PROJECT REPORT

On
A STUDY ON COMPARATIVE ANALYSIS OF ULIPS AND

MUTUAL FUNDS
FOR
THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINSTRATION
FROM GGS IP UNIVERSITY
DELHI

BATCH: 2013-2015
SUBMITTED BY:

SUBMITTED TO:

Name of the student

Name of the faculty supervisor

AMARJEET YADAV

DR. UMA LUTHRA

MBA 10

ARMY INSTITUTE OF MANAGEMENT & TECHNOLOGY,

GREATER NOIDA (UP) 201306

ACKNOWLEDGEMENT

I want to show my sincere gratitude to all those who made this study possible. First of
all I am thankful to the helpful staff and the faculty of Army Institute of Management
and Technology. Second I would like to extend my sincere thanks to my Industry
Guide, Sanjeev kumar(AM), for his/her untiring cooperation. One of the most
important tasks in every good study is its critical evaluation and feedback which was
performed by my faculty guide Prof.Uma Luthra. I am very thankful to my Faculty as
well as Industry guide for investing his precious time to discuss and criticize this
study in depth, and explained the meaning of different concepts and how to think
when it comes to problem discussions and theoretical discussions. My sincere thanks
go to my Institute and family, who supported and encouraged me.

Amarjeet Yadav
Course MBA10

Certificate of Originality

I, Mr. AMARJEET YADAV , Roll No.______________ of MBA 10

batch of Army Institute of Management & Technology has
undergone a Summer Internship in ADITA BIRLA MONEY MART
PVT.LTD(organization) for a duration of 8 weeks on a project title
COMPARATIVE ANALYSIS OF ULIPS AND MUTUAL FUNDS
hereby declare that this project is my original piece of work.

Signature of the student:

Student Name:
Date

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr/Ms_______________ of MBA 10 batch from

Army Institute of Management & Technology, Greater Noida has
undergone Summer Internship Project in our organization. His/her
project title was _________________________________, supervised
under Mr/Ms _____________________(Industry Mentor/ Guide) from
_________June 2014 to _______July 2014. His/ her conduct and effort
during the Internship is highly appreciable.

Authorised Person
Signature
Name
Designation
With stamp

Supervisor Certificate

This is to certify that Mr. AMARJEET YADAV a student of Master of

Business Administration, Batch MBA-10, Army Institute Management &
Technology, Greater NOIDA, has successfully completed his project under my
supervision.
During this period, he worked on the project titled COMPARATIVE

ANALYSIS OF ULIPS AND MUTUAL FUNDS in partial fulfillment

for the award of the degree of Master of Business Administration of GGSIP
University, Delhi.

To the best of my knowledge the project work done by the candidate has not
been submitted to any university for award of any degree. His performance
and conduct has been good.

Name of the faculty supervisor

AIMT-Gr. NOIDA
Date:

TABLE OF CONTENTS

1.COVER AND TITLE PAGE

a) Certificate of the company

PAGE NUMBER
Front page

b) Bonafide certificate

c) Acknowledgement

d) Preface

e) Declaration given by student

f) Table of contents

g) Executive summary

2. INTRODUCTION TO PROJECT
a) Introduction

9-19

b) Scope of the study

c) Objective of the study

3.RESEARCH METHODOLOGY
a)Conceptual and theoretical review

43-44

b) Research review

45

4. DATA ANALYSIS AND INTERPRETATION

A) Analysis part 1

47-54

B) Analysis part 2

55-66

5. CONCLUSIONS
a) Facts and findings

68

b) Limitations of the study

69

c)Suggestions/Recomme...............
d) Conclusion
Bibliography..

EXECUTIVE SUMMARY
Insurance in India is booming, but not to level comparative with the developed economics such
as Japan, Singapore etc.Also linearization of the Insurance sector has provided huge self
employment opportunity. Insurance is a federal subject in India. The insurance sector has gone
through a number of phases and changes. Since 1999, when the government opened up the
insurance sector by allowing private companies to solicit insurance and also allowing foreign
direct investment of up to 26%, the insurance sector has been a booming market. However, the
largest life-insurance company in India is still owned by the government.
While doing project at Reliance Life Insurance, I observed that unit managers were facing some
serious problem regarding the awareness of people about MUTUAL FUNDS AND ULIPS .The
Reliance Life Insurance and other insurance players are facing problem the same problem. To
find out the reason the main objective of the study is kept as COMPARATIVE ANALYSIS OF
MUTUAL FUNDS AND ULIPS
Inadequate information regarding the work of agents/financial consultant/agent advisors is the
main reason of attrition in Insurance industry.
The study is proposed to find out the difference difference mutual funds and tulips and to
compare them. So that a clear picture is depict before Investor. After analysis I came to the
conclusion that mostly people are unaware of tulips and mutual funds which includes the
executive of the company and investors too.
The project work is a sincere attempt to collect the information stating the various reasons for
attrition and suggests the useful measure for retention..

