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SUMMER TRAINING REPORT

(MBA-035)

ñ USTOMER BEHAVIOR FOR LIFE INSURAN E,

GENERAL INSURAN E & MUTUAL FUNDS´

Submitted By:
NAME- DEEPAK SINGH
ROLL NO.-0843670009
MBA ±III rd Semester
2008-2010
In partial fulfillment of the requirement for MBA Degree
Programme of Uttar Pradesh Technical University,
Lucknow.

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PREFA E

I have a great pleasure on doing my research work and in preparing this

report on topic assigned to me ³customer behavior for life insurance,

general insurance &mutual funds´

This project has been extremely updated in the light of evidence collected

from the market.

A proper formatting of this report is done and over all lay out of an entire has

been improved for making all the information provided clear and accessible.

It is a matter of great satisfaction for the research point of view that this

project has been in a short period of time.

In the end of the report, I have come out with the findings and suggestions

as recommend to the problem that I feel the company facing today in the

market.

Beside this I had also tried to include all available information in this report

and arranged, systematic manner.

A KNOWLEDGEMENT

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I would like to take this opportunity to thanks all those who have helped me

tremendously during the course of the project.

This project report is a result of endless effort & immense degree of oil by

many great minds.

I would like to thank all those people who graciously helped me by sharing

their valuable time, experience & knowledge. I would like to express

heartiest thanks to Mr.Shalabh Srivastva and Shakil Ratyeea who have

given me this beautiful opportunity to work with their organization and

helped me at each step with their experience.

I would like to thank all my friends and the entire team of pinnacle wealth

management.

I would like to thank MR. Rakesh handra director of KP college of

management and Miss Jyoti (HOD) who provided me this opportunity.

DEEPAK SINGH

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OMPANY ERTIFI ATE

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OLLEGE ERTIFI ATE

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TABLE OF ONTENT

PREFA E 2

A KNOWLEDGEMENT 3

OMPANY ERTIFI ATE 4

OLLEGE ERTIFI ATE 5

HAPTER-1

INTRODU TION TO THE STUDY 8-58

OBJECTIVE OF THE STUDY 59

SCOPE 60

SIGNIFICANCE 61-62

METHODOLOGY 63-66

LIMITATIONS 67

HAPTER-2

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INTRODU TION TO THE ORGANISATION 68

HISTORY 69-73

ORGANISATION STRUCTURE 74-76

PRODUCT PROFILE 77-85

FINANCIAL STATUS 86-89

HAPTER-3

THEORETICAL FRAMEWORK OF THE STUDY 90-105

HAPTER-4

CLASSIFICATION, ANALYSIS AND INTERPRETATION OF DATA COLLECTED

ACCORDING TO THE TOPIC ASSIGNED 106-118

ON LUSION 119

SUGGESTIONS 120

APPENDIX 121

BIBLIOGRAPHY 122

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HAPTER-1
INTRODU TION
TO THE STUDY
1. OBJECTIVE
2. SCOPE
3. SIGNIFICANCE
4. METHODOLOGY
5. LIMITATION

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INTRODU TION

My project work is to understand the level of awareness in regards to the

Life Insurance, General Insurance and Mutual Funds but before we move I

would like to give a glance about my project. Actually what is insurance?

cInsurance is not necessarily an investment from which one expects to get

one¶s money back, nor, it is gambling. A gambler takes, while insurance

offers protection against risks that already exit. Insurance is a way to share

risk with others.

Insurance is the device of shifting the risks to the qualified agencies or

persons known as Insurers. It¶s a contract between two parties by which one

of them agrees to index the other against a loss which may accrue to the

other on the happening of some event. With a view to protecting person

from various risks viz; death, medical claims, accident etc an insurance

company is framed by raising initial capital from the shareholders.cc

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With new era of 21st century people want to get money with easy steps but

due to the risk factor involved in the investment it is not a easy task. So here

we come to understand what is mutual funds and how it protect the

investors from risk.

Mutual funds can give investors access to emerging markets A mutual fund

is a professionally managed type of collective investment scheme that pools

money from many investors and invests it in stocks, bonds, short-term

money market instruments, and/or other securities. The mutual fund will

have a fund manager that trades the pooled money on a regular basis. The

net proceeds or losses are then typically distributed to the investors

annually

Yet, the insurance and mutual funds companies are in growtth stage but the

level of awareness is still low that¶s we come to know from this project work.

Therefore, from this project report we are trying to give details about

customer behavior for LIFE INSURANCE, GENERAL INSURANCE &

MUTUAL FUNDS. So, it was a golden opportunity for me to work for an

organization and to get a deep knowledge about the insurance sector.

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HISTORY OF INSURAN E

The insurance sector in India dates back to 1818, when Oriental Life

Insurance Company like Bombay life Assurance Company, in 1823 and

Tritons Insurance Company, for General Insurance, in 1850 were

incorporated. Insurance ACT was passed in 1928 but it was subsequently

reviewed and comprehensive legislation was enacted in 1938.

The nationalization of life insurance business took place in 1956 when 245

Indian and Foreign insurance societies were first merged and then

nationalized. It paved the way towards the establishment of life insurance

Corporation (LIC) and since then it has enjoyed a monopoly over the life

insurance business in India. General Insurance business. Subsequently in

1973, non-life insurance business was nationalized and the General

Insurance Business (Nationalization) ACT, 1972 was promulgated. The

General Insurance Corporation (GIC) in its present form was incorporated in

1972 and maintains a very strong hold over the non-life insurance business

in India. Due to concerns of relatively low spread of insurance in the

country.

The efficient and quality functioning of the Public Sector Insurance

Companies.

The untapped potential for mobilizing long-term contractual savings funds

for infrastructure.

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The (Congress) government set up Insurance set u an Insurance Reforms

committee in April 1993. The committee submitted its report in January

1994, recommended a phased program of liberalization, and called for

private sector entry and restructuring of the LIC and GIC.

Insurance Sector

The practice of insurance in the world is quite old infect. How ever, life

insurance business, as it is known today, is a much later development. It

evolved from the great transformation in life, which began with the decline of

the agrarian society in the western countries in the 19th century.

Industrialization with its cities, factories, cash economy and an urban

µsaving¶ class set the stage for life insurance as a large ± scale national

institution. It can truly be that life insurance is a product of modern industry.

Growth of life insurance Company in any country will illustrate introduced

modern life insurance business didn¶t make much headway. The business

started taking its deeper roots only when in the late 19th century µIndia¶

insurance companies appeared on the scenes and started accepting µIndia¶

lies freely on the same terms as European lives in India. The growth of India

life insurance business continued to remain restricted till the Swedish

movement gathered momentum. The business passed through the period of

ups and downs with the political and economic situation in the country.

Nationalization

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Even during days of the freedom struggle there was occasional demand for

nationalization of life insurance industry. The demand naturally gathers

mare momentum after independence. Mismanagement had lead to

liquidation of as many as 25 life insurance companies in the decade after

independence. Another 25 insurance companies had during the same

period so frittered away their resources that their business had to be

transferred to other companies. All these cost financial losses and

consequent suffering to several policyholders who had entrusted their hard

earned saving to the care of the company management. This misuse of

power, position and privilege by these companies in the private sector was

one of the most compelling reasons that influenced the decision of the

government of India to nationalize the life insurance industry in 1956. The

life insurance industry in India had to be geared up for raising resources for

execution national programs. One of the objectives of the national plans

was to build a pay welfare state. It was therefore, essential that benefits of

life insurance were made available to every family in the country and that

the business should be conducted with utmost economy by the

management acting in a spirit of trusteeship to enable maximization of the

people¶s saving that could be analyzed through the life insurance into the

development programs.

Objectives of nationalization:
The decision of the Government of India to nationalize life insurance

industry was implemented by the passage of the life insurance Corporation

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Act, 1956, by Parliament. The objectives of nationalization of life insurance

industry that emerged out of the discussion and speeches in the parliament

in the time passage of the act were:

Spread of message of life insurance as far and wide as possible reaching

out beyond the more advanced urban areas well into hitherto neglected

areas.

> Effective mobilization of the people¶s savings.

> Complete security to policyholders.

> Prompt and efficient services to the policyholders.

