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  1. 1. ----------------------------------------------- “Comparative analysis of I different Life Insurance C --------------------------------------------------------------- ---------- Project Report On ----------------------------------------------- “Comparative analysis of Insurance Product with different Life Insurance Companies --------------------------------------------------------------- ---------- May – June 2010 --------- ----------------------------------------------- surance Product with ompanies” --------------------------------------------------------------- ---------
  2. 2. PROJECT REPORT ON “Comparative analysis of Insurance Product with different Life Insurance Companies.” Submitted To: Mr. Vikash Kumar (Branch Manager, C.D.A.) Reliance Life Insurance Company LTD. Ranchi, Jharkhand Submitted By: Anubhav Bhushan (Management Trainee) A report submitted in the partial fulfillment award of POST GRADUATE DIPLOMA IN MANAGEMENT May – June 2010 Centurion School of Rural Enterprise Management, Paralakhimundi, Odisha
  3. 3. DECLARATION I hereby declare that this project work entitled “Comparative analysis of insurance Product with different life insurance companies” is my work, carried out under the guidance of my faculty guides PROF. K.V. RAMNA and my company guide Mr. VIKASH KUMAR. This report neither full nor in part has ever been submitted for award of any other degree of either this management college or any other management college. ANUBHAV BHUSHAN Regd. No- S0906 P.G.D.M. C.S.R.E.M. , PARALAKHEMUNDI
  4. 4. ACKNOWLEDGEMENT It gives me immense pleasure to express my deep sense of gratitude to DR. (PROF) GURUCHARAN PATRA, Director, CSREM, Paralakhemundi, for his valuable guidance and consistent supervision throughout the course. I am also thankful to Mr. VIKASH KUMAR, my Company Guide of Reliance Life Insurance company LTD, Ranchi, for his valuable guidance for preparing the Final Report and also for providing the necessary facilities. I am extremely thankful to PROF. K.V. RAMANA , Faculty Guide of CSREM, Paralakhemundi for their timely guidance and support throughout the project work. Finally I am indebted to our other faculty members, my friends and my parents who gave their full-fledged co-operation for successful completion of my project. It was an indeed learning experience for me. ANUBHAV BHUSHAN Regd. No. - S0906
  5. 5. Content Page No. CHAPTER No. 01 1.1.Abstract …………………………….. 01 1.2.Introduction ………………….…………..02 1.2.1. Insurance Industry ……………….……………..02 1.2.2. About The Project ……………………………..04 1.2.3. Purpose of the Project ……………………………..04 1.2.4. Scope of the Project ……………………………..05 CHAPTER NO. 02 2. Review of Literature ………………………………06 2.1. About Insurance Industry in Brief ………………………………06 2.2. Logic of Insurance ………………………………06 2.3. Need of Insurance ………………………………07 2.4. Insurance in India ………………………………07 2.5 History of Insurance in India ………………………………08 2.6 Life Insurance Corporation Act. 1956 ………………………….. 09 2.7 General Insurance Business ………………………………10 CHAPTER NO. 03 3.1. Insurance Regulatory and Development Authority of India, Act…10
  6. 6. Content Page No. CHAPTER NO. 04 4.1. Different Insurance Companies ……………………………..11 4.1.1. Top 10 Insurance Companies in India……………..13 4.2. Market share of Indian Insurance Companies ………………...17 4.3. Booming Insurance Market ……………………………..18 CHAPTER NO. 05 5.1. Advantage of Life Insurance …………………………….19 CHAPTER NO. 06 6.1. Type of Insurance product ……………………………..22 6.1.1. Term Insurance Plan ………………….………….22 6.1.2. Endowment Assurance Plan …………………..………….22 6.1.3. Money Back Policy . ……………………………22 6.1.4. Whole life Plan …………………….………..23 6.1.5. Pension Plan ……………………………...23 6.1.6. Child Plan ……………………………...24 6.1.7. ULIP …………………………….. 24
  7. 7. Content Page No. CHAPTER NO. 07 7. 1. Marketing mix in Insurance Industry …………………..25 7.1.1. Introduction …………………..25 7.1.2. Insurance Marketing …………………..26 7.1.3. Marketing mix for Insurance Company ………………….26 Product .………………… 27 Price ………………….28 Place ………….………30 Promotion …………..………31 People ………..…………32 Process ……...……………32 Physical Distribution………………….33 CHAPTER NO. 08 8.1. Coustmer For Reliance Insurance Company …………………35 CHAPTER NO. 09 9.1. Changing face of Indian Insurance industry …………………37 9.1.1. India – The next Insurance Giant…………………38