INTRODUCTION TO TOPIC

ULIPS (UNIT LINKED INSURANCE PLANS):The introduction of Unit Linked Insurance Plans has possibly been the single largest innovation
in the field of life insurance .It has addressed and overcome many difficulties and concern s that
customers had about life insurance liquidity, flexibility, and transparency.
These benefits are possible because ULIPs are differently structured products and leave many
choices to the policyholder. They are structured such that the protection (insurance) element and
the savings element (investment) can be distinguish and hence managed according to ones
specific needs, offering flexibility and transparency. Thus we can say it is such a product that
takes
care of multiple needs.
There were some factors which gave entry for ULIPs in the insurance market: - Firstly was the
arrival of private of private players, and ULIPs were the most significant innovation done by
them, and secondly was the decline of assured returns in endowment plans. Besides this as the
stock markets were booming which now has become the primary factor. As mentioned earlier
enhanced flexibility and merging of investment and insurance in a single entity that have really
endeared them to individuals.
ULIPs are also called as Bundled Policies.
According to Vijay Sinha ULIP is ideal for someone who is looking for a long term investment
product, is under-insured and is averse to taking a traditional life insurance product. Ulip
should be looked at from an investment as well as insurance point of view and not isolation
UNIT LINKED INSURANCE PLANS:Early the market of ULIPs was taken up Birla Sun; they were the first to capture the market in
this field. These are the insurance plans which are attached to Units Mutual Funds. The
premium amount received in this policy, some part is used in investment of funds and remaining
is used for insurance cover.
ULIPs are remarkably similar to, mutual fund in terms of structure and functioning: premium
payments are converted into units and net asset value (NAV) is declared regularly. Investors have
an option of choosing their fund according to their risk taking ability. They disclose all the
material facts most frequent and consistent (often quarterly or half-yearly) .Also investor has a
fairly good idea about expenses. The expenses which are considered are as follows:-

1) Mortality Rate: - These are charged by the life insurance company to cover the risk of an
eventuality to the individual.
2) Administration, sales/marketing Charges: - All life insurance companies incur certain
expenses on regular basis. Agents commission, sales & marketing expenses and overhead costs
incurred to run the day to day basis are some examples.
3) Fund Management Charges: - These charges are levied by the insurance company to cover
the expenses incurred by them on managing Ulip monies.
4) Ulip-fund Switch Charges: - These charges are borne by the individuals when they decide to
switch their, money from one type of fund to another.
5) Top-up Charges: A certain percentage is deducted from the top-up amount to recover the
expenses incurred on managing the same.
ULIPs are very different from the traditional policies because they are based on some
fundamentals of Mutual funds as different types of funds which are created wherein the
premiums which are received on the policy these are invested in these funds basically these
funds are of following types:a) Aggressive/Growth Fund:-Such funds invest a major portion in equity markets. They are
therefore considered to be high on risk parameter.
b) Debt Funds: - These types of funds invest the premium money in debt instruments like gsecs,
bonds and AAA rated securities. Such funds are low risk in nature.
c) Balanced Funds: - This fund is combination of growth & debt fund. This means its portfolio
consists of both equities and debt instruments. The risk for this fund is moderate.
d) Money Market/Liquid Funds:- Such a fund invests the premium money in short term liquid
instruments like bank deposits and money market instruments.
How ULIPs work
ULIPs work on the lines of mutual funds. The premium paid by the client (less any charge) is
used to buy units in various funds (aggressive, balanced or conservative) floated by the insurance
companies. Units are bought according to the plan chosen by the policyholder. On every
additional premium, more units are allotted to his fund. The policyholder can also switch among
the funds as and when he desires. While some companies allow any number of free switches to

the policyholder, some restrict the number to just three or four. If the number is exceeded, a
certain charge is levied.
Individuals can also make additional investments (besides premium) from time to time to
increase the savings component in their plan. This facility is termed "top-up". The money parked
in a ULIP plan is returned either on the insured's death or in the event of maturity of the policy.
In case of the insured person's untimely death, the amount that the beneficiary is paid is the
higher of the sum assured (insurance cover) or the value of the units (investments). However,
some schemes pay the sum assured plus the prevailing value of the investments.
ULIP - KEY FEATURES

Premiums paid can be single, regular or variable. The payment period too can be regular
or variable. The risk cover can be increased or decreased.

As in all insurance policies, the risk charge (mortality rate) varies with age.

The maturity benefit is not typically a fixed amount and the maturity period can be
advanced or extended.

Investments can be made in gilt funds, balanced funds, money market funds, growth
funds or bonds.

The policyholder can switch between schemes, for instance, balanced to debt or gilt to
equity, etc.

The maturity benefit is the net asset value of the units.

The costs in ULIP are higher because there is a life insurance component in it as well, in
addition to the investment component.

Insurance companies have the discretion to decide on their investment portfolios.

Being transparent the policyholder gets the entire episode on the performance of his fund.

ULIP products are exempted from tax and they provide life insurance.

Provides capital appreciation.

Investor gets an option to choose among debt, balanced and equity

funds.

MUTUAL FUND
A mutual fund is a professionally managed type of collective investment scheme that pools
money from many investors and invests typically in investment securities (stocks, bonds, shortterm money market instruments, other mutual funds, other securities, and/or commodities such
as precious metals). The mutual fund will have a fund manager that trades (buys and sells) the
fund's investments in accordance with the fund's investment objective. In the U.S., a fund
registered with the Securities and Exchange Commission (SEC) under both SEC and Internal
Revenue Service (IRS) rules must distribute nearly all of its net income and net realized gains
from the sale of securities (if any) to its investors at least annually. Most funds are overseen by
a board of directors or trustees (if the U.S. fund is organized as a trust as they commonly are)
which is charged with ensuring the fund is managed appropriately by its investment adviser and
other service organizations and vendors, all in the best interests of the fund's investor

A mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
share, debentures and other securities. The income earned through these investments and the
capital appreciations realized are shared by its unit holders in proportion to the number of units
owned by them.

