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SUMMER TRAINING PROJECT

Submitted in partial fulfillment for the degree of

Bachelor of Business Administration


from

Rajasthan University

ICICI PRUDENTIAL LIFE


INSURANCE

Supervised by:
Mr. Manohar Singh
Assistant Agent Manager of
icici prudential life insurance
ACKNOWLEDGEMENT

I would like to acknowledge my sincere thank to the


management of ICICI prudential life insurance for allowing
me to be associated with them, which has helped me
immensely in enriching my knowledge and gaining a
valuable insights into the practical of management.

I would extend my thanks to Mr. manohar singh, Assistant


Sales Manager, Mr. Deepak Singh, Branch Manager and all
other staff of ICICI prudential for helping me in
accomplishing my training.

I would also express thanks to my respected all the faculty


of my institute, without their guidance my training would
never be successful.
PREFACE

As part of the course curriculum of the bachelor of Business


Administration, the students have undergone practical
training for two weeks.

The underlying object of the training is to provide the


student with practical aspect of the organizations working in
an environment. Such type training help the student to work
on real industrial environment and to gain practical
knowledge and build confidence.

As the part of this curriculum, I took my training in ICICI


prudential life insurance. The training covered all the aspect
of learning about unit life insurance plan.

As we know that declining rate in traditional investments


have created urge among the people for new avenues of
investments, ICICI prudential life insurance plan prove to be
one such investment which provide a combination of good
return with all tax benefits that in turn help people to get
maximum returns and benefits on their savings. ICICI
prudential is the combination of mutual funds and insurance.

Practical training in any organization is must for every


management student as it is better of learning concepts and
helps the student to instrument those concept in the real co-
orporate world.

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Table of Contents
ACKNOWLEDGEMENT...........................................................2
PREFACE...............................................................................3
Table of Contents ................................................................4
PROJECT OBJECTIVES............................................................5
......................................................................................6
RESEARCH METHODOLOGY................................................7
PRIMARY DATA:............................................................................................8
SECONDARY DATA:......................................................................................8
INTRODUCTION.....................................................................9
ABOUT ICICI PRUDENTIAL...................................................11
ABOUT THE PROJECT........................................................... 14
Mutual Funds..............................................................................................16
TYPES......................................................................................................... 16
ADVANTAGES.............................................................................................18
LIFE INSURACE.........................................................................................21
When to consider term insurance?.............................................................25
What are the different types of term insurance policies?...........................26
ULIP (Unit Link Investment Plan)................................................................28
ADVANTAGES.............................................................................................29
ULIPs vs Mutual Funds................................................................................32
ABOUT THE PRODUCT.........................................................33
ClassicLife Premier.....................................................................................34
Flexi Cash Flow Money Back Plan...............................................................38
Flexi Save Plus Endowment Plan................................................................42
Classic Life.................................................................................................46
OBSERVATION....................................................................50
QUESTIONAIRE.................................................................... 52
Personal investment Risk Profile................................................................53
BIBLIOGRAPHY...........................................................................................55
THANK YOU......................................................................... 56

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PROJECT
OBJECTIVES
The main objectives of my project “Merging insurance
with mutual funds” in icici prudential are as follows :

• To know the new concept of investment coming up in


the market.

• To know the tax benefits available under different


traditional schemes and under the new investment
schemes.

• To know the products available under ULIP (Unit Link


Investment Plan).

• To know the saving and investment habits of people.

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RESEARCH
METHODOLOGY
To accomplish the project following research methodology
were used:

PRIMARY DATA:
Questionnaire
Personal Interview

SECONDARY DATA:
Brochures of ICICI prudential

Factsheeet of ICICI prudential

Website of ICICI prudential

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INTRODUCTION
ICICI Prudential Life Insurance Company is a joint venture
between ICICI Bank, which is one of India's foremost
financial services companies, and Prudential plc, which is a
leading international financial services group headquartered
in the United Kingdom. ICICI Prudential began the operations
in December 2000. Today, this company has over 2100
branches, which include 1,116 micro-offices, over 290,000
advisors and 18 banc assurance partners.

ICICI Prudential Life Insurance Company is the first life


insurer in India that received a National Insurer Financial
Strength rating of AAA (Ind) from Fitch ratings. ICICI
Prudential has been voted as India's Most Trusted Private
Life Insurer for three consecutive years. ICICI Prudential Life
Insurance Company has various insurance plans that have
been designed for different individuals, as every individual
has different insurance needs. Given below is a list of plans
provided by ICICI Prudential Life Insurance Company:

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ABOUT ICICI PRUDENTIAL

ICICI Prudential is the largest private insurance company


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

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Since the liberalization of Indian Insurance sector, ICICI
Prudential Life Insurance has been one of the earliest private
players. Since the time, ICICI Pru Life has been the leader in
terms of market share as indicated by the IRDA (Insurance
Regulatory and Development Authority, the regulator for
Indian Insurance Industry) at its website.

Arguably the most innovative Indian Life insurer in terms of


customer services and products, ICICI Prudential has one of
the largest distribution and servicing network with over
2,000 proprietary offices & customer touch points across
India. The 30,000 employee strong organization has one of
the largest agency distribution in the industry.

With a growing product range to match the complex needs


of the demanding customers in a growing economy, the
organization also has a history of successful.

During 2007-08, the organization's focus on rural business


has proved its complex project execution capability and
strong partnerships for customer servicing.

In June, 2009 ICICI Prudential Life Insurance has decided to


snap its tie up with TTK Healthcare to settle insurance
claims of its users.

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The ICICI prudential life insurance around the world, offer
innovative and practical financial solutions to individuals and
corporations.

