sales process or servicing. Here's a peek into what makes us leaders. 1. Our products have been developed after a clear and thorough understanding of customers' needs. It is this research that helps us develop Education plans that offer the ideal way to truly guarantee your child's education, Retirement solutions that are a hedge against inflation and yet promise a fixed income after you retire, or Health insurance that arms you with the funds you might need to recover from a dreaded disease. 2. Having the right products is the first step, but it's equally important to ensure that our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products.

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3. Robust risk management and underwriting practices form the core of our business. With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process. 4. Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term.
5.

Last but definitely not the least, our 20,000 plus strong team is given the opportunity to

learn and grow, every day in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

Vision & Values Vision:

To be the dominant Life, Health and Pensions player built on trust by world-class people and service. This we hope to achieve by: Understanding the needs of customers and offering them superior products and service Leveraging technology service customers quickly, efficiently and conveniently Developing and implementing super risk management and investment strategies to offer sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our employees And above all, building transparency in all our dealings. The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describes what the company stands for, the qualities of our people and the way we work.

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We do believe that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector. Given the quality of our parentage and the commitment of our team, there are no limits to our growth.

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

Promoters
ICICI Bank
ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector bank with over 50 years presence in financial services and with assets of over Rs 3569.32 bn (USD 88 billion) as on June 30, 2007. The Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, private equity and asset management. ICICI Bank is a leading player in the retail banking market and services its large customer base through a network of over 950 branches (including extension counters), 3469 ATMs, call centers and internet banking (www.icicibank.com) to ensure that customers have access to its services at all times

Prudential Plc
Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the US and Asia, provides retail financial services products and services to more than 20 million customers, policyholder and unit holders and manages over 256 billion

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of funds worldwide (as on June 30,2007). In Asia, Prudential is the leading European life insurance company with life operations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Vietnam. Prudential is the second largest retail fund manager for Asian sourced assets ex-Japan as at June 2006. Its fund management business has expanded into a total of ten markets : China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan, Vietnam and United Arab Emirates.

Fact Sheet
THE Company
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential's capital stands at Rs. 23.72 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the first quarter ended June 30, 2007, the company garnered Rs. 987 crore of weighted retail + group new business premiums and wrote over 450,000 retail policies in the period. The company has assets held to the tune of over Rs. 18,400 crore. ICICI Prudential 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 ICICI Prudential's ability to meet its obligations to customers at the time of maturity or claims. For the past six years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

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Distribution
ICICI Prudential has one of the largest distribution networks amongst private life insurers in India. It has a strong presence across India with over 680 branches and over 235,000 advisors. The company has over 23 bancassurnace partners, having tie-ups with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank, Idukki District Cooperative Bank, Jalgaon Peoples Co-operative Bank, Shamrao Vithal Co-op Bank, Ernakulam Bank, 9 Bank of India sponsored Regional Rural Banks (RRBs), Sangli Urban Co-operative Bank, Baramati Co-operative Bank, Ballia Kshetriya Gramin Bank, The Haryana State Co-operative Bank and Imphal Urban Cooperative Bank Limited. ICICI Bank About ICICI Bank: ICICI Bank Ltd (NYSE:IBN) is India's largest private sector bank and the second largest bank in the country with consolidated total assets of about US$ 102 billion as of June 30, 2009. ICICI Banks subsidiaries include Indias leading private sector insurance companies and among its largest securities brokerage firms, mutual funds and private equity firms. ICICI Banks presence currently spans 19 countries, including India. Prudential Plc Established in London in 1848, Prudential plc, through its businesses in the UK, Europe, US, Asia and the Middle East, provides retail financial services products and services to more than 21 million customers, policyholder and unit holders and manages over 249 billion of funds worldwide (as of March, 2009). In Asia, Prudential is the leading Europebased life insurer with life operations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam. Prudential is one of the largest asset management companies in terms of overall assets sourced in Asia ex-japan, with 36.8 billion funds under management (as of March, 2009) and operations in ten markets including China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan, Vietnam and United Arab Emirates.