  8. 8. Content Page No. CHAPTER NO. 10 10.1. Valuing the invaluable ……………………….42 10.1.1. Under Insurance ……………………….42 10.1.2. Cover Insurance ……………………….42 CHAPTER NO. 11 11.1. Profile of the Company ……………………….46 11.1.1. About Reliance Life Insurance Company Ltd…..48 11.1.2. Corporate Objective ……………………….49 11.1.3. Corporate Mission ……………………….49 CHAPTER NO. 12 12.1. Other Player in Insurance Industry ………………………56 12.1.1. Birla Sun Life ……………………...56 12.1.2. Life Insurance Corporation of India……………..57 12.1.3. National Insurance Company Ltd……………….58 12.1.4. TATA AIG Life Insurance ……………………59
  9. 9. Content Page No. CHAPTER NO. 13. 13.1. Research Methodology …………………………60 13.1.1. Source …………………………60 13.1.2. Primary Survey …………………………60 13.1.3. Secondary Survey …………………………61 13.1.4. Methodology …………………………61 13.1.5. Sample design ………………………….61 Sampling Frame ………………………….62 Sampling Technique ………………………….62 Sample Size ………………………….62 13.1.6. Data Collection …………………………..63 13.1.7. Finding and Interpretation …………………………..63 13.1.8. Result …………………………..73 13.1.9. Suggestion and Recommendation …………………………..74 13.1.10. Conclusion …………………………...75 13.1.11. Limitation ……………………………76 BIBLIOGRAPHY ………………………….77
  10. 10. ANEXXURE ………………………….78 List of Table and Diagram List of Table and Figure Particulars Page No. Fig. No. 1 Market share of Insurance Companies 17 Table No. 1 Market share of Insurance Companies 17 Fig. No. 2 Indian insurance Market 38 Table No. 2 Tax Rebate table 54 Fig. No. 3 Have you LIFE INSURANCE OR NOT 64 Table No.3 Have you LIFE INSURANCE OR NOT 64 Fig. No. 4 Most believable company 65 Table No. 4 Most believable company 65 Fig. No. 5 Policy taken from which company 66 Table No. 5 Policy taken from which company 66 Fig. No. 6 Suggestion for taken policy 67 Fig. No. 7 Types of Plan 68 Fig. No. 8 According to Age 40 your prefer insurance company 69 Fig. No. 9 According to age 25-40 your prefer insurance company 70 Fig. No. 10 Generally Preference of insurance company by people 71 Chapter No. 01
  11. 11. 1.1. Abstract Today every sector is very competitive sector and I find that insurance sector has the maximum growth and potential as compared to other sectors. Insurance has the maximum growth rate of 75% while as other sector has maximum 12-15% of growth rate. This growth potential attracts to enter in this sector and Reliance Life Insurance has given me the opportunity to work and get experience in highly competitive and enhancing sector. This project studies the existing management practices in the channel development process and various benefits derived by them in Reliance Life Insurance .The project is all about comparative analysis of different insurance products of different companies. The objective of the project was to check the awareness level of Insurance and attitude of the people towards insurance in the current market. Survey was also done regarding the preference of insurance sector depending on the age group (whether they prefer private players or public companies) . In the beginning, we gain an insight about the company and its values and inherit them in our life, and then studied different types of insurance plans like ULIP’s, term plan, endowment plan, and various other plans. Now, on to the statistical part, we designed a questionnaire that will provide a base for studying the awareness level and perception of the life insurance. The project helped me in developing my communication skill and interpersonal skills. During the tenure of my internship I learned a lot from my seniors, colique etc but above all I learned a lot from my own personal experience.
  12. 12. 1.2. INTRODUCTION 1.2.1. INSURANCE INDUSTRY The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered more risky for coverage. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to the Triton (Total) Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of nineteenth century insurance business was almost entirely in the hands of overseas companies .Insurance regulatation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the provident fund Act of 1912. Several frauds during 20's and 30's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.
  13. 13. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of Statelead planning and development. The (non-life) insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).The general insurance business was nationalized after the promulgation of General Insurance Business (Nationalizations) Act, 1972.The post-nationalization general insurance business was undertaken by the Genera 1.2.2. About the project The project deals with comparative analysis of different insurance products offered by Insurance companies.