> Conducting of the business with the utmost economy and with the full

realization that the money. Belonged to the policyholders.

> Investment of funds in such a way as to secure maximum yield

consistent with safety of capital.

> Economic premium rates.

> Development of a dynamic and vigorous organization under a

management conducted in sprit of Trusteeship.

> Formulation of scheme of insurance to suit different section of the

community.

How big is the insurance market?

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Insurance is a Rs.400 billion business in India, and together with banking

services adds about 7% to India's Gap. Gross premium collection is about

2% of Gap and has been growing by 15-20% per annum. India also has the

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highest number of life insurance policies in force in the world, and total

investible funds with the LIC are almost 8% of GDP. Yet more than three-

fourths of India's insurable population has no life insurance or pension

cover. Health insurance of any kind is negligible and other forms of non-life

insurance are much below international standards.

Indian Scenario :

Unfortunately the concept of insurance is not popular in our country .As per

the latest estimates, the total premium income generated by life and general

insurance in India is estimated at around a meager 1.95% of GDP. However

India's share of world insurance market has shown an increase of 10% from

0.31% in 2004-2005 to 0.34% in 2005-2006 India's market share in the life

insurance business showed a real growth of 11 % thereby out performing

the global average of 7.7% Non-life business grew by 3.1% against global

average of 0.20%. In India insurance spending per capita was among the

lowest in the world at $7.6 compared to $7 in the previous year. Amongst

the emerging economies, India is one of the least insured countries but the

potential for further growth is phenomenal, as a significant portion of its

population is in services and the life expectancy has also increased over the

years.

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Need for insurance:

Modern life insurance caters to multiple needs for insurance, which can be

broadly classified as under:

> Cash and income needs on an immediately following death.

> Family income needs.

> Income needs of a widow on the death of her husband.

> Cash and income needs of a husband on the death of his wife.

> Retirement income needs.

> Education needs.

> Business needs

lassification of insurance business

The insurance is broadly classified as:

1 .Life insurance business

2. Non-life insurance business

Life insurance business:

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It is the business of effecting contracts of insurances upon human life

including any contract whereby the payment of money is assured on death

or on the happening of any contingency to the dependent on human life and

any contract which is subject to the payment of premiums for a term and

shall be deemed to include:

The granting disability and double and triple indemnity accident benefits, if

so provided in the contract of insurance.

The granting of annuities of human life. The granting of super-annuation

allowance and annuities payable out of any fund applicable solely to the

relief and maintenance of the person engaged or who have been engaged

in any particular profession, trade or employment or of the dependents of

such persons.

Non life insurance business :

Conventional classification of insurance business:

1. Fire insurance

2. Marine insurance

3. Miscellaneous insurance (accident)

Modern classification of general insurance

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1. Insurance of person

2. Insurance of property

3. Insurance of interest

4. Insurance of liability

Life Insurance:

Life insurance can be defined as ³life insurance provides a sum of money if

the person who is insured dies while the policy is in effect´.

Life insurance is not for the person who passes away, it for those who

survive. It is the responsibility of every bread earner to guard against the

events that could affect the family in the unfortunate circumstance of his /

her demise. Thus, having a life insurance policy is very vital. Before going

for a life insurance policy it is imperative that you know about various types

of life insurance policies.

Major among them are:

> Whole Life Policy

> Term Life Policy

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> Money-back Policy

> Joint Life Policy

> Group Insurance Policy

> Loan Cover Term Assurance Policy

> Pension Plan or Annuities

> Unit Linked Insurance Plan

> Endowment Policy

Why Do People Need Life Insurance ?

Risks and uncertainties are part of life's great adventure -- accident,

illness, theft, natural disaster - they're all built into the working of the

Universe, waiting to happen.

Insurance then is man's answer to the vagaries of life. If you cannot

beat man-made and natural calamities, well, at least be prepared for

them and their aftermath.

Insurance is a contract between two parties - the insurer (the

insurance company) and the insured (the person or entity seeking the

cover) - wherein the insurer agrees to pay the insured for financial

losses arising out of any unforeseen events in return for a regular

payment of "premium".

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These unforeseen events are defined as "risk" and that is why

insurance is called a risk cover.

Hence, insurance is essentially the means to financially compensate

for losses that life throws at people - corporate and otherwise.

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Types of Plans«..

x onventional
x ULIP

onventional:-

Conventional plans are those plans in which returns are known and are

fixed. Example: - hildren¶s Plan. In this plan the customer has knows how

much return he will get after maturity or any miss happening occurs. Here

risk is low and returns are also low, because it is not dependent on the

market risk and is a rigid policy.

It is seen that people also invest less in such type of policies as

returns are less and there is a compulsion attached is of compulsory

premium submission till the policy matures.

Illustration: -

Premium for 10 yrs is 20000

20000+20000+20000+20000+20000+20000+20000+20000+20000+20000=

2lks

Return described was 2.5 times

So the customer will get approx 5 lkhs after deducting all charges.

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Insurance is always of the parent and beneficiary is the child. There

are 2 types of loss that occurs on any type of miss happening i.e. emotional

loss and monetary loss company can¶t full fill emotional loss but can help in

monetary loss by giving the 2lks Rs. At the miss happening and will give the

rest premium by its own and will give the bonus at maturity again to the

child.

ULIP

ULIP stands for UNIT LINK INSURAN E PLAN. As it is said higher risk
higher return

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Some of the important milestones in the life

insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on

Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance

company started its business.

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 Indian and foreign insurers and provident societies are taken over

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

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roots to the Triton Insurance Company Ltd., the first general insurance

company established in the year 1850 in Calcutta by the British.

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General Insurance

Insurance other than µLife Insurance¶ falls under the category of General

Insurance. General Insurance comprises of insurance of property against

fire, burglary etc, personal insurance such as Accident and Health

Insurance, and liability insurance which covers legal liabilities. There are

also other covers such as Errors and Omissions insurance for professionals,

credit insurance etc.

Non-life insurance companies have products that cover property against

Fire and allied perils, flood storm and inundation, earthquake and so on.

There are products that cover property against burglary, theft etc. The non-

life companies also offer policies covering machinery against breakdown,

there are policies that cover the hull of ships and so on. A Marine Cargo

policy covers goods in transit including by sea, air and road. Further,

insurance of motor vehicles against damages and theft forms a major chunk

of non-life insurance business.

In respect of insurance of property, it is important that the cover is taken for

the actual value of the property to avoid being imposed a penalty should

there be a claim. Where a property is undervalued for the purposes of

insurance, the insured will have to bear a rateable proportion of the loss. For

instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in

the event of a loss to the extent of say Rs.50/-, the maximum claim amount

payable would be Rs.25/- ( 50% of the loss being borne by the insured for

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underinsuring the property by 50% ). This concept is quite often not

understood by most insureds.

Personal insurance covers include policies for Accident, Health etc.

Products offering Personal Accident cover are benefit policies. Health

insurance covers offered by non-life insurers are mainly hospitalization

covers either on reimbursement or cashless basis. The cashless service is

offered through Third Party Administrators who have arrangements with

various service providers, i.e., hospitals. The Third Party Administrators also

provide service for reimbursement claims. Sometimes the insurers

themselves process reimbursement claims.

Accident and health insurance policies are available for individuals as well

as groups. A group could be a group of employees of an organization or

holders of credit cards or deposit holders in a bank etc. Normally when a

group is covered, insurers offer group discounts.

Liability insurance covers such as Motor Third Party Liability Insurance,

Workmen¶s Compensation Policy etc offer cover against legal liabilities that

may arise under the respective statutes² Motor Vehicles Act, The

Workmen¶s Compensation Act etc. Some of the covers such as the

foregoing (Motor Third Party and Workmen¶s Compensation policy ) are

compulsory by statute. Liability Insurance not compulsory by statute is also

gaining popularity these days. Many industries insure against Public liability.

There are liability covers available for Products as well.

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There are general insurance products that are in the nature of package

policies offering a combination of the covers mentioned above. For instance,

there are package policies available for householders, shop keepers and

also for professionals such as doctors, chartered accountants etc. Apart

from offering standard covers, insurers also offer customized or tailor-made

ones.