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MANAGEMENT PROFILE
Board of Directors
The ICICI Prudential Life Insurance Company Limited Board comprises reputed people from the finance industry both from India and abroad. Ms. Chanda D. Kochhar, Chairperson Mr. N. S. Kannan, Director Mr. K. Ramkumar, Director Mr. Barry Stowe, Director Mr. Adrian OConnor, Director Mr. Keki Dadiseth, Independent Director Prof. Marti G. Subrahmanyam, Independent Director Ms. Rama Bijapurkar, Independent Director Mr. Vinod Kumar Dhall, Independent Direct Mr. V. Vaidyanathan, Managing Director & CEO

Management Team
The ICICI Prudential Life Insurance Company Limited Management team comprises reputed people from the finance industry both from India and abroad. Mr.V.Vaidyanathan, Managing Director & CEO Dr. Avijit Chatterjee, Appointed Actuary Mr. N. S. Kannan, Executive Director Mr. Bhargav Dasgupta, Executive Director Ms. Anita Pai, EVP Customer Service & Technology

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Mr. Azim Mithani, Chief Actuary Mr. Puneet Nanda, Executive Vice President & Chief Investments Officer

Awards
The International Council of Customer Service Organizations (ICCSO) recently awarded ICICI Prudential Life the International Service Excellence Awards 2009 in the categories of Customer Charter Winner, Service Excellence in Large Business Highly Commended and Customer Service Leader awarded to Ms. Priya Nayak, VP-Service Quality. ICICI Prudential Life Insurance has won the first runner up award for the Best Defect Elimination in Service & Transaction category at Asian Six Sigma Excellence Summit 2009. ICICI Pru Life ranked as the Most Trusted Pvt. Life Insurance brand in the Brand Equity "Most Trusted Brands 2009" survey. ICICI Prudential Life won a Gold award for About ULIPS.com and Health Saver campaign, innovation award for www.taxguru08-09.com and a silver award for its Insurance yoga campaign at the ICICI Group Marketing Excellence award. Confederation of Indian Industry (CII) - Western Region recently awarded ICICI Prudential Life a 'Commendation for Strong Commitment to HR Excellence 2008' at the CII HR Summit 2008. ICICI Prudential Life Insurance was awarded with the coveted 'ICAI Award for Excellence in Financial Reporting' by the Institute of Chartered Accountants of India (ICAI) for the financial year ended March 31, 2008. ICICI Prudential Life was awarded the Life Insurance Company of the Year at the12th Asia Insurance Industry Awards 2008. ICICI Prudential Life was awarded with two Bronze Effie's in the services category for its Corporate campaign and Retirement Number campaign. ICICI Prudential Life Insurance won the award for the Best Life Insurer-Runner up at the Outlook Money & NDTV Profit Awards 2008.

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 ICICI Prudential Life was awarded the SAP ACE 2008 Best Business Objects Award for its IT practices. ICICI Prudential Life won the Award for Brand Excellence in the Banking and Financial services category at the Asia Brand Congress 2008. ICICI Prudential Life won the UK Trade & Investment India Business Awards 2008 in the Business Partnership Award-Large Company category. ICICI Prudential Life won the ICICI Group Marketing Excellence Award 2008 in three key categories for its marketing initiatives. ICICI Prudential Life was awarded the INDYs Award for Excellence in Mass Communication in the category of Most Creative Advertisement-Television India's Most Customer Responsive Insurance Company . Avaya Global Connect Economic Times. Customer Responsiveness Awards, 2007. ICICI Prudential Life Insurance won the award for the Best Life Insurer-Runner up at the Outlook Money & NDTV Profit Awards 2007. ICICI Prudential Lifes, retirement solutions campaign for the year 2006-07 was awarded the Bronze Effy trophy in the services category. It also won the Brand Equity Bravery Award 2007, instituted by Ad club. ICICI Prudential Lifes website, www.iciciprulife.com was awarded the best website among private life insurers at the Web 18 and Frost & Sullivan Genius of the Web Awards 2007 for commendable work in the online. Innovation Award for launching Diabetes Care Prudence Award 2006. People Award for excellence in training and people development - Prudence Award 2006. India's Most Customer Responsive Insurance Company. Avaya Global Connect Economic Times. Customer Responsiveness Awards. Most Trusted Private Life Insurer. The Economic Times - A C Nielsen Survey of Most Trusted Brands 2003, 2004 and 2005. Prudence Customer Centricity Award 2004 & 2005. Prudential Corporation Asia. Best Life Insurer 2003. Outlook Money Awards 2003 & 2004. IMM Award for Excellence. Institute of Marketing & Management.
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 Organisation with Innovative HR Practices Indira Group of Institutes. Organisation with Innovative HR Practices Asia-Pacific H R Congress Awards for HR Excellence. Silver Effie for Effectiveness of the Retire from Work not life advertising campaign Effies 2003.