Advantages of mutual fund

Professional management

Diversification

Low costs

Liquidity

Transparency

Flexibility

Tax benefits

REGISTRATION OF MUTUAL FUND:

Application for registration

1. An application for registration of a mutual fund shall be made to the Board in Form A by the
sponsor.
Application fee to accompany the application
2. Every application for registration under regulation 3 shall be accompanied by nonrefundable
application fee as specified in the Second Schedule.
Application to conform to the requirements
3. An application which is not complete in all respects shall be liable to be rejected:
Provided that, before rejecting any such application, the applicant shall be given an opportunity
to complete such formalities within such time as may be specified by the Board.

Furnishing information
4. The Board may require the sponsor to furnish such further information or clarification as may
be required by it.
Eligibility criteria
5. For the purpose of grant of a certificate of registration, the applicant has to fulfill the
following, namely :
(a) the sponsor should have a sound track record and general reputation of fairness and integrity
in all his business transactions.
Explanation : For the purposes of this clause sound track record shall mean the
sponsor should,

(i) Be carrying on business in financial services for a period of not less than five
Years; and
(ii) The net worth is positive in all the immediately preceding five years; and
(iii) The net worth in the immediately preceding year is more than the capital
Contribution of the sponsor in the asset management company; and
(iv) The sponsor has profits after providing for depreciation, interest and tax in three out of the
immediately preceding five years, including the fifth year;
(b) in the case of an existing mutual fund, such fund is in the form of a trust and the trust deed
has been approved by the Board;
(c) The sponsor has contributed or contributes at least 40% to the net worth of the asset
management company:
Provided that any person who holds 40% or more of the net worth of an asset
Management Company shall be deemed to be a sponsor and will be required to fulfill the
eligibility criteria specified in these regulations;
(d) the sponsor or any of its directors or the principal officer to be employed by the mutual fund
should not have been guilty of fraud or has not been convicted of an offence involving moral
turpitude or has not been found guilty of any economic offence;
(e) Appointment of trustees to act as trustees for the mutual fund in accordance with the
provisions of the regulations;
(f) Appointment of asset Management Company to manage the mutual fund and operate the
scheme of such funds in accordance with the provisions of these regulations;
(g) Appointment of a custodian in order to keep custody of the securities 10[or gold and gold
related instruments and carry out the custodian activities as may be authorized by the trustees.

Consideration of application
8. The Board, may on receipt of all information decide the application.
Grant of Certificate of Registration
9. The Board may register the mutual fund and grant a certificate in Form B on the applicant
paying the registration fee as specified in Second Schedule.
Terms and conditions of registration
10. The registration granted to a mutual fund under regulation 9, shall be subject to the following
terms and conditions:
(a) The trustees, the sponsor, the asset management company and the custodian shall comply
with the provisions of these regulations;
(b) The mutual fund shall forthwith inform the Board, if any information or particulars
previously submitted to the Board was misleading or false in any material respect;
(c) The mutual fund shall forthwith inform the Board, of any material change in the
Information or particulars previously furnished, which have a bearing on the
Registration granted by it;
(d) Payment of fees as specified in the regulations and the Second Schedule.

Rejection of application
11. Where the sponsor does not satisfy the eligibility criteria mentioned in regulation 7, the
Board may reject the application and inform the applicant of the same.

Payment of annual service fee:

12. A mutual fund shall pay before the 15th April each year a service fee as specified in the
Second Schedule for every financial year from the year following the year of registration:
Provided that the Board may, on being satisfied with the reasons for the delay permit the mutual
fund to pay the service fee at any time before the expiry of two months from the commencement
of the financial year to which such fee relates.

WHAT ARE VARIOUS TYPES OF MUTUAL FUNDS

A common man is so much confused about the various kinds of Mutual Funds that he is afraid of
investing in these funds as he cannot differentiate between various types of Mutual Funds with
fancy names. Mutual Funds can be classified into various categories under the following heads:(A) ACCORDING TO TYPE OF INVESTMENTS: - While launching a new scheme, every
Mutual Fund is supposed to declare in the prospectus the kind of instruments in which it will
make investments of the funds collected under that scheme. Thus, the various kinds of Mutual
Fund schemes as categorized according to the type of investments are as follows :(a) Equity funds / schemes
(b) Debt funds / schemes (also called income funds)
(c ) Diversified funds / schemes (also called balanced funds)
(d) Gilt funds / schemes
(e) Money market funds / schemes
(f) Sector specific funds
(g) Index funds
(B) ACCORDING TO THE TIME OF CLOSURE OF THE SCHEME :- While launching a
new schemes, Mutual Funds also declare whether this will be an open ended scheme (i.e. there is
no specific date when the scheme will be closed) or there is a closing date when finally the
scheme will be wind up. Thus, according to the time of closure schemes are classified as
follows:(a) Open ended schemes
(b) Close ended schemes

(C) ACCORDING TO TAX INCENTIVE SCHEMES :- Mutual Funds are also allowed to
float some tax saving schemes. Therefore, sometimes the schemes are classified according to
this also:(a) Tax saving funds
(b) Not tax saving funds / other funds
(D) ACCORDING TO THE TIME OF PAYOUT :- Sometimes Mutual Fund schemes are
classified according to the periodicity of the pay outs (i.e. dividend etc.). The categories are as
follows :(A) Dividend paying schemes
(b) Reinvestment schemes
The mutual fund schemes come with various combinations of the above categories. Therefore,
we can have an Equity Fund which is open ended and is dividend paying plan. Before you
invest, you must find out what kind of the scheme you are being asked to invest. You should
choose a scheme as per your risk capacity and the regularity at which you wish to have the
dividends from such schemes.