Suitable general Insurance covers are necessary for every family. It is

important to protect one¶s property, which one might have acquired from

one¶s hard earned income. A loss or damage to one¶s property can leave

one shattered. Losses created by catastrophes such as the tsunami,

earthquakes, cyclones etc have left many homeless and penniless. Such

losses can be devastating but insurance could help mitigate them. Property

can be covered, so also the people against Personal Accident. A Health

Insurance policy can provide financial relief to a person undergoing medical

treatment whether due to a disease or an injury.

Industries also need to protect themselves by obtaining insurance covers to

protect their building, machinery, stocks etc. They need to cover their

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liabilities as well. Financiers insist on insurance. So, most industries or

businesses that are financed by banks and other institutions do obtain

covers. But are they obtaining the right covers? And are they insuring

adequately are questions that need to be given some thought. Also

organizations or industries that are self-financed should ensure that they are

protected by insurance.

Most general insurance covers are annual contracts. However, there are

few products that are long-term.

It is important for proposers to read and understand the terms and

conditions of a policy before they enter into an insurance contract. The

proposal form needs to be filled in completely and correctly by a proposer to

ensure that the cover is adequate and the right one.

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.

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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. 107 insurers amalgamated and grouped into four companies

viz. the National Insurance Company Ltd., the New India Assurance

Company Ltd. the Oriental Insurance Company Ltd. and the United India

Insurance Company Ltd. GIC incorporated as a company.

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History of mutual funds

Massachusetts Investors Trust (now MFS Investment Management) was

founded on March 21, 1924, and, after one year, it had 200 shareholders

and $392,000 in assets. The entire industry, which included a few closed-

end funds represented less than $10 million in 1924.

The stock market crash of 1929 hindered the growth of mutual funds. In

response to the stock market crash, Congress passed the Securities Act of

1933 and the Securities Exchange Act of 1934. These laws require that a

fund be registered with the U.S. Securities and Exchange Commission

(SEC) and provide prospective investors with a prospectus that contains

required disclosures about the fund, the securities themselves, and fund

manager. The SEC helped draft the Investment Company Act of 1940,

which sets forth the guidelines with which all SEC-registered funds today

must comply.

With renewed confidence in the stock market, mutual funds began to

blossom. By the end of the 1960s, there were approximately 270 funds with

$48 billion in assets. The first retail index fund, First Index Investment Trust,

was formed in 1976 and headed by John Bogle, who conceptualized many

of the key tenets of the industry in his 1951 senior thesis at Princeton

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University It is now called the Vanguard 500 Index Fund and is one of the

world's largest mutual funds, with more than $100 billion in assets.

A key factor in mutual-fund growth was the 1975 change in the Internal

Revenue Code allowing individuals to open individual retirement accounts

(IRAs). Even people already enrolled in corporate pension plans could

contribute a limited amount (at the time, up to $2,000 a year). Mutual funds

are now popular in employer-sponsored "defined-contribution" retirement

plans such as (401(k)s) and 403(b)s as well as IRAs including Roth IRAs.

As of October 2007, there are 8,015 mutual funds that belong to the

Investment Company Institute (ICI), a national trade association of

investment companies in the United States, with combined assets of

$12.356 trillion. In early 2008, the worldwide value of all mutual funds

totaled more than $26 trillion.

Usage of mutual funds

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Since the Investment Company Act of 1940, a mutual fund is one of three

basic types of investment companies available in the United States.

Mutual funds can invest in many kinds of securities. The most common are

cash instruments, stock, and bonds, but there are hundreds of sub-

categories. Stock funds, for instance, can invest primarily in the shares of a

particular industry, such as technology or utilities. These are known as

sector funds. Bond funds can vary according to risk (e.g., high-yield junk

bonds or investment-grade corporate bonds), type of issuers (e.g.,

government agencies, corporations, or municipalities), or maturity of the

bonds (short- or long-term). Both stock and bond funds can invest in

primarily U.S. securities (domestic funds), both U.S. and foreign securities

(global funds), or primarily foreign securities (international funds).

Most mutual funds' investment portfolios are continually adjusted under the

supervision of a professional manager, who forecasts cash flows into and

out of the fund by investors, as well as the future performance of

investments appropriate for the fund and chooses those which he or she

believes will most closely match the fund's stated investment objective. A

mutual fund is administered under an advisory contract with a management

company, which may hire or fire fund managers.

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Mutual funds are subject to a special set of regulatory, accounting, and tax

rules. In the U.S., unlike most other types of business entities, they are not

taxed on their income as long as they distribute 90% of it to their

shareholders and the funds meet certain diversification requirements in the

Internal Revenue Code. Also, the type of income they earn is often

unchanged as it passes through to the shareholders. Mutual fund

distributions of tax-free municipal bond income are tax-free to the

shareholder. Taxable distributions can be either ordinary income or capital

gains, depending on how the fund earned those distributions. Net losses are

not distributed or passed through to fund investors.

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Mutual Funds ± oncept

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ccccccccccccccccA 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 shares, 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. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest

in a diversified, professionally managed basket of securities at a relatively

low cost. The flow chart below describes broadly the working of a mutual

fund:

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Mutual Fund Operation Flow hart

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TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis

of its structure and its investment objective:-

1. By Structure:

2. By Investment Objective:

By structure ;-

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a) Open-ended Funds

An open-end fund is one that is available for subscription all through the

year. These do not have a fixed maturity. Investors can conveniently buy

and sell units at Net Asset Value ("NAV") related prices. The key feature of

open-end schemes is liquidity.

b) losed-ended Funds

A closed-end fund has a stipulated maturity period which generally ranging

from 3 to 15 years. The fund is open for subscription only during a specified

period. Investors can invest in the scheme at the time of the initial public

issue and thereafter they can buy or sell the units of the scheme on the

stock exchanges where they are listed. In order to provide an exit route to

the investors, some close-ended funds give an option of selling back the

units to the Mutual Fund through periodic repurchase at NAV related prices.

SEBI Regulations stipulate that at least one of the two exit routes is

provided to the investor.

c) Interval Funds

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Interval funds combine the features of open-ended and close-ended

schemes. They are open for sale or redemption during pre-determined

intervals at NAV related prices.

2. by Investment Objective:

a) Equity Oriented Schemes

These schemes, also commonly called Growth Schemes, seek to invest a

majority of their funds in equities and a small portion in money market

instruments. Such schemes have the potential to deliver superior returns

over the long term. However, because they invest in equities, these

schemes are exposed to fluctuations in value especially in the short term.

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b) Debt Based Schemes

These schemes, also commonly called Income Schemes, invest in debt

securities such as corporate bonds, debentures and government securities.

The prices of these schemes tend to be more stable compared with equity

schemes and most of the returns to the investors are generated through

dividends or steady capital appreciation. These schemes are ideal for

conservative investors or those not in a position to take higher equity risks,

such as retired individuals. However, as compared to the money market

schemes they do have a higher price fluctuation risk and compared to a Gilt

fund they have a higher credit risk.

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c) Hybrid Schemes

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These schemes are commonly known as balanced schemes. These

schemes invest in both equities as well as debt. By investing in a mix of this

nature, balanced schemes seek to attain the objective of income and

moderate capital appreciation and are ideal for investors with a

conservative, long-term orientation.

d) Load Funds

A Load Fund is one that charges a commission for entry or exit. That is,

each time you buy or sell units in the fund, a commission will be payable.

Typically entry and exit loads range from 1% to 2%. It could be worth paying

the load, if the fund has a good performance history.

e) No-Load Funds

A No-Load Fund is one that does not charge a commission for entry or exit.

That is, no commission is payable on purchase or sale of units in the fund.

The advantage of a no load fund is that the entire corpus is put to work.

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History of the Indian Mutual Fund Industry

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. The history of mutual funds in India can be broadly divided into four

distinct phasesc

First Phase ± 1964-87c

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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.