• Life, Health and Disability


• Pension Funds and Plans
• Investment Management
• Annuities and Savings
• Trust, Brokerage and Banking

provide wealth management and protection products to


customers while the Distribution and Securities companies
provide brokerage and trading services for investment in
equities, debt securities, fixed deposits, etc.

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ABOUT THE
PROJECT
A bout t he P roduct

Ter m Ins u ra n ce M ut ua l Fun ds

ULIP
(Un it Link
Inves t m ent P lan)

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Mutual Funds
A mutual fund is simply a financial intermediary that allows
a group of investors to pool their money together with a
predetermined investment objective. The mutual fund will
have a fund manager who is responsible for investing the
pooled money into specific securities (usually stocks or
bonds). When we invest in a mutual fund, we are buying
shares (or portions) of the mutual fund and become a
shareholder of the fund.

Mutual funds are one of the best investments ever created


because they are very cost efficient and very easy to invest
in (we don't have to figure out which stocks or bonds to
buy).Pooling money together in a mutual fund, investors can
purchase stocks or bonds with much lower trading costs
than if they tried to do it on their own. But the biggest
advantage to mutual funds is diversification.

TYPES
Diversification is the idea of spreading out the money across
many different types of investments. When one investment
is down another might be up. Choosing to diversify the
investment holdings reduces the risk tremendously.
The most basic level of diversification is to buy multiple
stocks rather than just one stock. Mutual funds are set up to
buy many stocks (even hundreds or thousands). Beyond
that, we can diversify even more by purchasing different
kinds of stocks, then adding bonds, then international, and
so on. It could take weeks to buy all these investments, but
if we purchase few mutual funds we could do it in a few
hours because mutual funds automatically diversify in a
predetermined category of investments (i.e. - growth
companies, low-grade corporate bonds, international small
companies).

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The three major types of mutual funds are as under:

• Money Market Funds


• Bond Funds
• Stock Funds

Money Market Funds


These funds are a great place to park our money. Whether
we're storing money for emergencies, saving for the short-
term, or looking for a place to store cash from the sale of an
investment, money market funds are a safe place to invest.
These funds invest in short-term debt instruments and
typically produce interest rates that double what a bank can
offer in a checking account or savings account and rival the
returns of a CD (Certificate of Deposit).

Bond Funds
Bond funds carry more risk than money market funds are
often used to produce income (useful in retirement) or to
help stabilize a portfolio (diversification). The primary types
of bond funds are:

• Municipal Bond Funds -uses tax-exempt bonds


issued by state and local governments (these funds
are non-taxable).
• Corporate Bond Funds -uses the debt obligations of
corporations.
• Mortgage-Backed Securities Funds - uses securities
representing residential mortgages.

Another way bond funds are often classified is by maturity,


or the date the borrower (whether it be the bank, the
government, a corporation or an individual) must pay back
the money borrowed. Using this classification bonds are
often called short-term bonds, intermediate-term bonds, or
long-term bonds.

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Stock Funds
Stocks funds are considered riskier than bond funds
(although certain bond funds can be very risky) and are
used for growing your money. Money market funds and
bond funds typically provide returns just a percentage or
two above inflation, but stock funds should do much better
over long periods of time.

ADVANTAGES
It seems strange to compare mutual funds to stocks since
mutual funds are primarily composed of stocks, but it is
important to distinguish the two because there are some
notable advantages to using mutual funds.

Get Focused
I will admit that investing in individual stocks can be fun
because each company has a unique story. However, it is
important for people to focus on making money. Investing
isn't a game. Your financial future depends on where you
put you hard earned dollars and it shouldn't be taken lightly.

Diversification
There is no greater advantage to using mutual funds than
diversification. Do you honestly believe wealthy investors
purchase just a couple of stocks? Of course not! If they are
not using mutual funds (many do), than they are purchasing
a large number of stocks. Smart investors diversify because
it greatly reduces risk without sacrificing returns.

Professional Management
By purchasing mutual funds, you are essentially hiring a
professional manager at an especially inexpensive price. It
would be a bit cocky to think that you know more than
mutual fund manager. These managers have been around
the industry for a long time and have the academic
credentials to back it up. Saying you could outperform a
mutual fund manager is similar to a football fan sitting on

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their couch saying "I could have made that catch" -possible,
but not likely.
Even if some of us are better at picking stocks than a
professional and their support staff, most of us would not
want to spend the amount of time it takes to watch,
research and trade the market on a daily basis.

Efficiency
By pooling investors' monies together, mutual fund
companies can take advantage of economies of scale. With
large sums of money to invest, they often trade commission-
free and have personal contacts at the brokerage firms.

Ease of Use
Can you imagine keeping track of a portfolio consisting of
hundreds of stocks? The bookkeeping duties involved with
stocks are much more complicated than owning a mutual
fund. If you are doing your own taxes, or are short on time,
this can be a big deal.

Liquidity
If you find yourself in need of money in a short amount of
time, mutual funds are highly liquid. Simply put in your
order during the day and when the market closes a check
will be sent to you or you can have it wired to a bank
account. Stocks can be much more difficult depending on
what kinds of stocks you are invested in. CD's offer no
liquidity (not without a hefty fee) and bonds can be difficult,
too. Some mutual funds also carry check writing privileges,
which means you can actually write checks from the
account, similar to your checking account at the bank.

Cost
Mutual funds are excellent for the new investors because
you can invest small amounts of money and you can invest
at regular intervals with no trading costs. Stock investing,
however, carries high transaction fees making it difficult for
the small investor to make money. If an investor wanted to

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put in $100 a month into stocks and the broker charged $15
per transaction, their investment is automatically down 15
percent every time they invest. That is not a good way to
start off!
Wealthy stock investors get special treatment from brokers
and wealthy bank account holders get special treatment
from the banks, but mutual funds are non-discriminatory. It
doesn't matter whether you have $50 or $500,000; you are
getting the exact same manager, the same account access
and the same investment.