SOME OF THE TERMS USED IN MUTUAL FUNDS

Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per
unit NAV is the net asset value of the scheme divided by the number of units outstanding on
the Valuation Date.
Sale Price: It is the price you pay when you invest in a scheme and is also called "Offer
Price". It may include a sales load.
Repurchase Price: - It is the price at which a Mutual Funds repurchases its units and it may
include a back-end load. This is also called Bid Price.
Redemption Price : It is the price at which open-ended schemes repurchase their units and
close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load / Front End Load: It is a charge collected by a scheme when it sells the units.
Also called, Front-end load. Schemes which do not charge a load at the time of entry are
called No Load schemes.

ULIPS VS MUTUAL FUNDS

ULIPs are all set to pose serious competition to mutual funds. Though ulips as an investment
avenue are closest to mutual funds in terms of their structure and functioning like disclosing their
NAVs daily etc.
ULIPs are essentially a long term commitment between the policyholder and the insurance
company and mutual funds are built to cater to the relatively short term need of the investor.
The investments are made with a shorter- term duration profile when compared to ulips.
The seemingly similar structure of both of them makes it vital for investors to be aware of the
fine distinctions in both the offering and make informed decisions. Following are some insurance
companies who offer ULIPs:

Reliance life insurance ,

Bajaj Allianz,

ING Vysya,

HDFC Standard,

HDFC Standard,

Birla Sun life,

Aviva Life Insurance,

Kotak Mahindra,

Max New York Life,

Met Life,

Sahara Life,

Following are Difference between ULIPs & Mutual Fund

DIFFERENCE BETWEEN MUTUAL FUND AND ULIPS

Points of Difference

ULIPS(Unit Linked Insurance MFs(Mutual Funds)

Plans)

1) Meaning :-

These are the Insurance policies It is an investment

which are linked to units
organization with a main
of Mutual Fund.

objective of collecting
funds from various
segments
of people and investing
the same in a variety of
Securities.

2) Primary Objective :-

Its main objective is investment Its objective is only

& protection
investments.

3) Investment Duration:

It works out for long term It works out to medium

investment only.
term, long term, & short
Term. Risky for short
term investors.

4) Insurance Cover :-

ULIPs provide insurance cover MF schemes do not

(except annuity products
cover the life risk and
the amount
which may be issued with/
without risk cover) and from
invested,
net
of
expenses, gets invested
the amount invested in ULIPs as per the
after netting out the risk
investment objective of
premium for life risk cover and the scheme
administrative expenses,
the insurer invests the balance as
per the objective of the
Specific ULIP product.

5) Expenses :-

Insurance companies have a In

MFs,

expenses

relatively free hand in

charged for
activities like

various

levying expenses on their ULIP

products with no upper
sales/marketing,
administration and fund
limits being prescribed by the
regulator, the Insurance
management are capped
(for example in equity
Regulatory and Development oriented
Authority (IRDA)
mutual funds, expenses
are capped at 2.5% per
annum) as per the
guidelines
of
the
Securities and
Exchange Board of
India (SEBI). Similarly
funds
usually charge their
investors entry (at the
timing of
making an investment)
and exit (at the time of
sale)
Loads.
6) Flexibility :-

Flexibility is limited to moving Very flexible. Plenty of

across different funds
scope
to
correct
mistakes if
Offered with policy. Correcting
mistakes can turn out to
any wrong investment
decisions are made.
be expensive. Moving funds Portfolios
from one ULIP to another
can be easily shuffled in
ULIP of a different fund house MFs.
can be expensive.

7) Liquidity :-

Limited liquidity .It need to stay Very liquid. MF units

invested for minimum
can
be
sold
any

years before redeeming

time(except
ELSS).

8) Investment Objective

ULIPs can be used for achieving MFs can be used as

only long term
vehicle for investments
to
objectives (Children education,
marriage, Retirement
achieve
different
objectives.(E.g.: Buying
Planning).
a car three
Years from now. Down
payment for a home five
Years
from
now.
Childrens education 10
years from
now.
Childrens
marriage 15 years from
now.
Retirement planning 25
years
from
now.
Medical
Expenses
after
retirement 25 years from
now).

9) Flexibility of Switchovers
:-

Insurance companies
their ULIP investors

permit In MFs an investor

usually is subjected to
exit load
usually 3-4 switch overs free of
charge and thereafter
and/or entry load when
he/she
exercises
a
every additional switch over switch over
beyond the permissible limit
Option.
Is permitted at some cost.

10) Minimum Lock- in

Period

11) Investment styles

and Portfolio
Disclosures :-

12) Tax benefits and

implications :-

ULIPs currently are with a MF schemes (except

minimum lock-in of three
ELSS which has a lockin of
Years.
Three years) do not have
any such lock in.

Insurance
companies Most MFs usually declare their
declare their portfolios once portfolios on monthly
in a
basis and MFs are generally known
quarter and their investment to be more active
style are less aggressive and
in fund management
they
resort
to
less
churning.
Irrespective of the nature of In the case of mutual funds, only
the plan chosen by the
investments in tax saving
investor,
all
ULIP funds i.e. Equity-linked savings
investments qualify for schemes
deductions up
(ELSS) are eligible for Section 80C
To one lakh under Section benefits
80C of the Income Tax Act.
On the other hand, in the case of
In
equity-oriented
the case of ULIPs the
maturity proceeds are tax- mutual funds, if the investments are
held for a period
free.
over 12 months, the gains are tax
free and if sold
within a 12-month period they attract
short-term
Capital gains tax @ 10 percent.
Similarly, debt-oriented funds attract
long-term
capital gains tax @ 10 percent while

short-term
capital gain is taxed at the investors
marginal tax
rate.