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Second Phase ± 1987-1993 (Entry of Public Sector

Funds)c

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 Canbank

Mutual Fund (Decc

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.c

At the end of 1993, the mutual fund industry had assets under management

of Rs.47,004 crores.c

Third Phase ± 1993-2003 (Entry of Private Sector

Funds)c

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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.c

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry

now functions under the SEBI (Mutual Fund) Regulations 1996.c

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 c

Fourth Phase ± since February 2003c

The number of mutual fund houses went on increasing, with many foreign

mutual funds setting up funds in India and also the industry has witnessed

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several mergers and acquisitions. As at the end of January 2003, there

were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit

Trust of India with Rs.44,541 crores of assets under management was way

ahead of other mutual funds the Unit Trust of India with assets under

management of Rs.29,835 crores 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.

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BENEFITS OF INVESTING IN MUTUAL FUNDS

1. Professional Management

Mutual Funds provide the services of experienced and skilled professionals,

backed by a dedicated investment research team that analyses the

performance and prospects of companies and selects suitable investments

to achieve the objectives of the scheme.

2.Diversification

Mutual Funds invest in a number of companies across a broad cross-

section of industries and sectors. This diversification reduces the risk

because seldom do all stocks decline at the same time and in the same

proportion. You achieve this diversification through a Mutual Fund with far

less money than you can do on your own.

3. onvenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many

problems such as bad deliveries, delayed payments and follow up with

brokers and companies. Mutual Funds save your time and make investing

easy and convenient.

4. Return Potential

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Over a medium to long-term, Mutual Funds have the potential to provide a

higher return as they invest in a diversified basket of selected securities.

5. Low osts

Mutual Funds are a relatively less expensive way to invest compared to

directly investing in the capital markets because the benefits of scale in

brokerage, custodial and other fees translate into lower costs for investors.

6. Liquidity

In open-end schemes, the investor gets the money back promptly at net

asset value related prices from the Mutual Fund. In closed-end schemes,

the units can be sold on a stock exchange at the prevailing market price or

the investor can avail of the facility of direct repurchase at NAV related

prices by the Mutual Fund.

7.Transparency

You get regular information on the value of your investment in addition to

disclosure on the specific investments made by your scheme, the proportion

invested in each class of assets and the fund manager's investment

strategy and outlook.

8. Tax Benefits

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The taxman has, over the years, been more or less kind to mutual funds!

With laws varying from time to time, the overall objective has been to

encourage the growth of the mutual funds industry. Currently, a variety of

tax laws apply to mutual funds, which are broadly listed below:

1) apital Gains

Units of mutual fund schemes held for a period more than 12 months are

treated as long-term capital assets. In such cases, the unit-holder has the

option to pay capital gains tax at either 20 % (with indexation) or 10 %

without indexation.

2) Tax Deducted at Source (TDS)

For any income credited or paid by a fund, no tax is deducted or withheld at

source. The relevant sections in the Income Tax Act governing this

provision are Section 194K and 196A.

3) Wealth Tax

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Mutual fund units are not currently treated as assets under Section 2 of the

Wealth Tax Act and are therefore not liable to tax.

4) Income from units

Any income received from units of the schemes of a mutual fund specified

under section 23 (D) is exempt under Section 10 (33) of the Act. While

section 10(23D) exempts income of specified mutual funds from tax (which

currently includes all mutual funds operating in India), Section 10(33)

exempts income from funds in the hands of the unit-holders. However, this

does not mean that there is no tax at all on income distributions by mutual

funds.

5) Income Distribution Tax

As per prevailing tax laws, income distributed by schemes other than open-

end equity schemes is subject to tax at 20 % (plus surcharge of 10 %). For

this purpose, equity schemes have been defined to be those schemes that

have more than 50 % of their assets in the form of equity. Open-end equity

schemes have been left out of the purview of this distribution tax for a period

of three years beginning from April 1999.

6) Section 80-

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The investment in mutual funds designated as Equity Linked Laving

Scheme (ELSS) qualifies for rebate under Section 80-C. The maximum

amount that can be invested in these schemes is Rs.10,000, therefore the

maximum tax benefit available works out to Rs.2000. Apart from ELSS

schemes, the benefit of Section 80-C is also available in select schemes of

some funds such as UTI ULIP, KP Pension Plan etc

DISADVANTAGES OF MUTUAL FUNDS

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1. The Wisdom of Professional Management.

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That's right, this is not an advantage. The average mutual fund manager is

no better at picking stocks than the average nonprofessional, but charges

fees as though she is.

2. No ontrol.

Unlike picking your own individual stocks, a mutual fund puts you in the

passenger seat of somebody else's car.

3. Dilution.

Mutual funds generally have such small holdings of so many different stocks

that insanely great performance by a fund's top holdings still doesn't make

much of a difference in a mutual fund's total performance.

4. Buried osts.

Many mutual funds specialize in burying their costs and in hiring salesmen

who do not make those costs clear to their clients.

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IRDA

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omposition of Authority under IRDA Act, 1999

The authority is a ten member team consisting of:

(a) A Chairman.

(b) Five whole-time members.

(c) Four part-time members.

(All appointed 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

by the Government of India)

Duties, Powers and Functions of IRDA

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Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA.

(a) 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.

(b) protection of the interests of the policy holders in matters concerning

assigning of policy, nomination by policy holders, insurable interest,

settlement of insurance claim, surrender value of policy and other terms and

conditions of contracts of insurance;

(c) Specifying requisite qualifications, code of conduct and practical training

for intermediary or insurance intermediaries and agents;

(d) Specifying the code of conduct for surveyors and loss assessors;

(e) Promoting efficiency in the conduct of insurance business;

(f)Promoting and regulating professional organizations connected with the

insurance and re-insurance business;

(g) Levying fees and other charges for carrying out the purposes of this Act;

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(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, 193(4of1938);

Here in this section we have covered major financial regulatory bodies in

India's financial market.

Securities and Exchange Board of India (SEBI)

National Stock Exchange

Bombay Stock Exchange (BSE)

Reserve Bank of India

Major Financial Institutions in India

Foreign Investment Promotion Board

SEBI
(Securities and Exchange Board of India)

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ESTABLISHMENT OF SEBI

The Securities and Exchange Board of India was established on April 12,

1992 in accordance with the provisions of the Securities and Exchange

Board of India Act, 1992.

PREAMBLE

The Preamble of the Securities and Exchange Board of India describes the

basic functions of the Securities and Exchange Board of India as

³«..to protect the interests of investors in securities and to promote the

development of, and to regulate the securities market and for matters

connected therewith or incidental thereto´

Definitions

(1) In this Act, unless the context otherwise requires, -

(a) "Board" means the Securities and Exchange Board of India established

under section 3;

(b) "Chairman" means the Chairman of the Board;

Management of the Board

. The Board shall consist of the following members, namely:-

(a) A Chairman;

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(b) Two members from amongst the officials of the Ministry of the

Central Government dealing with Finance and administration of the

Companies Act, 1956(1 of 1956);

(c) One member from amongst the officials of the Reserve Bank;

(d) Five other members of whom at least three shall be the whole-time

members to be appointed by the central Government.

POWERS AND FUN TIONS OF THE BOARD

Functions of ɚ Board

(1) Subject to the provisions of this Act, it shall be the duty of the Board to

protect the interests of investors in securities and to promote the

development of, and to regulate the securities market, by such measures as

it thinks fit.

(2) Without prejudice to the generality of the foregoing provisions, the

measures referred to therein may provide for -

(a) Regulating the business in stock exchanges and any other securities

markets;

(b) Registering and regulating the working of stock brokers, sub-brokers,

share transfer agents, bankers to an issue, trustees of trust deeds,

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registrars to an issue, merchant bankers, underwriters, portfolio managers,

investment advisers and such other intermediaries who may be associated

with securities markets in any manner;

(BA) registering and regulating the working of the depositories, participants,

custodians of securities, foreign institutional investors, credit rating agencies

and such other intermediaries as the Board may, by notification, specify in

this behalf;

(c) Registering and regulating the working of venture capital funds and

collective investment schemes, including mutual funds;

(d) Promoting and regulating self-regulatory organizations;

(e) Prohibiting fraudulent and unfair trade practices relating to securities markets;

(f) Promoting investors' education and training of intermediaries of securities

markets;

(g) Prohibiting insider trading in securities;

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OBJE TIVE
The primary objective of my study is to gain through practical experience, a

sound appreciation and understanding of the theoretical principle learned in

two semester in MBA. My objective is oriented towards developing the skills,

knowledge and attitude needed to make an effective start as a member of

the management profession.