Risk
In general, mutual funds carry much lower risk than stocks.
This is primarily due to diversification (as mentioned above).
Certain mutual funds can be riskier than individual stocks,
but you have to go out of your way to find them.
With stocks, one worry is that the company you are
investing in goes bankrupt. With mutual funds, that chance
is next to nil. Since mutual funds typically hold anywhere
from 25-5000 companies, all of the companies that it holds
would have to go bankrupt.
I won't argue that you shouldn't ever invest in individual
stocks, but I do hope you see the advantages of using
mutual funds and make the right choice for the money that
you really care about.

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LIFE INSURACE
MEANING- The business of insurance is related to the
protection of the economic value of assets. Every Asset has
a value. The asset would have been created thought the
efforts of the owner. The Assets is valuable to the owner,
because he expects to get some benefits from it. It is a
benefit because it meets some of his needs. The benefit
may be an income or in some other form. In the case of a
factory or a cow, the product generated by it is sold and
income is generated. In the case of motor car, it provides
comfort and convenience in transportation. There is no
direct income. Both are assets and provide benefits.

Along with your savings and investment strategy, life


insurance should be part of your long-term financial
planning.

You may not like to think about it, but your death can be
costly to your loved ones. At the very least, there will be
funeral and burial costs. There may also be estate taxes and
outstanding debts to pay, such as medical expenses not
covered by health insurance. If you have dependents, they
will have to cope with these costs while no longer having
your income to rely on. The proceeds from a life insurance
policy can be of tremendous value at this time. It will
provide economic assistance to your family so they can pay

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off the mortgage, college tuition and other ongoing
expenses and maintain their current lifestyle.
LIFE INSURANCE PLANS

Education Insurance Plans

• Smart Kid New Unit-linked


• Regular Premium
• Smart Kid New Unit-linked
• Single Premium
• Smart Kid Regular Premium

Wealth Creation Plans

• Wealth Advantage
• LifeStage Assure
• LifeTime Gold
• LifeLink Super
• LifeStage RP

Premium Guarantee Plans

• InvestShield Life New


• InvestShield CashBank

Protection Plans

• Pure Protect
• Life Guard
• Save 'n' Protect
• CashBak
• Home Assure

Retirement Solutions

• Life Stage Pension


• LifeTime Super Pension
• LifeLink Super Pension
• ForeverLife Plan
• Immediate Annuity

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Health Coverage Plans

• Health Saver
• Medi Assure
• Hospital Care
• Crisis Cover

• Cancer Care
• Diabetes Care Active
• Diabetes Assure

ICICI Pru Group Solutions Advantage

• Group Super Annuation


• Group Gratuity Plan
• Annuity Solutions
• Group Term Insurance Plan
• Group Term Insurance in lieu of EDLI

Rural Plans

• ICICI Pru Suraksha


• ICICI Pru Suraksha Kavach

Micro Insurance Plans

• ICICI Pru Sarv Jana Plan

There are many choices when it comes to life insurance and


over 1,500 insurance companies to choose from, so it is
important to work with a knowledgeable insurance agent or
company representative.

Many financial experts consider life insurance to be the


cornerstone of sound financial planning. It is generally a
cost-effective way to provide for your loved ones after you
are gone. It can be an important tool in the following ways:

1. Income replacement
The key economic asset for most people is their ability to
earn a living. If you have dependents, then you need to
consider what would happen to them if they no longer
have your income to rely on. Proceeds from a life

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insurance policy can help supplement retirement
income. This can be especially useful if the benefits of
your surviving spouse or domestic partner will be
reduced after your death.

2. Pay outstanding debts and long-term obligations


Consider life insurance so that your loved ones have
the money to offset burial costs, credit card debts and
medical expenses not covered by health insurance. In
addition, life insurance can be used to pay off the
mortgage, supplement retirement savings and help pay
college tuition.

3. Estate planning
The proceeds of a life insurance policy can be
structured to pay estate taxes so that your heirs will
not have to liquidate other assets.

4. Charitable contributions
If you have a favorite charity, you can designate some
of the proceeds from your life insurance to go to this
organization.

While there a many different types of life insurance policies,


they generally fall into two categories – term and
permanent.

Term
Term Insurance is the simplest form of life insurance. It
provides financial protection for a specific time, usually from
one to 30 years. These policies are relatively inexpensive
and are well suited for goals, such as insurance protection
during the child-raising years or while paying off a
mortgage. They provide a death benefit, but do not offer
cash savings.

Purchasing term insurance is like renting a home. It is a


short-term solution. Monthly costs are usually lower, but you
will not be building equity. Just as many people rent (while
saving to buy a home), individuals who need insurance
protection now, but have limited resources, may purchase

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term coverage and then switch to permanent protection.
Others may view term insurance as a cost-effective way to
protect their family and still have money to put into other
investments.

Permanent
Permanent insurance (such as universal life, variable
universal life and whole life) provides long-term financial
protection. These policies include both a death benefit and,
in some cases, cash savings. Because of the savings
element, premiums tend to be higher. This type of insurance
is good for long-range financial goals.

Purchasing permanent insurance is like buying a home


instead of renting. You are taking care of long-term housing
needs with a long-term solution. Your monthly costs may be
higher than if you rent, but your payments will build equity
over time. If you purchase permanent insurance, your
premiums will pay a death benefit and may also build cash
value that can be accessed in the future.

When to consider term insurance?


If you need life insurance for a specific period of time, term
insurance should be considered. It provides insurance
protection from one to 30 years and is generally the least
expensive form of life insurance. If you die during the term
of the policy, your beneficiary will be paid the amount of
money specified in the policy. If you are still alive at the end
of the term, coverage stops unless the policy is renewed.
Unlike permanent insurance, you will not build equity in the
form of cash savings.