SCOPE OF THE STUDY

THE PROJECT INCLUDES THE FOLLOWING AREAS:
(1)IN THIS PROJECT, THE STUDY RELATED TO THE COMPARITIVE STUDY OF
MARKET LINKED INSRANCE PLANS WITH MUTUAL FUND
(2)SURVEY OF 50 INDIVIDUALS IS ALSO INCLUDED
OBJECTIVES OF STUDY :
PROJECT STUDY

Comparative Study of Unit Linked Insurance plans and

Mutual Funds
MAIN OBJECTIVE:

To study and compare the Unit Linked Insurance Plans and Mutual Fund.

To know the difference in investing in ULIP & Mutual Fund.

To know whether these two options are substitute for each other or not.

SUB OBJECTIVES
(1) To know the factors that influence investors while taking investment decisions.
(2) To know the merits & demerits of mutual funds.
(3) To know investing in Mutual Fund is worthy or not .
(4) To know advantages & disadvantages of investing in ULIP.
(5) To know the suitability of ULIP & Mutual Fund to different investors.
(6) To know Customer awareness and preferences

INDUSTRY PROFILE
INSURANCE
Is

form

of risk

management primarily

used

to hedge against

the risk of

contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from
one entity to another, in exchange for payment.
An insurer is a company selling the insurance. An insured or policyholder is the person or entity
buying the insurance policy.
The insurance rate is a factor used to determine the amount to be charged for a certain amount of
insurance coverage, called the premium.
Risk management, the practice of appraising and controlling risk, has evolved as a discrete field
of study and practice.
The transaction involves the insured assuming a guaranteed and known relatively small loss in
the form of payment to the insurer in exchange for the insurer's promise to compensate
(indemnify) the insured in the case of a large, possibly devastating loss. The insured receives a
contract called the insurance policy which details the conditions and circumstances under which
the insured will be compensated.

INSURANCE IS A FEDERAL SUBJECT IN INDIA.

The insurance sector has gone through a number of phases and changes. Since 1999, when the
government opened up the insurance sector by allowing private companies to solicit insurance
and also allowing foreign direct investment of up to 26%, the insurance sector has been a
booming market. However, the largest life-insurance company in India is still owned by the
government.
IRDA controls all the Insurance business in India. They are setting structure and boundaries for
the insurance companies to act upon. Starting from licensing to approving the products, IRDA
directs the companies in India. They also protect customer interests in the country.

INSURANCE COMPANIES IN INDIA APPROVED BY IRDA

Bajaj Allianz Life Insurance Company Limited Birla Sun Life Insurance Co. Ltd

HDFC Standard life Insurance Co. Ltd

ICICI Prudential Life Insurance Co. Ltd.

ING Vysya Life Insurance Company Ltd.

Life Insurance Corporation of India

Max New York Life Insurance Co. Ltd

Met Life India Insurance Company Ltd.

Kotak Mahindra Old Mutual Life Insurance Limited

SBI Life Insurance Co. Ltd

Tata AIG Life Insurance Company Limited

Reliance Life Insurance Company Limited.

Aviva Life Insurance Co. India Pvt. Ltd.

Shriram Life Insurance Co, Ltd.

Sahara India Life Insurance

Bharti AXA Life Insurance

Future Generali Life Insurance

IDBI Fortis Life Insurance

Canara HSBC Oriental Bank of Commerce Life Insurance

Religare Life Insurance

DLF Pramerica Life Insurance

Star Union Dai-ichi Life Insurance

Agriculture Insurance Company of India

Apollo DKV Insurance

Cholamandalam MS General Insurance

HDFC Ergo General Insurance Company

ICICI Lombard General Insurance

IFFCO Tokyo General Insurance

National Insurance Company Ltd

New India Assurance

Oriental Insurance Company

Reliance General Insurance

Royal Sundaram Alliance Insurance

Shriram General Insurance Company Limited

Tata AIG General Insurance

United India InsuranceUniversal Sompo General Insurance Co. Ltd

HISTORY OF MUTUAL FUND

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can
be broadly divided into four distinct phases: First Phase 1964-87
An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve
Bank of India and functioned under the Regulatory and administrative control of the Reserve
Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of
India (IDBI) took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of
assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established
its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families.

Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 cores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 cores of assets under management
and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 cores under 421
schemes

RESEARCH METHODOLOGY
CONCEPTUAL AND THEORETICAL REVIEW
RESEARCH

DESIGN Descriptive research design

Descriptive research design is those studies which are concerned with describing the
characteristics of a particular individual, or of a group. in this study like, observation,
questionnaires, examination of records etc are used for such studies.

DATA

SOURCES- Primary data and secondary data

RESEARCH

APPROACH Face to face interview, observation, individual depth

interview
RESEARCH

INSTRUMENT Questionnaire.
Questionnaire method:
In the study questionnaire was send to the person concerned with a request to answer the
questions and return the questionnaire. a questionnaire consists of a number of questions typed in
definite order on a set of forms. The respondents had to answer the question on their own.

DATA COLLECTION:
PRIMARY DATA:
The primary data are those which are collected afresh and for the first time; and thus happen to
be original in character. In this study data is collected through observation, guidance of the
supervisor and data is collected through questionnaire.
1) Use of a Questionnaire for carrying out a survey

2) Presentation given by the Advisors of ABMM.