Apart from these basic objectives some other objectives of my study are

listed below:

> To understand the awareness level of potential customer in regards

to life insurance, general insurance and mutual funds by directly

interacting with them.

> To provide the requisite information to the potential customer about

the investment.

> To understand the purchasing behavior of the people towards the

insurance and mutual funds.

> To educate the people about the insurance and mutual funds.

> To keep a sharp look in the market to understand the behavior of

competitor.

So from the above listed objective I got opportunity to interact with

customer and to understand their behavior.

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S OPE

The scope of this project work is very wide, interacting with People

helps me a lot to learn about the awareness level of customers

towards mutual funds and insurance and helps me to understand

their decision making process of investing in insurance and mutual

funds. It also gave me opportunity to visit different people who make

me familiar with the market of investment. It also helps me to learn

how to behave in market as well as helps me to behave in front of

customers. Interacting with different people with different opinion and

views helps me to learn the human purchasing behavior in regards to

life insurance and mutual funds and the data collected from these

sources helps to interpret the awareness level of potential customers.

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SIGNIFI AN E
From my point of view every study work always gives something

rather than nothing. So I had listed some of the significance apart from

number of the advantages.

> Understanding real life situations in organization and their

related environment and accelerating the learning process of

how his/her knowledge could be used in realistic way.

> Understanding the formal and informal relationship in an

organization as well as in a market.

> To understand the behavior of potential customer with different

views and opinion towards the investment.

> Learn to adopt our self in the changing market.

> To recognize the need and demand of the customer.

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> Developed the personality with continuous learning.

> Got the market exposure.

> Explore the new strengths and their development.

> Learned how to formulate the corporate strategies and their

implementation.

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RESEAR H METHODOLOGY

Since every project begins with the search of information, because it

is vital source to interpret and to understand the need and demand of

the product.

To understand the customer in an emphatic manner we need to

understand their behavior and that can be achieved by doing a

research and to carry out the research a methodology is needed.

Research methodology is a way to systematically solve the research

problem. it may be understood as a science of studying how research is

done scientifically .when we talk about research methodology we not only

talk of the research methods but also consider the logic behind the methods

we use in the context of our research study and explain why we are using a

particular method or technique and why we are not using others so that

research results are capable of being evaluated either by the researcher

himself or by others.

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Data¶s are the useful information or any forms of document designed in a

systematic and standardize manner which are used for some further

proceedings. One of the important tools for conducting marketing research

is the availability of necessary and useful data. Some time the data are

available readily in one form or the other and some time the data are

collected afresh. The sources of Data fall under two categories, Primary

Source and Secondary Sources.

SOUR ES OF DATA

PRIMARY DATA: The data which is collected by the researcher himself is

called primary data. it is fresh data.c

SE ONDARY DATAc The data obtained through published or written

sources collected through other sources than the researcher himself is

called secondary data.

PRIMARY DATA:

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> Direct interaction with customers

> Telecommunication

> mail

> questionnaire

SE ONDARY DATA:

> Magazines

> journals

> internet

> company¶s handouts

This project is basically based on primary data which I gathered from

the direct verbal interaction with the potential customers.

SAMPLING SIZE -100 RESPONDENTS

SAMPLING AREA ± AGRA

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DATA OLLE TION

For the purpose of this project, a questionnaire was designed to

collect data. The questions were structured for general information.

Questionnaire is one of the good methodology which I had used to

collect requisite information about my project work.

DATA ANALYSIS TE HNIQUE

a. Simple average

b. Tabulation

LIMITATIONS

Besides number of advantages this project also have some

limitation, some of

them are listed below.

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> Poor participation of the customer.

> Low awareness level.

> Less number of potential customers.

> Frequent adaptation based on market condition is very tuff.

> Risk factor.

> Perception of the customer is negative.

> Customers are not agreed quickly.

> Fear of fraud or insolvency in the customer mind.

> Sometime the scheme offered by the company didn¶t meet the

customer expectations.

> Expectation on ROI (return on investment) is very high.

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HAPTER-2
INTRODU TION
TO
ORGANISATION

1. HISTORY
2. ORGANISATION STRUCTURE
3. PRODUCT PROFILE
4. FINANCIAL STATUS

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HISTORY OF THE OMPANY

cThe Kotak Mahindra group is a financial organization established in 1985 in

India. It was previously known as the Kotak Mahindra Finance Limited, a

non-banking financial organization. In February 2003, Kotak Mahindra

Finance Ltd, the group's flagship company was given the license to carry on

banking business by the Reserve Bank of India (RBI). Kotak Mahindra

Finance Ltd. is the first company in the Indian banking history to convert to a

bank.

The group has a net worth of over Rs. 6,523 crore and has a distribution

network of branches, franchisees, representative offices and satellite offices

across cities and towns in India and offices in New York, London, San

Francisco, Dubai, Mauritius and Singapore. The Group services around 6.2

million customer accounts.

The bank is headed by K.M. Gherda

Kotak Mahindra is one of India's leading financial organizations, offering a

wide range of financial services that encompass every sphere of life. From

commercial banking, to stock broking, to mutual funds, to life insurance, to

investment banking, the group caters to the diverse financial needs of

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individuals and corporate.

Kotak Mahindra Old Mutual Life Insurance Ltd.

Kotak Mahindra Old Mutual Life Insurance is a 74:26 joint venture between

Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual

Life Insurance is one of the fastest growing insurance companies in India

and has shown remarkable growth since its inception in 2001.

About Kotak Mahindra Group

µTHINK INVESTMENTS.THINK KOTAK¶

Kotak Mahindra group is one of India¶s leading banking and financial

services organizations, with offerings across personal financial services;

commercial banking; corporate and investment banking and markets; stock

broking; asset management and life insurance. The Kotak Group employs

around 20,000 people and has over 1,350 offices across 370 cities and

towns in India. Kotak also has offices in London, New York, San Francisco,

Singapore, Dubai and Mauritius.

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About Old Mutual Plc

Old Mutual plc is an international savings and wealth management company

based in the UK. Originating in South Africa in 1845, it is among the top 50

largest companies in the FTSE100. The group has a balanced portfolio of

businesses offering Asset Management, Life Assurance, Banking and

General Insurance Services in over 40 countries, with a focus on South

Africa, Europe and the United States, and a growing presence in Asia

Pacific. Old Mutual plc employs approximately 53,000 employees worldwide

and is listed on the London and Johannesburg stock exchanges.

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ompany¶s Vision and Mission

Mission:

The Company focuses on the needs of their customers and creates

confidence, trust and loyalty by offering a wide range of innovative

insurance solutions.

Strengthened by their commitment to professional management,

company ensures the continued growth and advancement of their

employees.

Vision:

Kotak Life Insurance has a deep rooted commitment to improve the quality

of life of its customers, employees and stakeholders. They aim at improving

the long term value in their relationship by continuous innovation and

improvements. They do this by their three-prong effort which strives to make

Kotak Life Insurance a corporate with values.

Increase ustomer Value

Kotak Life Insurance has gone to the heart of its customer's

requirements and developed products which are unique and serve the

customer needs perfectly. It builts a relationship of mutual trust and benefit

to serve the Indian customer. At Kotak Life Insurance the customer always

comes first.

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ohesive Work Environment

It forms long-term partnership with its employees by offering them an

invigorating work experience. It not only demand loyalty, sincerity and

values but also give it back in equal measures. Kotak Life Insurance will like

to offer its employees space to grow, innovate and build a long-term career.

Work with Honors

Kotak Life Insurance delivers everyday services in the marketplace with

the high sense of duty and commitment. Their employees strive to build the

long-term value for all those come in contact with Kotak Life Insurance.

Their consumers, distributors, employees, shareholders and the nation have

their commitment that it will uphold the values of trust, integrity and a Sense

of Honors in every thought, act and deed in order to positively contribute to

individual, society and nation growth.