Recognitions
ICICI Prudential Life was recognized as the most trusted brand amongst private life insurers in the Economic Times-Most Trusted Brand survey 2008. IMM Award for Excellence. Institute of Marketing & Management. Organisation with Innovative HR Practices. Indira Group of Institutes. Organisation with Innovative HR Practices. Asia-Pacific H R Congress Awards for HR Excellence.

Products
Insurance Solutions for Individuals
ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

Save'n'Protecton is a traditional endowment savings plan that offers life protection along with adequate returns. Cash Back is an anticipated endowment policy ideal for meeting milestone expenses like a child's marriage, expenses for a child's higher education or purchase of an asset. It is available for terms of 15 and 20 years.

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Life Time Super & Life Time Plus are unit-linked plans that offer customers the flexibility and control to customize the policy to meet the changing needs at different life stages. Each offer 6 fund options - Preserver, Protector, Balancer, Maxi miser, Flexi Growth and Flexi Balanced Life Link Super is a single premium unit linked insurance plan which combines life insurance cover with the opportunity to stay invested in the stock market. Premier Life Gold is a limited premium paying plan specially structured for long-term wealth creation. Invest Shield Life New is a unit linked plan that provides premium guarantee on the invested premiums and ensures that the customer receives only the benefits of fund appreciation without any of the risks of depreciation. Invest Shield Cash back is a unit linked plan that provides premium guarantee on the invested premiums along with flexible liquidity options.

Protection Solutions

Life Guard is a protection plan, which offers life cover at low cost. It is available in 3 options - level term assurance, level term assurance with return of premium & single premium. Home Assure is a mortgage reducing term assurance plan designed specifically to help customers cover their home loans in a simple and cost-effective manner.

Education insurance plans

Education insurance under the Smart Kid brand provides guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the child's life. Smart Kid plans are also available in unit-linked form - both single premium and regular premium.

Retirement Solutions

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Forever Life is a traditional retirement product that offers guaranteed returns for the first 4 years and then declares bonuses annually. Life Time Super Pension is a regular premium unit linked pension plan that helps one accumulate over the long term and offers 5 annuity options (life annuity, life annuity with return of purchase price, joint life last survivor annuity with return of purchase price, life annuity guaranteed for 5, 10 and 15 years & for life thereafter, joint life, last survivor annuity without return of purchase price) at the time of retirement. Life Link Super Pension is a single premium unit linked pension plan. Immediate Annuity is a single premium annuity product that guarantees income for life at the time of retirement. It offers the benefit of 5 payout options.

Health Solutions

Health Assure and Health Assure Plus: Health Assure is a regular premium plan which provides long term cover against 6 critical illnesses by providing policyholder with financial assistance, irrespective of the actual medical expenses. Health Assure Plus offers the added advantage of an equivalent life insurance cover. Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis as well as at different stages in the treatment of various cancer conditions. Diabetes Care: Diabetes Care is a unique critical illness product specially developed for individuals with Type 2 diabetes and pre-diabetes. It makes payments on diagnosis on any of 6 diabetes related critical illnesses, and also offers a coordinated care approach to managing the condition. Diabetes Care Plus also offers life cover. Hospital Care: is a fixed benefit plan covering various stages of treatment hospitalization, ICU, procedures & recuperating allowance. It covers a range of medical conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years. Crisis Cover: is a 360-degree product that will provide long-term coverage against 35 critical illnesses, total and permanent disability, and death.