3) Data explaining the working of the ULIPs and mutual funds.

SECONDARY DATA:
In this study secondary sources of data were the various websites and insurances manuals .The
mainly provided information about the insurance sector and the companys profile. These help in
gaining knowledge about industry.
1) Books
2) Newspapers
3) Magazines
4) Newsletter
5) Internet
6) Television
7) Booklet
8) Policy Brochures

RESEARCH REVIEW
SAMPLING
It is the process of obtaining information about an entire population by examining only a part of
it.
SAMPLING UNIT-Individuals
SAMPLE SIZE-50 units
SAMPLING TECHNIQUE-Random convenience
SURVEY PERIOD WAS 6 WEEKS STARTED FROM 4th JULY TO 15th AUGUST 2012

DATA ANALYSIS AND INTERPRETATION

FINDINGS
(CUSTOMERS SURVEY)
ANALYSIS PART 1

MUTUAL FUND

1. Which of the following investment options would you prefer?

Analysis: 44% of respondents have invested in bank deposits,12% in

Postal savings, 4% of respondents in shares and bonds and2%
In mutual funds, 3% in Insurance Policy and 34% have invested
In both fixed deposit and postal savings.

2. Have you invested in the following? (Please tick)(if yes, go to Q no.4)

Analysis:

According to the above table 6 % of the respondents have

Invested in Mutual Funds and58 % respondents have invested in Insurance

Policies, 36% have invested in both the Mutual Fund and Insurance Policies.

3. What is the reason for not investing?

Analysis: According to the above table 5 %of the respondents are

Uncertain to invest in Mutual Funds. 1% of the respondents think it is high cost
And 3 % of them are not interested in investments, 90% of respondents have
Invested in either investment.

4.

Do you think investing in Mutual Fund is worthy?

Analysis:

According to the above table 55% of the respondents think

that investing in Mutual Funds is worthy and 43% of the respondents think
it is not , 2 % have not responded.
5.

According to you why an individual should invest in Mutual Fund?

Analysis:
According to the above table 5% of the respondents say that they have invested to
multiply their money, 43 % of the respondents have invested for moderate returns with moderate
risk, 16 % of the respondents have invested to have a faster rate of growth, 1 % of the
respondents have invested as other reason and 35% have invested so ,not responded for question.

6.

Do you have any plan of investing in near future? (if no go to Q no.8)

Analysis:
According to the table 8 % of respondents plan to invest in a Mutual Fund and 90
% do not plan to invest ,2% have not responded.
7.

When do you plan to invest?

Analysis:
According to the table 25% of respondents plan to invest in a month, 12.5%
during a month to a year and 37.5% plan to invest after a year and 25% have not responded.

8.

How likely are you to recommend investment in Mutual fund to your friend?

Analysis:
According to the above table 54 % of the respondents definitely will recommend about the
investment of Mutual Funds. 44 % of the respondents might or might not recommend and 2%
have not responded.

ANALYSIS PART 2
ULIPS
1. Are you aware of ULIP concepts in Life Insurance?

Analysis:
According to the table 51% of respondents are aware of ULIP concepts and 49 % are not aware.
This shows investors are still not aware of Unit Linked Insurance Plan.

2. In which companies have you invested?

Analysis:
According to the table 66% respondents have invested in LIC, 3 % have invested in ICICI PRU,
23 % in BAJAJ ALLIANZ, 9% in AVIVA and 1 % in others which include RLIC.
3. What made you to go for that company?

Analysis:
According to the table 27% of respondents have invested in the company for the
Brand name,15% have invested for the service provided, 39% have invested for the customer
relationship the company maintains. 14% of respondents have invested for the better policy
options available, 1% have invested for other reason and 4% have not responded.

4. What extra benefits would you like to have along with life cover?

Analysis: According to table the extra benefit customer would like to have is 53 % Want a
family income benefit, 15% would like to have critical illness Benefit, 1% would like to have
riders,8% would like to have more return and 2% would like other benefit and 21% would like
to have family income benefit and critical illness benefit along with life cover.
5. What is your expectation from investment plan?

Analysis:

According to table 59% of respondents expect security, 3% expect high return and 1% expect
minimum premium,28% expect easy claim and 2% expect maximum sum assured ,7% expect
security and easy claim.
6. Are you aware of ULIP of Aditya Birla ? (If no go to question no 10)

Analysis:
According to table 1% of customers are aware of traditional plan, 3% are aware of
Retirement plans, 5% are aware of Life time and 2% are aware of Life Link Super, 89% have
not responded.
7. Do you hold Unit linked insurance plan?

Analysis:

According to table 27.27% of customers hold Unit Linked Insurance Plan and
72.72 % do not hold Unit Linked Insurance Plane
8. What did you like about Unit Linked Insurance Plan?

Analysis:
According to table 18.18% of customers liked liquidity and 9.09% others and
72.72 % have not responded.
9. How do you rank Unit linked plan of RLIC as compared to Mutual Fund?

Analysis:
According to table 18.18% of customer has ranked RLIC as good
And 9.09% have ranked as satisfactory, 72.72% have not responded.
10.

Do you have any plan of investing in ULIP in near future? (If no go to Q no.12)

Analysis: According to the table 6 % of respondents plan to invest in a ULIP and 91 % do not
plan to invest in near future, 3% have not responded.
11. When do you plan to invest?

Analysis:
According to the table 16.66% of respondents plan to invest in a month,
66.66% plan to invest after a year, 16.66 % have not responded.
12.