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ORGANISATION STRU TURE

HANNEL MARKETING

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URRENT AUTHORITIES OF KOTAK LIFE INSURAN E

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6 MANAGING DIRECTOR: - MR. GAURANG SHAH

6 CFO :- G. MURALIDHAR

6 VICE-PRESIDENT TRAINING AND

MANAGEMENT DEVELOPMENT: - MR. ARUN

PATIL

6 VICE PRESIDENT HR: - MR. SUGATA DUTTA

6 VICE-PRESIDENTS DISTRIBUTION

DISTRIBUTION DEVELOPMENT AND

PLANNING: - MR. KAMLESH VORA

6 APPOINTED ACTUARY: - JOHN BRY E

PRODU T PROFILE

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Protection Plans

Kotak Loan Protection Plan

Kotak Loan Protection Plan is a protection plan that helps share the burden

of your loan.

Kotak Term/Preferred Term Plan

The Kotak Term/Preferred Term Plan is a pure risk cover plan that provides

you with a high level of protection at nominal costs.

Kotak Eternal Life Plans

Kotak Eternal Life Plans are participating whole life plans that provide

enhanced protection till the golden age of 99.

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Savings & Investment Plans

Kotak Platinum Advantage Plus

You've lived life on your own terms; always done what you've believed in.

You are used to having the luxury of choice and the power to control.

Kotak Smart Advantage

Kotak Smart Advantage is an intelligent unit-linked plan that is based upon

the idea of regular savings and systematic accumulation of wealth in the

long term.

Kotak Safe Investment Plan

Kotak Safe Investment plan is the ideal investment plan for you with its

unique ³Seal of Guarantee´ offer that not just gives you the best of bull

markets but also eliminates any capital loss in falling markets.

Kotak Flexi Plan

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Kotak flexi plan offers you an ideal market-linked investment plan that helps

you create your own financial future by offering you the flexibility and control

over your money.

Kotak Platinum Advantage Plan

Kotak Platinum Advantage Plan features capital protection, embedded

investment advice, life cover and aggressive market linked growth options.

Kotak Easy Growth Plan

Kotak Easy Growth plan, a single premium investment plan that generates

value for you for whole life as well as provides protection to your family in

case of unforeseen events.

Kotak apital Multiplier Plan

The Kotak Capital Multiplier Plan is the only plan of its kind that allows you

to enjoy returns even beyond maturity.

Kotak Money Back Plan

This plan offers the key benefit of cash lump sums at periodic intervals of

five years ensuring that you are able to meet any of your financial

obligations.

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Kotak Endowment Plan

Kotak Endowment Plan is a participating endowment plan that provides you

an avenue for long term regular investments to accumulate a lump sum on

maturity.

Kotak Premium Return Plan

The premium Return Plan will get you the dual benefit of a risk cover and

savings, with minimal paperwork and procedures.

Kotak Sukhi Jeevan Plan

Sukhi Jeevan is a long-term savings and protection plan that keeps pace

with your changing needs at every step of life.

Kotak Gramin Bima Yojana

Kotak Surakshit Jeevan

Kotak Surakshit Jeevan, an enhanced protection and long-term savings

plan, makes sure your family remains financially independent even if you

are not around.

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Retirement Plans

Kotak Secure Retirement Plan

An ideal retirement solution is one that gives you complete flexibility and

peace of mind, not only while you save for your retirement but also after you

retire.

Kotak Retirement Income (Unit Linked)

Kotak Retirement Income Plan is an ideal retirement solution that gives you

complete flexibility and peace of mind, not only while you save for your

retirement but also after you retire.

Kotak Long Life Secure Plus

Kotak Long Life Secure Plus is a unit-linked plan that ensures your

investment gives maximum protection to secure your family's future and

their financial independence

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Kotak Long Life Wealth Plus

Kotak Long Life Wealth Plus is an intelligent investment plan that helps you

builds your future net worth with power-packed features that actively monitor

and manage your investment growth

Kotak Retirement Income Plan

The Kotak Retirement Income Plan is a savings plan designed to meet your

post-retirement needs. It is a plan that gives you "Jeene ki azaadi".

hild Plans

Kotak Headstart hild Plans

The headstart child plans are specially tailored, cost effective plans that aim

to give your children the financial means to pursue his or her dreams

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Kotak hild Advantage Plan

The Kotak Child Advantage Plan is an investment plan designed to meet

your child's future financial needs.

PLANS FOR GROUP

Kotak Group Shield

Kotak Group Shield is a comprehensive solution that helps protect your

customer¶s assets and savings in the unfortunate event of death, illness or

disability.

Kotak Group Assure

Kotak Group Assure is a comprehensive solution that helps protect your

customer¶s assets and savings in the unfortunate event of death, illness or

disability.

Kotak Term Grouplan

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Kotak Term Grouplan provides life cover for a group of employees, by

paying a lump sum benefit to the beneficiary on the unfortunate death of an

employee.

Kotak Gratuity Grouplan

Gratuity management solution manages your gratuity liability effectively but

also helps you release resources for your core business activities.

Kotak Superannuation Grouplan

Kotak Superannuation Grouplan (KSGP) is a uniquely flexible product that

addresses the needs of both the employers and the employees.

Kotak redit-Term Grouplan

The Kotak Credit-Term Grouplan, is the right solution to your needs,

protecting both your institution's and your customer's interest.

Kotak omplete over Grouplan

Kotak Complete Cover Grouplan can provide your institution the required

value-add to differentiate your products and make them more competitive.

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FINAN IAL
STATUS OF THE
OMPANY

FINANCIAL RECORD AMOUNT IN CRORE

YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

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LI 11422 11165 12282 12558 15003 27103 27144

PRIVATE 180 662 2085 4357 7500 15932 29268

INVETMENT
OMPANIES

TOTAL 11602 11827 14367 16915 22503 43035 56412

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MARKET SHARE

YEAR 2001- 2002- 2003- 2004- 2005- 2006- 2007-

02 03 04 05 06 07 08

LIC 98% 94% 85% 74% 66% 63% 48%

PRIVATE 2% 6% 15% 26% 34% 37% 52%

COMPANIES

From the last year data it is clear that they had shown a tremendous growth
in the year 2008 LIC and Private companies has been sold approximately
29 crore policies.

Out of the total 28% policies has been sold out in rural areas.

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ompanies April may-june April may-june % change

quarter 1 2008 quarter 1 2009

LI 7524.56 9028 19.98%Ĺ

Private 7524.54 5428 -27.86%Ļ

companies

Major insurance companies

SBI life 1149 1073 -6.61%Ļ

Icici prudential 1590 807.07 -49.24%Ļ

Bajaj alliance 828 577 -30.31%Ļ

BS L 502 440 -12.35%Ļ

HDF 490 412.64 -15.79%Ļ

PERFORMANCE OF KOTAK DURING 2008-09 FINANCIAL YEAR

KOTAK LI 1400 CRORE

TIDE AGENCY 500 CRORE

ALTERNATE CHANNEL 900 CRORE

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HAPTER-3

THEORETI AL FRAMEWORK
OF THE STUDY

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Theoretical framework of the study

During my training I had to find out customers awareness and their views

towards Insurance in KOTAK LIFE INSURANCE

During my training I had to face many problems as customers have no time

to give me and listen to my words what I want to convey to them, they have

less trust in Insurance Companies as compared to the LIC (Life Insurance

Corporation). Introduction of new players in the market making the

competition heated up. I tried my best to overcome these problems and do

my job with utmost dedication and commitment.

From the survey I conducted by getting feedback from the consumers I

found that there are many offers, facilities and scheme launched by the

other Insurance Company. There are certain customers who are happy and

satisfied with the working performance of the company but skill a lot of

benefits are to be received by the customers which can satisfy them.

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> ¦
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Make every rupee work for your happineyss

In this policy, the investment risk in the investment portfolio is borne by the

policyholder.

Why should we invest in Kotak smart advantage?

Every step in our life brings with it newel earnings. We are determined to

make the best of it, so that we can look forward to a great future. How we

shape our tomorrow depends greatly on how we build on our today.

Kotak Life Insurance introduces Kotak Smart Advantage, a great

combination of investment with insurance, to put our savings to work today.