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Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. Group Gratuity Plan: ICICI Pru's group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. Group Superannuation Plan: ICICI Pru offers both defined contribution (DC) and defined benefit (DB) superannuation schemes to optimize returns for the members of the trust and rationalize the cost. Members have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement. Group Immediate Annuities: In addition to the annuities offered to existing superannuation customers, we offer immediate annuities to superannuation funds not managed by us. Group Term Plan: ICICI Pru's flexible group term solution helps provide affordable cover to members of a group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.

Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer.
1.

Accident & disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the rider sum assured under the policy. If an accident results in total and permanent disability, 10% of rider sum assured will be paid each year, from the end of the 1st year after the disability date for the remainder of the base policy term or 10 years, whichever is lesser. If the death occurs while traveling in an authorized

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mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit.
2.

Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical expenses prior to death.

3.

Waiver of Premium: In case of total and permanent disability due to an accident, the future premiums continue to be paid by the company till the time of maturity. This rider is available with Smart Kid, Life Time Plus, Life Time Super and Life Time Super Pension.

4.

Income Benefit: In case of death of the life assured during the term of the policy, 10% of the sum assured is paid annually to the nominee on each policy anniversary till the maturity of the rider.

The company does believe that it is on the threshold of an exciting new opportunity, where it can play a significant role in redefining and reshaping the sector. Given the quality of its parentage and the commitment of its team, there are no limits to our growth.

ICICI Pru Life Time plus Plan Suitability

This policy is a long-term market linked total protection plan. The plan offers protection for life at the same time allows the policyholder to get market-linked returns. It is a single product combining the benefits of both investment product and insurance plan. This apart, the product offers a lot of flexibility.

Key Benefits of Life Time Plus;

This policy offers the policyholder the protection of Sum Assured AND Fund Value, in case of an unfortunate event of death. Potentially higher returns are offered over the long-term by investing in market linked funds.

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 Provision of additional allocation of units at regular intervals to enhance the investment. Options to withdraw the money systematically over a period of 5 years on maturity of the policy. Provides cover continuance option, which ensures continuance of life insurance cover even if the policyholder takes a temporary break in premium payment. The policyholder can enjoy tax benefits on premium paid & benefits received under this policy, as per the prevailing Income Tax Laws.

How does the policy work?

The policyholder needs to choose the premium amount, term &Sum Assured for which he wishes to take the policy. After deducting premium allocation charges, the balance amount is invested in the investment fund(s) of policyholders choice. The policyholder can opt for add-on riders available under the policy for a nominal extra amount. On survival, the maturity benefit is paid to the policyholder. If the unfortunate event of death, the nominee receives the Sum Assured AND the Fund Value

Benefits in Detail
Death Benefit In the unfortunate event of death during the term of the policy, the nominee shall receive the Sum Assured AND Fund Value. Maturity Benefit Based on the term chosen for this policy, the policyholder will be entitled to receive the Fund Value at the time of maturity. Switching Option With this option, the policy holder can switch between the investment funds at any time provided the policy is in force], depending on the policy holders' financial priorities 7

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investment decision. In any policy year, 4 switches are free of charge. The minimum switch amount is 2,000 Partial Withdrawal Benefit Partial withdrawal will be allowed after completion of 3 policy years & on payment of full 3 years premium. The minimum partial withdrawal amount is Rs.2, 000. Cover Continuance Option This option ensures that the insurance cover continues in case policyholder is unable to pay premiums, anytime after the payment of first 3 years premium. All applicable charges will be automatically deducted from the units available in his fund. The policyholder can restart premium payment any time thereafter. The policyholder needs to opt for cover continuance option, if he wishes to avail of this benefit. Additional Protection with Riders The policyholder can further customize his policy by adding riders, to enjoy additional protection at a nominal extra cost, as given below: Accident & Disability Benefit Rider- Benefits payable on death due to an accident. If the policyholder dies due to an accident, 100% of the rider sum assured is paid in addition to the basic sum assured. In case the policyholder dies in a land surface, mass public transport system wherein the policyholder was travelling as a fare-paying passenger, then 200% of the rider sum assured is paid. Benefits payable in case of permanent disability due to an accident If the policyholder survives an accident but becomes permanently disabled then the premium for the basic plan is completely waived off to the extent of the rider sum assured. Plus, 10% of the rider sum assured is paid for the next 10 years, which helps in providing that extra money and takes care of sudden financial setback that occurs after a tragic disability.