Term insurance can be a useful financial tool for:

• Those who need a large amount of life insurance, but


have a limited budget, such as a young couple, with
children.
• Covering debts that will disappear in time, such as a
mortgage or car loan.

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• Business owners who want to cover the life of a key
employee for a specific number of years.

Keep in mind that premiums are lowest when you are young
and increase upon renewal as you age. Some term
insurance policies can be renewed when the policy ends, but
the premium will generally increase. Many policies require a
medical examination at renewal to qualify for the lowest
rates. Before deciding on a policy from a specific company,
find out what their requirements are. Also, see if you would
be able to convert the term policy to a permanent policy
later on.

If you think your financial needs will change, you may also
want to look into “convertible” term policies. These allow
you to convert to permanent insurance without a medical
examination in exchange for higher premiums.

What are the different types of term


insurance policies?
Renewable Term Insurance
This policy allows you to renew coverage at the end of the
term without having to submit medical information. The
company renews your policy even if your health has
deteriorated. However, the premium rate will usually rise
with each renewal.

Convertible Term Insurance


You can convert your term coverage into a permanent policy
without providing evidence of insurability (usually a medical
exam). Premiums for convertible policies are usually higher
than for nonconvertible policies. Once converted, the
premiums for the permanent coverage will be higher than
those you are currently paying for the term policy for the
same death benefit. However, the premiums for the
permanent policy will now remain the same while the term
premiums will continue to rise on renewal.

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Level Term Insurance
These policies provide a fixed premium for a certain years,
usually 10 or 20 years, while the death benefit remains
unchanged. The advantage is that you lock in a certain rate
for the period of the policy. The disadvantage is that rates
will jump considerably if you want to renew with another
level policy.

Decreasing Term Insurance


The death benefit in this type of policy decreases over its
term. For example, you might start with $100,000 of
coverage and the amount of coverage would decrease by
$10,000 each year for 10 years. The premium will vary over
the term of the policy. This policy is no longer sold very
often.

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ULIP (Unit Link Investment Plan)
UNIT-linked insurance plans (ULIPs) are the flavour of the
season. Launched a couple of years ago, these plans have
contributed over 50 per cent of the new business of
insurance companies such as ICICI Prudential and Birla Sun
Life.
Encouraged by the response, other players, too, are
launching variants of savings and endowment plans in the
unit-linked format. A recent addition to the range of
insurance products,
ULIPs claim to give an investor the best of both worlds —
high returns and risk cover.

Mutual funds is the 'safety of the principal' guaranteed, plus


the added advantage of capital appreciation together with
the income earned in the form of interest or dividend.
Insurance is a provision against risk and it is a device with
which man tries to protect himself from risk in life. The
recent development in the financial innovation is Unit Link
Insurance Policy (ULIP), which covers the concept of mutual
fund and insurance.

A Unit Link Insurance Policy (ULIP) is one in which the


customer is provided with a life insurance cover and the
premium paid is invested in either debt or equity products or
a combination of the two. In other words, it enables the
buyer to secure some protection for his family in the event
of his untimely death and at the same time provides him an
opportunity to earn a return on his premium paid. In the
event of the insured person's untimely death, his nominees
would normally receive an amount that is the higher of the
sum assured or the value of the units (investments). To put
it simply, ULIP attempts to fulfill investment needs of an
investor with protection/insurance needs of an insurance
seeker. It saves the investor/insurance-seeker the hassles of
managing and tracking a portfolio or products.

However, there are some schemes in which the policyholder


receives the sum assured plus the value of the investments.
Various schemes have been tailored to suit different
customer profiles and, in that sense, offer a great deal of

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choice. The advantage of ULIP is that since the investments
are made for long periods, the chances of earning a decent
return are high. Just as in the case of mutual funds, buyers
who are risk averse can buy debt schemes while those who
have an appetite for risk can opt for balanced or equity
schemes.

ADVANTAGES
Mode of investment/ investment amounts
ULIP investors also have the choice of investing in a lump
sum (single premium) or using the conventional route, i.e.
making premium payments on an annual, half-yearly,
quarterly or monthly basis. In ULIPs, determining the
premium paid is often the starting point for the investment
activity.
This is in stark contrast to conventional insurance plans
where the sum assured is the starting point and premiums
to be paid are determined thereafter.

ULIP investors also have the flexibility to alter the premium


amounts during the policy's tenure. For example an
individual with access to surplus funds can enhance the
contribution thereby ensuring that his surplus funds are
gainfully invested; conversely an individual faced with a
liquidity crunch has the option of paying a lower amount
(the difference being adjusted in the accumulated value of
his ULIP). The freedom to modify premium payments at
one's convenience clearly gives ULIP investors an edge over
their mutual fund counterparts.

Expenses
Insurance companies have a free hand in levying expenses
on their ULIP products with no upper limits being prescribed
by the regulator, i.e. the Insurance Regulatory and
Development Authority. This explains the complex and at
times 'unwieldy' expense structures on ULIP offerings. The
only restraint placed is that insurers are required to notify

- 29 -
the regulator of all the expenses that will be charged on
their ULIP offerings.
Expenses can have far-reaching consequences on investors
since higher expenses translate into lower amounts being
invested and a smaller corpus being accumulated. ULIP-
related expenses have been dealt with in detail in the article
"Understanding ULIP expenses".

Portfolio disclosure
There is lack of consensus on whether ULIPs are required to
disclose their portfolios. During our interactions with leading
insurers we came across divergent views on this issue.
While one school of thought believes that disclosing
portfolios on a quarterly basis is mandatory, the other
believes that there is no legal obligation to do so and that
insurers are required to disclose their portfolios only on
demand.
Some insurance companies do declare their portfolios on a
monthly/quarterly basis. However the lack of transparency
in ULIP investments could be a cause for concern
considering that the amount invested in insurance policies is
essentially meant to provide for contingencies and for long-
term needs like retirement; regular portfolio disclosures on
the other hand can enable investors to make timely
investment decisions.