It is a market linked plan with 100% premium allocations helping us to

accumulate wealth systematically, over the long-term. Kotak Smart

Advantage is a great combination of investment with insurance designed to

enable you to make the best use of your hard-earned money that puts you

right ahead

Key Highlights

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x Guaranteed returns of up to 275% of your first year premium at

maturity.

x Assured bonus additions at regular intervals during the policy term

to enhance your fund value.

x 100% allocation of your premiums from second year onwards to

maximize your earning potential.

x A unique3 fund offering you the maximum Opportunity for growth.

x Option to maximize protection your loved ones.

x Tex Benefits to avail under 80 C and section 10 (10D) of the Income

Tax Act, 1961.

6 How does this plan work?

Kotak Smart Advantage optimizes the return on your premiums paid through

a smart mix of assured additions and 100% premium allocation. Your first

year¶s premium contributes towards guaranteeing you an Assured Addition

Advantage that boosts your fund value at regular intervals throughout the

term of the policy. The

Longer your premium paying term, the higher will be the value of the

advantage.

The Assured Addition Advantage is a powerful combination of two benefits:

A. Fixed Advantage

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The Fixed Advantage benefit is an assured value guaranteed at the end of

your premium payment term. This benefit is calculated as a percentage of

your first year premium depending on the premium payment term chosen,

provided your policy is in force and all premiums are fully paid up to date.

B. Dynamic Advantage

The Dynamic Advantage benefit is an assured bonus addition credited to

your fund value at the end of every 10th, 15th, 20th, 25th and 30th policy

year. This benefit will be calculated as a percentage of the average value of

funds in the three years preceding the benefit allocation, provided your

policy is in force and all premiums are fully paid up to date.

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The Assured Addition Advantage lets you enjoy the benefits of a fixed

assurance and a dynamic benefit directly linked to your fund value, to help

you tread comfortably and swiftly towards your goals.

Further, the plan makes your money work smarter for you through 100%1

premium allocation in each policy year from second year

Onwards, in the funds of your choice. On maturity of your policy, you will

receive the Fund Value and the Fixed Advantage benefit, provided your

premiums are always fully paid up to date. The Dynamic Advantage benefit

would have already been credited in the Fund Value at the specified

intervals to accumulate more for you at the end.

> Wealth Maximization Avenuec

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> High Premium Allocation

Kotak Smart Advantage Plan gives you 100% premium allocation for annual
premium sizes equal to and above Rs.36,000, resulting in greater returns.
Low premium allocation charges of up to 2% are charged for annual
premiums below Rs.36,000. These charges reduce to 0% from the 11th
year onwards.

> Protection for your family (Death Benefit)

In the unfortunate event of death within the term of the policy, your
beneficiary would receive the sum assured or the fund value in the Main
Account plus the Fixed Advantage Benefit, whichever is higher, plus the
fund value in the Top-up account. This plan offers you flexible life cover
options to choose from for the same annual premium.

> Tax Benefits

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Tax Benefits can be availed under section 80C and 10(10D) of Income Tax
Act, 1961. Tax benefits are subject to change in tax laws.



IMPORTANT APPLI ABLE DEDU TIONS UNDER HAPTER VI A OF

TAXATION

SECTION APPLICABLE DEDUCTIONS

80C Investment in saving scheme(initially allowed u/s 88) such as

GPF/PPF/LIC/GIS/NSC/NABARD BOND/ELSS. Tuition fees of
children & repayment of house loan principal, without any interim limit,
max. to Rs. 1 lac, including bank FD for 5yrs or more.

80CCC Premium amount deposited in pension scheme of Govt./Pvt. Insurance

Co., max. up to Rs.100,000.00

80CCD Contribution for assessee/employer in pension schemes of Central

Govt. up to the limit of 10% of salary.

80CCE Investment done u/s 80C, 80CCC & 80CCD combined should not be
more than Rs. 1,00,000.00

80D Premium paid for medical insurance for self husband/wife, or children
maximum up to Rs. 15¶000.00 & Additional Rs. 15,000.00 will be
allowed for Medical Insurance for mother, father from FY 08-09 (but if
age is > 65yrs, then max. up to Rs. 20,000.00).

80DD Deduction of Rs.50,000.00 against expenses of insurance premium

occurred on treatment of dependent disable ( ded. Applicable up to
Rs. 75,000.00 in case of serious disability).

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80E Payment of interest of education loan taken for higher education of

self, spouse or children; without any maximum limit of payment.

80G Donation given in PM/CM relief fund, fully exempted.

80U If assessee him/herself, if completely blind or physically or mentally

disable permanently then deduction of Rs.50,000.00 is allowed.

Important Schemes/Heads for Investment/expenses

SCHEMES/HEADS FOR INVESTMENT/EXPENSES Limit of invest. &

Applicable u/s80C

Contribution of employee in GPF/CPF/PPF MAX. 1.00 LACS

Investment against purchase of NSC, due interest on earlier MAX. 1.00 LACS
purchased NSC (excluding interest of 6th year)

Premium paid during the year in life insurance scheme of Max. 1.00 LAC
Govt./Pvt. Insurance co., postal insurance & ULIP scheme .

Repayment of housing loan (taken for purchase/ construction MAX. 1.00 LACS
of house from approved institution) principal & necessary
expenses as stamp duty, registration fees etc.

Amount paid in the form of tuition fees of child studying in MAX. 1.00 LACS

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college, university, school or other educational institute

(excluding development fee or donation fee) ded. Applicable
up to 2 children only.

Investment for 5 years & above in scheduled bank/ Post MAX. 1.00 LACS
Office as fixed deposit.

ELSS MAX. 1.00 LACS

SR. CITIZEN Deposit scheme of Post Office MAX. 1.00 LACS

6 What can you gain by investing in Kotak Smart

Advantage?

Smart investing is based on the fundamental idea of regular savings and the

power of compounding, which is a great way to multiply your money. It

makes small savings transform into jackpots if planned with a long-term

vision and right investment fund options. Kotak Smart Advantage, with its

power-packed and well-defined fund options, gives you unmatched benefits

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to maximise your earnings potential. Each of these funds is carefully crafted

to suit your individual long-term needs.

You can distribute your investments across one or more funds based on
your needs and goals, keeping in mind your time horizon and risk appetite.

6 Eligibility ± A Ready Reckoner

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ULIP: Unit Linked Insurance Plan

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³A Unit-linked Insurance Plan, or ULIP, is a bundled product that combines

life insurance cover with investing.´

OR

³A ULIP is an investment-linked life insurance plan that combines

investment and protection.´

ULIP

> The premiums that you pay provide you not only with a life insurance
cover, but a part of it gets invested in specific investment funds of
your choice.

> The funds are chosen in accordance to the amount of risk you are
willing to take.

> Choices range between 0% Equity or Full Debt market related

products to 100% Equity.

> As a policyholder, you can choose how you want to allocate your
insurance premiums towards protection and investment.

> The insurance cover would include death benefit, disability & critical
illness.

> The investment fund is divided into units of equal value.

> Prices of these units are published daily in newspapers, so you can
easily track the value of your investments.

ULIP¶s: How exactly they work

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> The costs of a ULIP are deducted from the premium that a
policyholder pays. The premium paid by you, minus any charges
to be deducted, is used to buy units in the fund selected by you at
that day¶s unit price.

> So, more units are added to your account each time you pay your
policy premium. If the unit price is relatively high, you get lesser
number of units & if the unit price is relatively low then you get
more number of units.

> The value of the fund depends on the unit price, which in turn is
determined from the market value of the underlying assets.

> Thus, the fund value is determined by multiplying the number of

units with the price of the unit ±

> (FUND VALUE = UNIT PRICE × NO.OF UNITS)

ULIP¶s: How they differ from Tradit. Plan

> Ulips & endowment plans work differently. A typical endowment

plan mixes Insurance & Investment & assures you a certain sum
at the end of a given period (SA & Bonuses)

> In an endowment plan, the big change has been in the structuring
in bonus payments.

> If it is accumulated & paid either on maturity of the policy or death

of the insured person, it is reversionary bonus.

> If the policy holder is allowed to encash it , it is called non-

reversionary bonus.

> The bonus depends on the performance of the company.

> If the bonus is non-reversionary, some insurers offer other bonus

payment choices.

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> The advantage of a Ulip over Trad. Plans, is that the policy holder
does not have to commit to a fixed level of cover or investment at
the time of inception of policy.