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Accident & Disability Benefit rider is available with Life Time Super, Premier Life Gold, Life Time Super Pension, Lifetime Plus, Smart Kid New ULRP, Save n Protect, Cash back, , Life Guard ROP, Life Guard WROP, Group Term Plan. Premiums paid under this rider are eligible for tax benefits under Section 80C. Critical illness benefit Rider- This rider provides protection against 9 critical illnesses, namely: Major organ transplants, Complete renal failure, Stroke, Paralysis, Heart attack, Valve replacement surgery, Major surgery of the aorta, CAGS (Bypass) and Cancer. Waiver of Premium Rider- n total and permanent disability due to an accident, all future premiums for both the base policy and rider(s) will be waived till the end of the term of the rider or death of the life assured, if earlier. Waiver of Premium rider is available with Life Time Super, Life Time Plus, Life Time Super Pension, Smart Kid New ULRP, Life Guard ROP, Life Guard WROP. Premiums paid under this rider are eligible for tax benefits under Section 80C. Rider charges for opted riders will be recovered by cancellation of units.

Other Conditions
Minimum/Maximum Entry Age : 0-65 years Minimum/maximum Term Minimum/Maximum Premium Premium Payment Frequency Minimum Sum Assured : 10-30 years : Rs.20,000 - Rs.300,000 per annum : Yearly, Half-yearly, Monthly : Annual Premium x (Term/2)

Charges applicable under the policy

Premium allocation charge
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Annual

Year 1

Year 2 25%

Year 3 3%

Year 4 3%

Year 5 onwards 1%

Premium Rs.20,000 to 25% Rs300,000

Other Charges
Switching Charges- 4 free switches allowed every policy year. Subsequent switches will be charged at Rs100 per switch. Policy Administration Charge- There would be a fixed policy administration charge of Rs60 per month. Mortality charge- Mortality charges will be deducted on a monthly basis on the Sum Assured. Indicative charges per thousand Sum Assured for a healthy male life is shown below: Age(yrs) Rs. 20 1.33 30 1.46 40 2.48 50 5.99

Fund Management Charge- The annual fund management charge, which will be adjusted from the Net Asset Value of various Funds, are as follows: Fund Charge Maximiser ll 1.50% p.a. Balancer ll 1.00% p.a. Protector 0.75% p.a. Preserver 0.75% p.a.

Partial Withdrawal Charge- One partial withdrawal in a policy Year would be free. All subsequent partial withdrawals in that policy year would be charged at Rs100 per withdrawal. (These charges will be deducted by cancellation of units)

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Research Methodolog y

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RESEARCH METHODOLOGY
RESEARCH DESIGN 1) Statement of the problem 2) Research objectives 3) Research Methodology Type of study Data collection Sampling Tools & techniques 4) Scope of study 5) Limitations

I. Defining Research Problem

Problem definition is the first & foremost part of the research process, without this research cannot be completed until and unless there is a problem or objective, the research cannot be initiated. Problem definition refers to the objective on which research has to be done, so problem definition in my project work is comparative study of unit link products of HDFC-SLIC & ICICI Prudential Life Insurance Company and to know which company can provide better service to consumer.

II. Objectives of the study:

To know about company history and organization structure. Provide an overview of unit linked plans of HDFC standard life insurance company ltd. & ICICI Prudential Company.
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 To make a comparative performance of unit linked plans To study the expectations of customers from insurance companies. Position of Insurance Companies in the mind of the consumer

III. Research Methodology

Research refers to search for knowledge. In other words research is defined as a careful investigation or inquiry especially through for new facts in any branch of knowledge. Research Methodology is one of the important aspects of any project. This gives us clear-cut view of method so used while gathering the information so needed for the completion of the report.

Type of Study: Study is exploratory & descriptive in nature. Data Collection: Two types of data sources will be taken into consideration
Primary Data Secondary Data Primary Data: The primary data are those which are collected a fresh and for the first time and thus happen to be original in character. Under this project direct collection of data from source of information & techniques such as personal interviewing and survey through questionnaire for customers has been considered. Secondary Data: Secondary data is one which has already been collected by someone else and which has already been passed through statistical processing. Under this project secondary data is been collected from journals, magazines, & web sites.