Flexibility in altering the asset allocation


Most insurance companies permit their ULIP inventors to
shift investments across various plans/asset classes either
at a nominal or no cost (usually, a couple of switches are
allowed free of charge every year or a cost has to be borne
for additional switches).
Effectively the ULIP investor is given the option to invest
across asset classes as per his convenience in a cost-
effective manner.
This can prove to be very useful for investors, for example in
a bull market when the ULIP investor's equity component
has appreciated, he can book profits by simply transferring
the requisite amount to a debt-oriented plan.

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Tax benefits
ULIP investments qualify for deductions under Section 80C
of the Income Tax Act. This holds well, irrespective of the
nature of the plan chosen by the investor.
Maturity proceeds from ULIPs are tax free. In case of equity-
oriented funds (for example diversified equity funds,
balanced funds), if the investments are held for a period
over 12 months, the gains are tax free; conversely
investments sold within a 12-month period attract short-
term capital gains tax @ 10%.
Similarly, debt-oriented funds attract a long-term capital
gains tax @ 10%, while a short-term capital gain is taxed at
the investor's marginal tax rate.
Despite the seemingly similar structures evidently both
mutual funds and ULIPs have their unique set of advantages
to offer. As always, it is vital for investors to be aware of the
nuances in both offerings and make informed decisions.

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ULIPs vs Mutual Funds
Basis ULIPs Mutual Funds
Investmen Determined by the Minimum investment
t amounts investor and can be amounts are determined
modified as well by the fund house
Expenses No upper limits, Upper limits for expenses
expenses determined chargeable to investors
by the insurance have been set by the
company regulator
Portfolio Not mandatory* Quarterly disclosures are
disclosure mandatory
Modifying Generally permitted Entry/exit loads have to
asset for free or at a be borne by the investor
allocation nominal cost
Tax Section 80C benefits Section 80C benefits are
benefits are available on all available only on
ULIP investments investments in tax-saving
funds

- 32 -
ABOUT THE
PRODUCT

- 33 -
In icici prudential life Insurance there were various types
ULIP suiting the various needs of the customers. Some of
them are as follows:

ClassicLife Premier
For the select few like you, settling for anything short of the
best is an unthinkable compromise. We, at ICICI Prudential
Life Insurance, understand you and hence have created a
plan that keeps pace with your ever growing success.
ClassicLife Premier is a plan that not only helps you save for
the future, but also lets you reap rich benefits from the
investments of your choice especially at a time when your
need for family protection reduces significantly. We realize
that when you look at a life insurance policy, you look for
something that will act as a protector as well as an
enhancer.
The unit linked, investment-oriented insurance plan is as
flexible as life and will help you strike the right proportion
between protections and savings during your life yet last
you a lifetime.

How does ClassicLife Premier ensure me superior


benefits?
• You have the choice of 5 fund options with the
flexibility to allocate premiums@ in varying
proportions into different options or even switch*
between the investment options.

• You can top-up your Policy Fund whenever you


have additional savings. The minimum amount of
top-ups will be Rs. 10,000.

• The plan offers you further benefits in the form of


additional units, which will be credited to the Policy
Fund at the end of the 10th policy year and at the

- 34 -
end of every 5th year thereafter.

• There is high liquidity in the form of withdrawals


and surrender benefits.

• You retain the flexibility to increase the Face


Amount of the policy depending on your varying
need for life insurance.

• Death benefits, which will be higher of the policy


fund or face amount, reduced by the applicable
withdrawals (refer section on death benefits given
later in the brochure)

What are the options available in the product?


Duration of the product
You have the option of taking the plan till the age of 75
years or till the age of 100 years.

Premium Payment Term


The premium is payable for the payment term (pay) that
you opt for. You have the following options to choose from:
 To age 75 years: 3 pay, 5 pay
 To age 100 years: 10 pay, 15 pay, 20 pay or
pay throughout the duration of the plan.

Entry Age
The minimum entry age is 30 days and the maximum entry
age is 65 years making it a very convenient plan for all.

What are the premiums that I need to pay and the


various payment options?
Premium Amount
The premium amount is entirely flexible, subject to a
minimum annual premium amount of Rs.25,000. To give you
an idea of the flexibility in the premium payment, the plan
allows you to:
Pay top-up premiums whenever you have additional savings.
You can pay additional amounts over and above the regular

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premium amount whenever you have additional savings.
These amounts, which you deposit, get added to your Policy
Fund so that you do not have to look for other investment
opportunities for your money. The minimum amount of top
ups will be Rs. 10,000.
Pay premiums at your convenience. You have the option of
paying the premiums on a monthly (through ECS only),
quarterly, semi-annual and annual basis.

How much life insurance cover is available in the plan?


Face Amount
The life insurance cover will be equal to 10 times the
premium amount that you choose to pay. Thus the minimum
face amount in the plan is Rs. 2,50,000. You can increase
the Face Amount chosen by you during the tenure of the
plan.

Vary the Face Amount


Depending on your changing needs during your lifetime you
can increase the amount of life insurance cover. So if you
feel that your need for life insurance cover is more then you
can increase the Face Amount of life insurance. The Life
Insurance Coverage Face Amount may be increased once
every five years after first five policy years. Any change will
be allowed only on the Policy Anniversary. The minimum
amount of increase will be Rs.50, 000 and is subject to the
underwriting and administrative rules of the company then
in force. A fee would be charged to cover the costs of any
medical underwriting requirements and administrative
expenses. As per the current administrative rules, the fee is
Re. 1 per thousand of the Life Insurance Coverage Face
Amount.