ULIPS : TYPES

È There are 2 types of ULIPS available in the market ±

È Single Premium: a single lump sum premium

A single lump sum premium payment is made. The death cover is

either 125% or 500% of your premium or anything between this The
death benefit is the SA or the value of investment units at the time of
claim whichever is high.

È Regular Premium: monthly, quarterly, half yly, or annually.

The basic insurance cover in the event of death is usually a multiple of the
annual premium .The death benefit payment will be the SA or the value of
investment units at the time of claim, whichever is higher, or both.

HOW FLEXIBLE ARE ULIPS

> The main feature of ULIPS is there flexibility.

> These policies provide flexibility in life protection, investment &

savings, adjustable life cover, fund options.

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> Transparency in charges.

> These policies have options to take additional cover against death
due to accident or disability or critical illness, & liquidity through
partial withdrawals.

> You may vary the amount of your premium payments or cover
according to your changing financial circumstances.

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HAPTER-4

CLASSIFICATION, ANALYSIS
AND INTERPRETATION OF
DATA COLLECTED ACCORDING
TO THE TOPIC ASSIGNED

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LASSIFI ATION OF DATA

On the basis of data which I had collected from different sources and from
different area I had classified data on the basis of some factors which are
listed below

1. Income
2. Qualification
3. Occupation
4. Gender
5. Marital status
6. Age
7. Area
8. Earning source
9. Saving
10. Purpose of investment

On the basis of our mentioned factors I had classified, analyze and interpret
ate data, shown in diagrammatic form to make it easier to understand

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1. WHAT IS YOUR IN OME (ANNUALLY IN RS) ?

1-150000 150000-250000 250000-350000 above350000

18 38 24 20

Interpretation

As from the pie chart it is clear most of the people fall in the income group

of 150000-250000.This income group belongs to the middle class family

and they high urge to invest After this group income level of 250000-350000

have their priority in the investment.

2. WHAT IS YOUR QUALIFI ATION?

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12th Diploma Graduate Post graduate &above

32 8 41 19

Based on the 100 respondent

Interpretation

On the basis of pie chart it is clear that 41% people are graduate who has

shown knee interest in the investment. Yet there are 32% people who are

12th passed but they have very little knowledge about the investment

market.19% people are post graduate & above are partially interested in

investment.

3. O UPATION

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Salaried class Self employed Business class others

65 7 18 10

Interpretation

As per the pie chart it is clear 71% people fall in salaried class and they their

disposal income to invest.20% people come in business class, they have

their high income to invest in a market to get better return on their

investment.

4. GENDER

Male Female
83 17

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Interpretation

On the basis of pie chart it is clear there is dominance of male in the

investment decision .

5. MARITAL STATUS

Married Unmarried
61 39

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Interpretation

As per the pie chart 61% people are married to whom I met. Out of these

people almost 20% are interested to invest their money. However, on the

other end out of 39% unmarried people only 5% are keen to invest in the

market in form of Insurance & Funds.

6. AGE

18-25 years 25-40 years 40-55 years Above 55 years

33 78 34 5

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Interpretation

From the pie chart it is clear that 53% people those fall in the age group

of 25-40 years have shown high potential towards investment. After this

the people of age group of 40-55 years have great interest to invest in

Insurance & Funds Sector.

7.AREA

Rural Urban
28 72

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Interpretation

As per the pie chart it is clear that 72% people are from urban areas and

remaining 28% people are from rural, reason for the low participation from

the rural areas are illiteracy, unawareness and lack of information.

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8.WHAT IS YOUR EARNING SOUR E?

Salary Business Investment Others

69 14 9 8

Interpretation

As per the pie chart 74% people earn money through their salary and

these people are potential customer for the investment and this helps him

to get tax benefits. After that it is business class who wants to get ROI at

higher rate.

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9..WHAT % OF YOUR IN OME YOU SAVE?

0-15% 15-30% 30-40% Above40%

51 41 6 2

Interpretation

As per the pie chart 51% respondent save less than 15% of their total

income these people have high urge to their saving in mutual funds &

insurance to secure their future from any uncertainty.

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10. PURPOSE OF INVESTMENT

Saving for Wealth creation Tax rebate Diversification

future
54 38 5 3

Interpretation

As per the pie chart it is clear that most of the people invest in the

insurance or mutual funds because they want to save something for their

bright future, very less people are interested in tax rebate from investment.

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FINDINGS
As we have seen from the pie charts that people have different need for
the investment and different purpose given below is a chart showing
percentage of people and their investment basis.


 
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ON LUSION
Kotak life insurance is based on the vision that it should understand the

need of customers and offer those superior products and services,

leveraging technology to service customers quickly, efficiently and

conveniently, developing and implementing superior strategies to offer

sustainable and stable returns to our customers and providing an enabling

environment to foster growth and learning for the employees.

The awareness level of the customer for the kotak company and its

products is said to be at moderate level though it is quickly picking up the

speed for growth and development.

From the analysis of various facts and figure collected it can be concluded

that most of the people know about kotak and they are interested in

investment schemes of the company.

Investment decision are not so easy to make but due rapid changing

environment it is vital need to invest in mutual funds and insurance to

secure for the future uncertainty.

Though the awareness level of mutual funds and insurance is quite

moderate but with the help immense advertisement and promotion people

come to know the benefits of mutual funds and insurance.

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SUGGESTIONS

1. Invest their money in the scheme according to the performance or

fundamentally not on the brokers¶ tips.

2. An investor should remember that it is the equity that brings the

highest rate of return but through the long ±term investment and not

through short- term/speculative strategies. But there is high risk in the

equities. If the people invest in mutual funds they will get good return in

the long run as well as short run risk is very less in mutual fund.

Investor should prefer fund rather than equities.

3. Company has to take necessary steps to keep customer updated

regarding the technological up gradations in these facilities.

4. Provide help to the interested investors about the mutual funds and

insurance.

5. Provide financial planning services.

6. Provide value added services to the investors to make them satisfied

and happy.

7. Try to understand the behavior of customer & suggest them the best

product according to their need.

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APPENDIX

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Dear Respondent,

Objective: This is being conducted to understand the investor¶s

preferences and they will keep strictly confidential.

Do you invest in insurance?

1. Yes

2. No

Do you invest in mutual funds?

1. Yes

2. No

Please Tick
A. Which is of the following are preferred, where you invest in saving?

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1. Mutual funds
2. Shares
3. Govt. bonds / PO Deposits
4. Insurance
5. Gold
6. Real estate

B. Purpose of your investment?

1. Savings for future

2. Wealth creation/investment

3.Tax Rebate

4. Diversification

. By what mean you trading in stock market?

1.Online

2.Through Broker/Sub broker

D. Is fluctuation in stock market effect your investment plan?

1. Not at all

2. Little bit

3. Moderate

4. Very much

E. Do you have proper knowledge about the concept of mutual

funds?

1. Yes

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2. No

3. Partial, I would like to know more

F. Do you have proper knowledge about the concept of insurance?

1. Yes

2. No

3. Partial, I would like to know more

G. Which is the best MF, Give Ranking.

1. LIC Mutual Fund

2. Kotak Mutual Fund

3. HDFC Mutual Fund

4. UTI Mutual Fund

H. Why it is the best mutual fund Scheme?

1. High Return

2. Safety

3. Tax saving

4. Liquidity

I. Which is the best mutual fund Scheme?

1. Equity

2. Debt

3. Balanced

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4. Tax saving scheme

J. Rank these consultancy firms, as per your preference of (1-5 in

descending order)

1. Bajaj capital

2 .India Bulls

3. Karvy

4. Kotak Securities

5. HSBC

6. Other (please specify )

K. Do you have any knowledge about financial planning?

1. Yes

2. No

3. Partial, I would like to know more

L. What is your earning source?

1. Salary

2. Business

3. Investment

4. Others««««««««««««..

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M. What is your income (Annually in Rs.)?

1.1-150000

2. 15000-25000

3.25000-30000

4. Above 35000

N. What percentage of your income you save?

1.0-15%

2.15-30%

3.30-40%

4.Above 40%

O. Please comment on kotak life insurance«««...........