Developing Sample Design:

Sample design refers to number of items to be included in sample. It refers to the technique or procedure the researcher would adopt in selecting items from the sample.
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Type of universe: The universe is the entire group of items the researcher wishes to study and about which they plan to generalize. Under this project type of universe include people residing in Jaipur.

Sampling Unit: Sampling units are the persons, who have purchased the insurance plan in Jaipur. Size of Sample: Number of people surveyed. Generally large Sample gives more reliable result than small sample. The sample Consist of 50 respondents. Sampling Procedure: Sampling procedure refers to technique Used in selecting the items for the sample. Under this project selection of respondents is on the basis of convenience sampling. Tools and Techniques: For this survey Convenience- Sampling technique is used.

Scope of Study: This study is mainly confined to the customer of Jaipur.

Comparison is done on the basis of secondary sources. The entry of foreign MNCs and the conductive business environment fostered by the government, it is no wonder that the re-entry of private insurance has marked a second coming for the sector. In just five years, the sector has undergone a makeover, offering more choice, better services, quicker settlement, tighter regulation and greater awarenesss the environment become more and more competitive and services and products become alike, creating a differentiation is becoming extremely tough. The HDFC standard life insurance company and ICICI prudential life insurance are top private players in the market so I have taken both the companies for their comparative analysis.

Limitations of the Study:

Time for the completion of the project was too short to do an in-depth study. The facts and concepts of Respondents may be biased, imaginary and may be based entirely on their personal experience.

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 Most of question in the questionnaire was closing ended which reduced the scope for people to give free opinion. The sample size was not enough to reach on any exact conclusion. Study is based on primary or secondary data that may not be true. Most of the people are not interested to give the right data.

Comparative analysis of unit link plans

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Company Name Plan Name Age Sum Assured Premium

HDFC Std. Life Insurance Young star 18 to 65 Minimum-Rs.1,00,000 Maximum-No limit Minimum-Rs.10, 000 Maximum-no limit 3 years After 3 years: no charges Before lock in period-30% of outstanding premium OP= difference between regular premium expected & received in the first two years

ICICI Pru life Insurance Life Time Plus 0 to 65 Minimum-Rs.1,00,000 Maximum-1crore Minimum-Rs.20, 000 Maximum-3,00,000 3 years After 3 years: you get 92% After 4 years: you get 94% After 5 years: you get 96% After 6 years: you get 98% After 7years & above: you get 100% of fund value

Lock in period Surrender allowed

Death and Maturity

On Death-Sum Assured + future premiums will be given by HDFC on the behalf of policyholder. On maturity- Value of accumulated fund is given to the beneficiary.

On Death- Sum Assured + Fund Value will be given to the nominee. On Maturity-Fund value is given to the policyholder

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Fund Option

Term Rider Charges

1. Liquid Fund 2. Secure Managed Fund 3. Defensive Managed Fund 4. Balanced Managed Fund 5. Equity Managed Fund 6. Growth Fund For accident, Critical Illness- max. Rs.25,00,000

Maxi miser ll Balancer ll Protector ll Preserver

For accident, Critical Illness, Permanent Disability Fund Mgmt. ChargesFund Management Charges0.80% per annum Different Charges for Administration Chargesdifferent funds selected. Rs.20 per Month Maxi miser ll-1.50% Risk Benefit Chargesp.a. Depend upon the age of the Balancer ll-1.00% policyholder. p.a. Partial Withdrawal Charge Protector- 0.75% 6 partial withdrawal in a p.a. policy year is free. All Preserver- 0.75% subsequent partial p.a. withdrawal in that policy Administration Chargesyear would be charged at Rs.60 per Month Rs.250 per withdrawal. Partial Withdrawal ChargeFund switching Charges, 4 one partial withdrawal in a switches allowed every policy year is free. All policy year free. Subsequent subsequent partial switches will be charged at withdrawal in that policy Rs. 100 per switch premium year would be charged at Rs.100 per withdrawal. Switching Charges- 4 switches allowed every policy year free. Subsequent switches will be charged at Rs. 100 per switch.