What are the various Investment Fund options available


in the plan?
Choice of Investment Funds
You can choose from 5 Investment Fund options to match
your risk profile and help you earn efficient returns on your

- 36 -
funds.
If you wish to diversify your risk, you can choose to allocate
your premium in varying proportions amongst the available
Investment Fund options and create your own fund. You can
switch* between the fund options or change the allocation
into the various funds@ anytime after the first policy year.
The portfolio of the different funds is given below:

Upper limit of
Protecto Builde Enhance Creato Magnifie
Percentage of
r r r r r
assets in:
Government and
government 85% 70% 55% 60% 100%
approved securities
Corporate bonds
rated AA or above
by CRISIL or any
30% 30% 30% 30% 25%
equivalent rating by
any approved
rating agency
Money market and
20% 20% 20% 20% 20%
other liquid assets
Infrastructure
sector as defined 25% 25% 25% Nil Nil
by the IRDA
Listed equities 10% 20% 35% 50% 90%

The funds have a varying amount of debt and equity. You


can select the funds based on your risk preference and
switch between the funds based on market performance.

- 37 -
Flexi Cash Flow Money Back Plan
What makes this plan attractive is the lump sum tax free*
payments at regular intervals to meet your various financial
obligations at crucial junctures such as education of your
child or marriage.

Unique Features:
• Unit-Linked plan to give you efficient earnings in
the long term.
• Three investment fund options: Protector, Builder
and Enhancer, with the freedom to switch between
Funds any time after the first policy year.
• Flexibility to make additional lump sum
investments (top ups) to increase the savings
portion of your policy. Minimum Guaranteed returns
of 3% p.a. on your premium net of all Policy Fee and
Charges. The entire upside on the performance of
the fund is passed on to you.
• Options to make tax-free withdrawals from your
Fund anytime after two years.
• Loan against your policy or surrender of the policy
without penalty after 4 policy years.
• Vary the Face Amount during the premium paying
period depending on your life insurance
requirements.
• Convenient premium payment options: Single Pay,
Short Pay or Regular Pay.

- 38 -
Flexi Cash Flow - Money Back Plan
Entry Age 30 days - 65 years
Minimum Face Rs 50,000 for minors and Rs 75,000 for adults
Amount
Duration of the As per policy term - 10, 15, 20 or 25 years
plan
Premium Paying Single pay, 5,10, 15, 20 years or over the duration of
Period the plan
Premium Annually, semi-annually, quarterly, monthly
Payment (ECS/Standing Instruction/Salary deduction) or one-
Frequency time payment
Maturity Benefits Policy fund
Amount due to Face amount + Policy Fund (Where the policy is
nominee in event bought on or prior to the 1st birthday of the insured,
of death of the only Policy Fund is payable to the policy owner in the
life insured event of death of the life insured within the first
policy year)
Free Look Period 15 days from the date on which you receive the
policy document
Tax Benefits Under Section 80C and 10(10D) of the Income Tax
Act, 1961 **

Top Up Your Policy Fund


You can top up your Policy Fund with additional amounts
whenever you have extra savings. Top up premiums will
increase the savings portion of your policy without affecting
the Face Amount. The top up premiums that can be
deposited will be subject to the prevailing administrative
rules of BSLI.

Vary Your Plan Face Amount


Depending on your changing needs for Life Insurance during
your lifetime; you have the option of varying the Life
Insurance cover under your policy once in every five policy
years. The minimum amount of change will be Rs. 50,000
and will be subject to underwriting and other rules of BSLI
prevailing at the time of change. This change will result in a
change in the premiums to be paid. This change will be
subject to the permissible limits of minimum Face Amount.

- 39 -
Keep Track of your Policy Fund
ICICI Prudential Life Insurance will send you an annual Policy
Statement on every Policy Anniversary to keep you
completely informed on the performance of your fund.

Electronic Clearing Service (ECS):


The ECS is a convenient and hassle-free method of paying
your premiums through an electronic debit to your bank
account.

Riders:
You can further customize your ICICI Prudential Life
Insurance Plan by adding riders to the base plan at the
marginal extra cost.

• Accidental death and Dismemberment


Benefit Rider: It provides 100% of coverage in case
of death due to accident; loss of more than one limb
or sight in both the eyes or in case of loss of one
limb and loss of sight in one eye; 50% coverage in
case of loss of one limb or sight in one eye.
• Term Rider: It provides additional amount of
cover in the event of death of the life insured.
• Critical Illness Rider: It provides a cover in the
event of life insured being diagnosed as suffering
from any of four illnesses specified under the Critical
Illness Rider.
• Critical Illness Plus Rider: It provides a cover in
the event of life insured being diagnosed as suffering
from any of the seventeen illnesses specified under
the Critical Illness Plus Rider.
• Critical Illness Woman Rider: It provides a
cover against several critical illness including woman
specific illnesses, pregnancy complications and
congenital anomalies in a new born child.
• Waiver of Premium: This rider waives
payment of future premiums on the happening
of any of the unforeseen events as covered
under this rider.

- 40 -
Investment Fund Portfolio:
Upper Limit of Percentage of
Protector Builder Enhancer
Assets In:
Govt. and Govt. approved
85% 70% 55%
Securities
Corporate Bonds (Rated AA and
30% 30% 30%
Above)
Money market and other Liquid
20% 20% 20%
assets
Infrastructure sector as Defined by
25% 25% 25%
the IRDA
Listed equities 10% 20% 35%

- 41 -
Flexi Save Plus Endowment Plan
Flexi Save Plus Endowment Plan not only offers you the
advantages of a Unit-Linked plan but also provides you the
opportunity to make large tax-free savings over a long
period. Thanks to the benefits of compounding, it empowers
you with a substantial amount to meet the bigger
requirements of life.