How likely are you to recommend investment in ULIP to your friends?

Analysis:
According to the above table 53 % of the respondents definitely will recommend about the
investment of ULIP. 42 % of the respondents might or might not recommend and 5% have not
responded.

CONCLUSION
OVER ALL FACTS AND FINDINGS
Mutual funds are essentially short to medium term products. The liquidity that these
products offer is valuable for investors.
ULIPs, in contrast, are now positioned as long-term products and going ahead, there will
be separate playing fields for ULIPS and MFs, with the product differentiation between
them becoming more pronounced.
ULIPs now do not seek to replace mutual funds, they offer protection against the risk of
dying too early, and also help people save for retirement.
Insurance has to be an integral part of ones wealth management portfolio.
ULIPs and mutual funds are, therefore, not likely to cannibalize each other in the long
run.

 While ULIPs as an investment avenue is closest to mutual funds in terms of their

functioning and structure, the first and foremost purpose of insurance is and will always
be protection. The value that it provides cannot be downplayed or underestimated. As
an instrument of protection, insurance provides benefits that no investment can offer.
It is important for an investor to understand his financial goals and horizon of investment
in order to make an informed investment decision. The decision to invest in either a
mutual fund or a ULIP should depend on the time period of investment, individual
financial goals as well as risk taking appetite, and its about time the industry and
customer realize it.
Thus we can say that ULIPs are different from Mutual funds, and the basic difference
between the two is the Insurance cover i.e. protection. Also
The ULIPs are for long term investments and Mutual Funds long as well as short term.

LIMITATIONS
The time constraint was one of the major problems.
The study is limited to the different schemes available under the mutual funds and Tulips
selected.
The lack of information sources for the analysis part.

SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS FOR MUTUAL FUNDS

According to agents, private mutual funds advertisement and logo concept

Plays major role in awareness about the product. So mutual funds should also
Do aggressive ad campaign with the celebrity endorsement and innovative and
Creative logo should be there which matches the product and signifies the strength
Of the type.

An agent in continues should be increased to boost sales.

As the mutual fund industry is growing and facing tough competition from
Foreign brands, mutual funds should focus on product awareness and product
Preference advertising.

There are some investors who have invested in mutual funds, but they are

Actually not aware about mutual funds because of the lack of awareness of mutual
Funds, so the company should conduct such a awareness programs that the people
Should come to know about the schemes of mutual funds.

Advertising of the schemes in newspaper should be done aggressively so that

Investors get to know about the schemes performing well.

The fund should emphasize its unique and positive features to the brokers
Investors and corporate.

The organization should focus on balanced scheme as they are the most
Preferred scheme.

SUGGESTIONS FOR ULIPS

Most of the respondents are not aware of Unit Linked Insurance Plan; the awareness
programmed for non-investor should be increased by different Medias like TV,
Magazines, & News Paper.

The company has to provide proper training to advisors or marketing skills to improve
the marketability of products.

Educate people by arranging a meeting or fair for investors and explaining about how
ULIP works because investors are not aware of ULIP as an investment option and
investors do not have the sufficient knowledge of the basic concepts of ULIP & about the
operating of ULIP.

Complete information should be provided regularly to the advisors as well as to the

investors to keep them updated about the developments.

Many of the investors say that they are ready to recommend about investment to friends,
so the company should approach the

Investors through the distributors and explain about the Insurance schemes.

RECOMMENDATIONS TO THE COMPANY:ULIPS:

The schemes should be designed in such a way which would also suit
to the pockets of the lower and middle income groups.

The premium should be quite less so that even lower class of people
can invest in such policy

At the maturity the policyholder should not only get NAV (Net Asset
Value) amount but also the SA (sum Assured) i.e. guaranteed SA.

The charges should be reduced.

Term of the policy should be reduced.

The premium amount should be reduced.

The charges can be revised.

Additional Support Required by the Agents from the Company:-

- Field support i.e. the company should provide a staff wherein they will get a field work done
from them.
- The company should provide proper database to their agents. For the database the company can
also have some tie-ups with some of the companies.
- There should be monthly meetings held by the company for the agents wherein they can solve
their problems and suggest the new ways for the marketing of products.
- There should be separates Claim Settlement Cell so that the company as well as the agents do
not face any problem while settlement of claims.
- Also the company can support the agents by having some kind of publicity.

ANALYSIS:Thus from this survey I would say that the company should not only target the middle age and
lower class group but also retired and pensioners.
Also the ULIPs are gaining lot of popularity but while taking these ULIPs one should take few
measures as in:
1) To know to the ULIP plan, which of the insurance type is adjoined term or endowment.
2) While choosing of fund there should be balanced of equity and debt or if equity some small
percentage of debt should be taken so that some returns are fixed.
3) And consult to the investment advisor.

CONCLUSION OF THE SURVEY

Life insurance sector is one of the key areas where enormous business potential exists.
Life insurance is a form of insurance that pays monetary proceeds upon the death of the

insured covered in the policy. The basic urge in man to secure himself against any form
of risk and uncertainty.

After comparing Unit Linked life insurance plans and Mutual Fund it can be concluded
that most of respondents are not aware of ULIP products of RLIC.

There is the difference between expenses of a ULIP as compared with the expenses of a
mutual fund. If investor is looking for a long-term investment avenue with an insurance
cover, then ULIP is the product for them and if they are looking at a product that helps
investor to focus purely on investment and returns over a medium term, then mutual fund
is suitable.