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Data analysis and interpretation

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Respondent Profile: 1: - The source of Awareness of HDFC Standard Life Insurance Company:By analyzing the response of the above question we came to know about people associated with the HDFC standard life and the most prominent source which help the people to know about the HDFC standard life S. No. A B C D Particulars Print Media Electronic Media Agents Others Response 12 15 18 05

INTERPRETATION:In this chart, we can see that the agents play major role in awaring people about the HDFC-SLIC. Apart from this electronic media is also a source for awareness. So it is suggestive to improve the network of agents so that more people become aware about the Hdfc standard life insurance

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2: Perception of the people about the Insurance

By analyzing the above question we came to know about the different purposes for which the people take insurance because the preferences changes according to the people S. No. A B C Particulars Necessity for protection security Imposition of a burden of expenses A compulsory tool for tax saving Response 33 8 9

INTERPRETATION:As we all know or we can say security is another name of insurance and this has been proves by analyzing the above question. that is on the basis of above analysis, we can say that people mostly treat insurance as a protection instrument. 33 people think insurance as a necessity for protection & security. Some people treat it for taking the tax benefit.

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3: Number of people having any insurance policy By analyzing this question we can see that how many people are insured and see their future as a secured one

S.NO.

Particulars 1 YES 2 NO

Response 48 2

INTERPRETATION:We can easily see from the table and chart that most of the people are insured and very less are uninsured.this shows that the people are more sensitive towards security and need security for themselves and for their children

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4: People having the of different bank insurance policy

By analyzing this question we can see the different banks that provide the insurance to the customer and from which bank most of the people prefer to take insurance

S.NO.

Particulars 1 HDFC 2 ICICI 3 SBI 4 OTHERS

response 17 11 8 14

INTERPRETATION:It is very clear from the above chart and table that most of the people are interested and taken loan from the HDFC standard life insurance.This shows that the HDFC is providing with more customer catching and oriented policies which satisfies the customer .

5: - Main consideration that a customer looks at while purchasing an Insurance Policy.

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The relevance of this question is very high because the response of this question makes us to know that what really customers want in their insurance policy S. No. A B C D E Particulars TAX SAVING PROTECTION PENSION INVESTMENT Response 5 15 26 2 2

INTERPRETATION:Protection and saving is the foremost priority of the people in todays world. Thus On the basis of above analysis, it is very clear that people purchase insurance policy mostly for the protection purpose so use to purchase traditional plans. The second priority is been given to saving by the customers

6: -Factors of the company influence the decision making of customer while purchasing Insurance from the company.
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The purpose of this question is to know about the factors which highly affect the decision of the customer when they purchase a insurance policy. The response of this question help the company to improve the parameter which have the greater impact on the decision the customer and should take steps in the area where they lack behind. S. No. A B C D E Particulars Standing and goodwill of the company Product range of the company Advertisement being released by the company Services being given by the company Returns of bonus declared by the company Response 23 4 2 9 12

INTERPRETATION:On the basis of above analysis, we can say that people prefer the companies those have very highly goodwill in the market. Thus it is very important for the company to maintain its goodwill if they wants to grow and sustain in the market and apart from this while purchasing them also use to give more weight age to return also.

7: -Plan that a respondent prefers to buy

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This question helps to know about the preference of the customer in respect to the various plans available in insurance industry. And the highest preference given by the customer to a plan should be more improved with new offers at a regular pace plan S. No. A B C D Particulars Protection Plan Investment Plan Pension Plan Children Plan Response 23 10 5 12

INTERPRETATION:As we already seen in the analysis of the above questions that people take insurance mainly for the protection purpose and from the above question analysis, we can say that people prefer to buy protection plans and the secondary position in the preference of the plans is on children plans mostly.

8: - Customers expectations from Life Insurance Companies

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This question is more important from the point of company because from the response of this question we came to know about the need and want of customer which they want in their policy from the company. The company who is providing all these services can improve them and those who are not having such offers can add them to their insurance policy plan. S. No. A B C D Particulars Innovative Products Reasonable Premium Better Customer Service High Risk Coverage Response 4 12 23 11

INTERPRETATION:In the old time producer was the king but now customer is the king so the preferences of the customer are given the highest priority and it is very important for the company to give the best customer service so that more and more customer get associated with the company and associated customer remains there with the company for the longer period. And on the basis of above analysis chart, we can say that people expect better customer service from the insurance companies & reasonable premium on their investment.