  14. 14. 1.2.3. Purpose of the project The main purpose of the project is to do comparative analysis of different insurance products, check the awareness level and perception of insurance by the individuals. The project would also help in understanding preference of people regarding private and public insurance companies. The main objective of the research is Making comparative analysis between:- i) Reliance life insurance with life insurance Corporation of India. ii) Reliance life insurance with Tata AIG life insurance. iii) National Health Plan with Reliance Health Wise Policy. finding out the features and benefits of these plans To find out the awareness level of insurance in Varanasi To determine customer preference towards private insurance companies and public insurance companies. marketing of different insurance products. 1.2.4. Scope of the project The entry of foreign MNC’s and the conductive business environment fostered by the government, it is no wonder that the re-entry of private insurance has marked a second coming for the sector. In just five years, the sector has undergone a makeover, offering more choice, better services, quicker settlement, tighter regulation and greater
  15. 15. awareness ‘s the environment become more and more competitive and services and products become alike, creating a differentiation is becoming extremely tough. Thus, the main objective of my project was to find out the preference of people regarding insurance companies, which would help R.L.I. employees to market their product. The study then goes on to evaluate and analyze the findings so as to present a clear picture of recent trends in the Insurance sector.
  16. 16. Chapter No. 2 2. REVIEW OF LITERATURE 2.1. About Insurance Industry "Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event."Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the Insurance Companies act as trustees to the amount collected. For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured. Similarly, in a car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage. It is a system by which the losses suffered by a few are spread over many, exposed to similar risks. 2.2. Logic of insurance It is a system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the amount premiums collected from the insuring public and the Insurance Companies act as trustees to the collected.
  17. 17. 2.3. Need of insurance Insurance is desired to safeguard oneself and one's family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events. By taking life insurance a person can have peace of mind and need not worry about the financial consequences in case of any untimely death. Certain Insurance contracts are also made compulsory by legislation. For example, Motor Vehicles Act 1988, stipulates that a person driving a vehicle in a public place should hold a valid insurance policy covering “Act" risks. Another example of compulsory insurance pertains the Environmental Protection Act, wherein a person using or to carrying hazardous substances (as defined in the Act) must hold a valid public liability (Act) policy. 2.4 Insurance in India Insurance is a federal subject in India and has a history dating back to 1818. Life and general insurance in India is still a nascent sector with huge potential for various global players with the life insurance premiums accounting to 2.5% of the country's GDP while general insurance premiums to 0.65% of India's GDP. The Insurance sector in India has gone through a number of phases and changes, particularly in the recent years when the Govt. of India in 1999 opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%. Ever since, the Indian
  18. 18. insurance sector is considered as a booming market with every other global insurance company wanting to have a lion's share. Currently, the largest life insurance company in India is still owned by the government. 2.5. History of Insurance in India Insurance in India has its history dating back till 1818, when Oriental Life Insurance Company was started by Europeans in Kolkata to cater to the needs of European community. Pre-independent era in India saw discrimination among the life of foreigners and Indians with higher premiums being charged for the latter. It was only in the year 1870, Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates.At the dawn of the twentieth century, insurance companies started mushrooming up. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. However, the disparage still existed as discrimination between Indian and foreign companies. The oldest existing insurance company in India is National Insurance Company Ltd, which was founded in 1906 and is doing business even today. The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance
  19. 19. Corporation of India (GIC). GIC had four subsidiary companies.With effect from December 2000, these subsidiaries have been de-linked from parent company and made as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited. 2.6. Life Insurance Corporation Act, 1956 Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that life insurance in India was completely nationalized, through a Government ordinance; the Life Insurance Corporation Act, 1956 effective from 1.9.1956 was enacted in the same year to, inter-alia, form LIFE INSURANCE CORPORATION after nationalization of the 245 companies into one entity. There were 245 insurance companies of both Indian and foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of the management of the companies. The Life Insurance Corporation of India was created on 1 September, 1956, as a result and has grown to be the largest insurance company in India as of 2006 . 2.7. General Insurance Business (Nationalization) Act, 1972 The General Insurance Business (Nationalization) Act, 1972 was enacted to nationalize the 100 odd general insurance companies and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India