CONCLUSION
At the end of the project the conclusion which can be drawn is that the mutual fund
industry is going to be one of the emerging avenues for the investors in the time to come.
Most of the people show less interest in the mutual funds.
Most of the people who were aware of the funds too were not interested in investing their
saving in the Mutual Funds.They were not confident of the safety and security of the
investments in Mutual Funds.
People normally give preference to the bank deposits schemes as compared to the mutual
funds because of the risk factor associated with it.
Most of the people are mainly look for the profitability in the mutual fundswhich
becomes difficult for them because they normally invest their larger proportion of their
amount in debt instruments as compared to equity which gives less return.
Many people also do not invest in mutual funds because of the fact that the cost is high in
mutual funds, as they have to pay entry and exit load attached to the fund.
People normally go through distribution companies while investing in the mutual funds
and hence can avoid any fraud and flaws associated with the investments.

BIBLIOGRAPHY
A. BOOKS
1. Insurance Principles & Practices
M.N.Misra S Chand Publications.
2. Insurance
M.J.Mathew RBSA Publications.
3. Insurance Fundamentals, Environment & Procedures
B.S.Bodla, M.C. Greg, K.P. Singh
Deep & Deep Publications of 2003
4. Insurance Institute of India IC 33------S.J. Gidwani
5. Taxman Life Insurance agent ---- P.R. Khanna, Taxmann allied service pvt ltd

B. NEWSPAPERS
1. Economic Times
2. Times of India
3. ESCOLIFE PAPER on Insurance by Ritu Nanda
Vole 2, Issue viii June, 2007.

C. MAGAZINES
1. Money Simplified --Vole 2, Feb 2007 ULIPs how they fit in
2. Consumer Voice ---Vole 7, Issue 3

D. NEWSLETTER
1. Tata AIG Life Agency Newsletter
Vole 1, Edition 6 , March ,2007.

E. INTERNET
www.tata-aig.com
www.licofindia.com

www.iciciprulife.com
www.reliancelife.com
www.moneycontrol.com
www.personalfn.com
www.et.com
www.google.com
F. CNBC TV 18
G. BOOKLET on the Orientation Programme of Employees at Tata AIG
H. Policy Brochures of Tata AIG, ICICI Prudential, Reliance Life & LIC

ANNEXURE
QUESTIONNAIRE
This information is for our internal use only, will not be disclose to any other
organization/department
COMPARATIVE ANALYSIS OF MUTUAL FUND AND MARKET LINKED INSURANCE
PLANS
Name

Address

Telephone

Age

Occupation

Annual income

Marital status single or married

(age of child if applicable)

SECTION A
1. Which of the following investment options would you prefer?
a) Bank fixed deposit
b) Postal savings

c) Shares and bonds

d) Mutual funds
e) Insurances policies
f) Others
g)Bank FD and postal savings

2. Have you invested in the following? (Please tick)(if yes, go to Q no.4)

a) Mutual funds
b) Insurance policies
c) Mutual funds and insurance policies both
3. What is the reason for not investing?
a) Uncertainty
b) High cost
c) Not interested in investment
d) Others
e) Non respondents
4.

Do you think investing in Mutual Fund is worthy?

a) Yes
b) No
c) No response
5.

According to you why an individual should invest in Mutual Fund?

a) To multiply money

b) Moderate return with minimum risk

c) To have a faster rate of growth
d) Others
6.

e) Non respondent

Do you have any plan of investing in near future? (if no go to Q no.8)

a) Yes
b) No
c) Non respondent

7. When do you plan to invest?

a) A month
b) 1 month - 1 year
c) After 1 year
d) Non-respondent

8.

How likely are you to recommend investment in Mutual fund to your friend?

a) Definitely recommend
b) Might not recommend
c) Non respondent

SECTION B
1. Are you aware of ULIP concepts in Life Insurance?
a)Yes
b) No

2. In which companies have you invested?

a) LIC
b) ICICI PRU
c) BAJAJ ALLIANZ
d) RLIC
e) Others

3. What made you to go for that company?

a) Brand Name
b) Service
c) Customer Relationship
d) Better Policy Option
e) Others
f)Non Respondent
4. What extra benefits would you like to have along with life cover?
a) Family Income Benefit
b) Critical Illness Benefit
c) Riders
d) Returns
e) Others
f) Family Income Benefits and Critical Illness Benefits Both

5. What is your expectation from investment plan?

a) Security
b) High Return
c) Minimum Premium
d) Easy Claim
e) Maximum Sum Assured
f) Others
g) Security and Easy Claim

6. Are you aware of ULIP of ABMM? (If no go to question no 10)

a) Traditional Insurance Plan
b) Retirement Plan
c) Life Time Plan
d) Life Link Super
e) Non-Respondent

7. Do you hold Unit linked insurance plan?

a) Yes
b) No
8. What did you like about Unit Linked Insurance Plan?
a) Liquidity
b) Withdrawal
c) Flexibility
d) Others
e)Non-Respondent

9. How do you rank Unit linked plan of ABMM as compared to Mutual Fund?
a) Good
b) Satisfactory
c) Non-Respondents
10.

Do you have any plan of investing in ULIP in near future? (if no go to Q no.12)

a) Yes
b) No
c) Non Respondents

11. When do you plan to invest?

a) A Month
b) 1 Month- 1year
c) After 1 Year
d) Non-Respondents
12.

How likely are you to recommend investment in ULIP to your friends?

a) Definitely Recommend
b) Might Not Recommend
c)Non-Respondents