9: - HDFC Standard Life Insurance Company provides better facilities than ICICI Prudential Life Insurance Company

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This question helps to know about the best company between ICICI and HDFC providing the facility of insurance policy S. No. A B C Particulars Yes No Cant say Response 17 1 32

INTERPETATION:Among the two companies more people prefer the HDFC more than the ICICI. but On the basis of above analysis, we can say that people are not aware about these companies so we can not come on any conclusion.

10: satisfaction with the plan which customer owe in their insurance policy

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It is very necessary that people should get satisfied what they take but at times it happens that we get what we want didnt may because of scarcity of the plans available with the companies. These question responses will tell us the unsatisfactory acceptance of the customer S. No. A B C Particulars Yes No I havent bought any Response 33 8 9

INTERPETATION:On the basis of above analysis, we can say that people are satisfied with the plans they have bought. But there are many people who are not satisfy with the plans they opted for and some are confused with their option.

FINDING

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 Agents play major role in awareness about the benefits of insurance. People think insurance as a protection tool. People purchase insurance policy mostly for protection purpose and some of people for saving. The goodwill of the company also attracts customers toward an insurance company. People also take insurance policy as a security for their children.

CONCLUSION

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On the basis of my study, I conclude that, both the companies are providing very good facilities to their customers. HDFC Standard Life Insurance is the one that is providing wavier of premium to its customer in case of death of the life assured, whereas ICICI is not providing this facility to its customers. Both the companies have same lock in period i.e.3 years. Surrender charges of these companies are different from each other. On maturity, both the companies provide the amount equal to the market value of the units. Charges taken to manage the fund are different in both the companies.

SUGGESTIONS
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 Advertisement should be done on television and especially Posters and Banners. This will greatly help in raising awareness level. Insurance Companies should show more commitment with the customers. Private companies give better services to the customers as compared to public companies. The private company should create good relations and communication. Private companies should collaborate to spread awareness regarding the benefits of insurance plans provided by the Private Companies. Agents have got maximum influence on customers. They are the one who introduces the prospect to different policies. So agents should be given fullfledged training and the training should be strict.

Bibliography
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WEBSITES

www.hdfcinsurance.com www.economictimes.com www.irdaindia.com www.bimaonline.com www.google.com www.iciciprulife.com www.wikipedia.org

BROUCHERS
HDFC Standard Life Insurance ICICI Prudential Life Insurance

BOOKS
Indian financial system Insurance law & regulations Elements of banking and insurance

MAGAZINE Professional Bankers by the ICFAI Business University Press

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Questionnaire
Consumers Behavior towards various Investment and Insurance Products Name Occupation:a) Govt. employee b) Private employee c) Self employed Q.1: How do you know about HDFC Standard Life Insurance Company? a) Print Media b) Electronic Media c) Agents d) Others Q.2: What do you think about insurance? a) Necessity for protection security b) Imposition of a burden of expenses c) A compulsory tool for tax saving Q.3: Do you have any insurance policy? a) Yes b) No Q.4: If yes, which Banks insurance policy you have? a) HDFC b) ICICI c) SBI d) OTHERS Q.5: Main consideration that you look at while purchasing an insurance policy. a) Tax b) Saving c) Protection d) Pension e) Investment Q.6: What do you see while purchasing an insurance policy from the company? a) Standing and goodwill of the company b) Product range of the company c) Advertisement being released by the company d) Services being given by the company e) Returns of bonus declared by the company contact details

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Q.7: Which plan would you like to buy? a) Protection Plan b) Investment Plan c) Pension Plan d) Children Plan Q.8: What do you expect from HDFC Standard Life Insurance Company? a) Innovative Products b) Reasonable premium c) Better Customer Service d) High risk coverage Q.9: Do you think that HDFC Standard Life Insurance Company provides better facilities than ICICI prudential life insurance company? a) Yes b) No Q.10. Are you satisfied with the plan you bought? a) Yes b) No c) I havent bought any

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