Unique Features:
• Unit- Linked plan to give you efficient earnings in
the long term.
• Three Investment Fund Options: Protector, Builder
and Enhancer, with the freedom to switch between
funds any time after the first policy year.
• Flexibility to make additional lump sum
investments (top ups) to increase the savings
portion of your policy.
• Minimum guaranteed returns of 3% p. a. on your
premium net of all policy fees and charges. The
entire upside on the performance of the fund is
passed on to you.
• Options to make tax free withdrawals from your
fund, any time after two years.
• Loan against your policy or surrender of the policy
without penalty after 4 policy years.
• Vary the Face Amount during the Premium Paying
Period depending on your requirements.
• Convenient premium payment options: Single Pay,
Short Pay or Regular Pay.

- 42 -
Flexi Save Plus - Endowment Plan - Plan Details
Entry Age 30 days -65 years
Minimum Face
Rs.50,000 for minors and Rs.75,000 for adults
Amount
As per policy term - 5, 10, 15, 20, 25, or 30 years
Duration of the plan or as per maturity age - 15,20,25,30, 35 years for
minors and 60, 65, 70, 80, years for adults
Premium Paying Single pay, 5,10, 15, 20 years or over the duration
Period of the plan
Annually, semi- annually, quarterly, monthly
Premium Payment
(through ECS/Standing Instructions/Salary
Frequency
Deduction)or one- time payment
Maturity Benefits Policy Fund
Face amount + Policy Fund (Where the policy is
Amount due to
bought on or prior to the 1st birthday of the life
nominee in event of
insured, only Policy Fund is payable to the policy
death of the life
owner in the event of death of the life insured
insured
within the first policy year)
15 days from the date on which you receive the
Free Look Period
policy document
Under Sec 80C and Sec 10 (10D) of the Income Tax
Tax Benefits
Act 1961**

Top Up Your Policy Fund:


You can top up your Policy Fund with additional amounts
whenever you have extra savings. Top up premiums will
increase the savings portion of your policy without affecting
the Face Amount. The top up premiums that can be
deposited will be subject to the prevailing administrative
rules of BSLI.

Vary Your Plan Face Amount:


Depending on your changing needs for Life Insurance during
your lifetime, you have the option of varying the Life
Insurance cover under your policy once in every five policy
years. The minimum amount of change will be Rs. 50,000
and will be subject to underwriting and other rules of BSLI
prevailing at the time of change. This change will result in a
change in the premiums to be paid. This change will be
subject to the permissible limits of minimum Face Amount.

- 43 -
Keep Track of Your Policy Fund:
Birla Sun Life Insurance will send you an annual Policy
Statement on every Policy Anniversary to keep you
completely informed on the performance of your fund. The
performance of the various funds (based on unit price) will
be available on our web site, www.birlasunlife.com as well
as in the newspapers.

Electronic Clearing Service (ECS):


The ECS is a convenient and hassle-free method of paying
premiums through an electronic debit to your bank account.

Riders:
You can further customize your Birla Sun Life Insurance Plan
by adding riders to the base plan at a marginal extra cost.

• Accidental death and Dismemberment


Benefit Rider: It provides 100% of coverage in case
of death due to accident; loss of more than one limb
or sight in both the eyes or in case of loss of one
limb and loss of sight in one eye; 50% coverage in
case of loss of one limb or sight in one eye.
• Term Rider: It provides additional amount of
cover in the event of death of the life insured.
• Critical Illness Rider: It provides a cover in the
event of life insured being diagnosed as suffering
from any of four illnesses specified under the Critical
Illness Rider.
• Critical Illness Plus Rider: It provides a cover in
the event of life insured being diagnosed as suffering
from any of the seventeen illnesses specified under
the Critical Illness Plus Rider.
• Critical Illness Woman Rider: It provides a
cover against several critical illnesses including
woman specific illnesses, pregnancy complications
and congenital anomalies in a new born child.
• Waiver of Premium: This rider waives payment
of future premiums on the happening of any of the
unforeseen events as covered under this rider.

- 44 -
Investment Fund Portfolio:
Upper Limit of % of Assets In: Protector Builder Enhancer
Govt. and Govt. approved
85% 70% 55%
Securities
Corporate Bonds (Rated AA and
30% 30% 30%
above)
Money market and other Liquid
20% 20% 20%
assets
Infrastructure sector as Defined
25% 25% 25%
by the IRDA
Listed equities 10% 20%

- 45 -
Classic Life
ClassicLife, apart from saving for your future, lets you make
investments of your choice when your need for family
protection reduces significantly. It is as flexible as life is
uncertain and will help you strike the right proportion
between protection and savings during your life, yet last you
a lifetime. Our unit-linked, insurance cum investment plan
does more than any other life insurance plan. It helps you
plan your future the way only you could.

Superior Benefits of the ClassicLife Plan:


• Option to top up your Policy Fund whenever you
have additional savings.
• Loyalty Additions in the form of additional units
will be credited to the Policy Fund at the end of the
10th Policy Year and at the end of every 5th year
thereafter.
• Flexibility to change the Face Amount of the Policy
depending on your varying need for life insurance.
• A choice of 5 fund options with the flexibility to
allocate the premiums in varying proportions into
the different options or even switch* between the
investment options.
• High liquidity in the form of withdrawals and
surrender benefits.
• Flexibility in the premium payment, the plan
allows you to:
 Pay top-up premiums whenever you have
additional savings
 You can pay additional amounts over and above
the regular premium amount whenever you have
additional savings. These amounts, which you
deposit, get added to your Policy Fund so that you
do not have to look for other investment
opportunities for your money. Pay your premiums
at your convenience. You have the option of
paying the premiums on a monthly (through ECS
only), quarterly, semi-annual and annual basis.

- 46 -
The first premium however has to be at least a 6
months premium.

Face Amount
The minimum Face Amount will be Rs. 5,00,000 and based
on the premium amount you choose to pay, there is a
maximum Face Amount, which will be expressed as a
multiple of the premium amount paid. You can also vary the
Face Amount chosen by you.
The minimum Face Amount for the various premium bands
is as under:
Premium
Minimum Face Amount
Amount
25000 - 49,999 5,00,000
50,000- 99,999 8,00,000
>= 1,00,000 10,00,000
(The premium amount selected has to be in
multiples of Rs.1000/-).

Vary the Face Amount


Depending on your changing needs during your lifetime you
can vary the amount of life insurance cover. So if you feel
that your need for life insurance cover is less than that for
savings you can reduce the Face Amount of life insurance
and the investment portion will increase and vice versa. The
minimum amount of change will be Rs.50,000 and is subject
to the underwriting and administrative rules of the company
then in force. The Life Insurance Coverage Face Amount
may be increased or decreased once every five years. Any
change will be allowed only on the Policy Anniversary.

Choice of Investment Funds:


You can choose from 5 Investment Fund Options to match
your risk profile and help you earn efficient returns on your
funds. If you wish to diversify your risk, you can choose to
allocate your premium in varying proportions amongst the
available Investment Fund Options.
You can switch * between the fund @options and change the
allocation into the various funds anytime after the first
Policy Year. The portfolio of the different funds is given
below:

- 47 -
Upper limit of
Protecto Builde Enhance Creato Magnifie
Percentage of
r r r r r
assets in:
Government and
government
85% 70% 55% 60% 100%
approved
securities
Corporate bonds
rated AA or above
by CRISIL or any
30% 30% 30% 30% 25%
equivalent rating
by any approved
rating agency
Money market
and other liquid 20% 20% 20% 30% 20%
assets
Infrastructure
sector as defined 25% 25% 25% Nil Nil
by the IRDA
Listed equities 10% 20% 35% 50% 90%

The funds have a varying amount of debt and equity. You


can select the funds based on your risk preference and
switch between the funds based on market performance.

Loyalty Additions:
Loyalty Additions in the form of additional units will be
credited to the Policy Fund on the 10th Policy Anniversary
and on every 5th Policy Anniversary thereafter while your
Policy is in effect. The Loyalty Addition will be 2 percent of
your average Policy Fund in the last 60 months. Your
average Fund Value in the last 60 months is equal to the
sum of your Policy Fund on the monthly date, after monthly
deductions, in the 60 Policy Months immediately preceding
the Loyalty Addition calculation, all divided by 60.

High Liquidity:
• Withdrawal Option: The plan offers you high
liquidity as it allows you to withdraw from your
Investment Funds any time after the first Policy Year.

- 48 -
The minimum amount of such withdrawal however
will have to be Rs. 25,000. The maximum amount
that can be withdrawn will be subject to maintaining
a minimum balance of Rs. 25,000 in the Policy Fund.
All withdrawals would be net of the Surrender
Charges wherever applicable.
• Surrender Benefit: The plan also offers you the
flexibility of surrendering your Policy if the need
arises. There will be no Surrender Charge on Policies
surrendered after 4 completed Policy Years, which
means that the entire Policy Fund is payable to you
in case you surrender the Policy anytime after 4
Policy Years till maturity.
• Death Benefit: The higher of the Policy Fund or
the Face Amount reduced by all withdrawals made in
the 6 months preceding the death of the life insured
will be paid to the nominee in the event of death
anytime during the tenure of the Policy.
However in the event of death of the life insured
(minor), anytime before the Policy Anniversary date
on or immediately following the date when life
insured attains the age of five years, only Policy
Fund is payable.
If the life insured dies by suicide within one year of
the issue or reinstatement of the Policy, we will
refund premiums paid since the issue date or
reinstatement date, whichever is later.

Riders:
You can further customize your plan by adding any of the
following riders:

• Term Rider
• Accidental Death and Dismemberment Rider
• Critical Illness and Critical Illness Plus rider
• Critical Illness Women Rider

- 49 -
OBSERVATION
The main observations of the project are as follows:

 Awareness regarding the investments was low.


 Guaranteed Returns was the plus point.
 Rigidity regarding the tax savings plans.

ULIP is suggestible because of higher returns, tax free


income, guarantee and short lock-in period.

- 51 -
QUESTIONAIRE
Personal investment Risk Profile
NAME:
ADDRESS:
MOBILE NO.:

1. What is your age?


A) 40 years and below
B) Between 40 and 50 years
C) 50 years and above
D) Retired

2. How long you intend to remain invested?


A) <2 years
B) 2 – 3 years
C) >5 years

3. Your investment experience is best described as


follows:
A) Limited
B) Moderated
C) Extensive

4. How will you best describe your expected future


income over the next 5
years?
A) To increase
B) To remain steady
C) To decrease

5. If you have an opportunity to increase potential returns


significantly by taking more risk (including possible loss
of principal), please indicate your preference.
A) I am willing to take a lot more risk with some of
my money
B) I am willing to take a little more risk with some of
my money
C) I am unlikely to take more risk.

- 53 -
6. With regard to the amount of money you would like to
invest and/or save with Citibank, what is it as a
percentage of your total wealth excluding self –
occupied property and business interests?
A) Less than 50%
B) 50% - 70%
C) Greater than 75%

7. Reason behind investments:


A) To earn more
B) To save from tax point of view
C) For both

8. Mode of investments:
A) Traditional
B) Non - traditional

- 54 -
BIBLIOGRAPHY
Books:
C.R. Kothari: Research Methodology
Philip Kotler: Marketing Management

Magazines:
Business World
Business Today

Newspapers:
Times of India
Economic Times

- 55 -
THANK YOU