  20. 20. Assurance, Oriental Insurance, and United India Insurance which were headquartered in each of the four metropolitan cities. Chapter No. 3 3.1. Insurance Regulatory and Development Authority (IRDA) Act, 1999 Till 1999, there were not any private insurance companies in Indian insurance sector. The Govt. of India then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies into the insurance. Further, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies. In recent years many private players entered in the Insurance sector of India. Companies with equal strength started competing in the Indian insurance market. Currently, in India only 2 million people (0.2 % of total population of 1 billion), are covered under Medi claim, whereas in developed nations like USA about 75 % of the total population are covered under some insurance scheme. With more and more private players in the sector this scenario may change at a rapid pace Chapter No. 4 4.1. Different Insurance Companies Insurance is an upcoming sector, in India the year 2000 was a landmark year for life insurance industry, in this year the life insurance industry was liberalized after more than fifty years. Insurance sector was once a monopoly, with LIC as the only company, a
  21. 21. public sector enterprise. But nowadays the market opened up and there are many private players competing in the market. There are fifteen private life insurance companies has entered the industry. After the entry of these private players, the market share of LIC has been considerably reduced. In the last five years the private players is able to expand the market (growing at 30% per annum) and also has improved their market share to 18%.For the past five years private players have launched many innovations in the industry in terms of products, market channels and advertisement of products, agent training and customer services etc.The various life insurers entered India:- 1. Bajaj Allianz Life Insurance Company Limited 2. Birla Sun Life Insurance Co. Ltd 3. HDFC Standard life Insurance Co. Ltd 4. ICICI Prudential Life Insurance Co. Ltd. 5. ING Vysya Life Insurance Company Ltd. 6. Max New York Life Insurance Co. Ltd 7. Met Life India Insurance Company Ltd. 8. Kotak Mahindra Old Mutual Life Insurance Limited 9. SBI Life Insurance Co. Ltd 10. Tata AIG Life Insurance Company Limited
  22. 22. 11. Reliance Life Insurance Company Limited. 12. Aviva Life Insurance Co. India Pvt. Ltd. 13. Sahara India Life Insurance Co, Ltd. 14. Shriram Life Insurance Co, Ltd. 15. Bharti AXA Life Insurance Company Ltd. 16. Future General Life Insurance Company Ltd. 17. IDBI Fortis Life Insurance Company Ltd. 18. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd 19. AEGON Religare Life Insurance Company Limited. 20. DLF Pramerica Life Insurance Co. Ltd. 21. Star Union Dai-ichi Life Insurance Comp. Ltd. The various other general Insurance Companies are as under:- 1. National Insurance Company Limited. 2. Reliance General Insurance. 3. Star Health Plus Insurance. 4. Oriental Insurance Company. 5. United India Insurance Company Ltd. 6. Bajaj Allianz General Insurance Company Ltd. 7. Future General Insurance Company Ltd. 8. ICICI Lombard General Insurance Ltd.
  23. 23. 4.1.1. TOP 10 LIFE INSURANCE COMPANIES IN INDIA 1. Life Insurance Corporation of India LIC (Life Insurance Corporation of India) still remains the largest life insurance company accounting for 64% market share. Its share, however, has dropped from 74% a year before ,mainly owing to entry of private players with innovative products and better sales force. 2. ICICI Prudential Life Insurance Company Ltd. ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It experienced growth of 58% in new business premium, accounting for increase in market share to8.93% in 2007-08 from 6.97% in 2006- 07. 3. Bajaj Allianz Life Insurance Company Ltd. Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went upto 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in numberof policies sold in 2007-08, with total market share of 7.36%. 4. SBI Life Insurance Company Ltd SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in2007-08. New premium collection for the company was Rs 4,792.66 crore in 2007-08, anincrease of 87% over last year
  24. 24. 5. Reliance Life Insurance Company Ltd. Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market share wentup to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th innumber of new policies sold in 2007-08. 6. HDFC Standard Life Insurance Company Ltd. HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08,registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6 th among theinsurance companies and 5th amongst the private players. 7. Birla Sun Life Insurance Company Ltd. Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. 8. Max New York Life Insurance Company Ltd. Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs 641.83 crore as against Rs 387.51 crore. 9. Kotak Mahindra Old Mutual Life Insurance Ltd. Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in2007-08.
  25. 25. 10.Aviva Life Insurance Company India Ltd. Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9thlast year. It has presence in more than 3,000 locations across India via 221 branches and close to40 banc assurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344 crore 4.2. Market Share of Indian Insurance Companies Figure No. 1 L.I.C. ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Birla sun life Reliance life insurance Max Newyork Om kotak AVIVA TATA AIG MetLife
  26. 26. S. No. Company Market share 1 L.I.C. 48.10% 2 ICICI Prudential 13.70% 3 Bajaj Allianz 10.30% 4 SBI Life 6.20% 5 HDFC Standard 4.10% 6 Birla sun life 3.40% 7 Reliance life insurance 3.40% 8 Max Newyork 2.40% 9 Om kotak 1.90% 10 AVIVA 1.80% 11 TATA AIG 1.50% 12 MetLife 1.40% 13 ING Vysya 1.20% 14 Shriram Life 0.30% Table No. 1 4.3. BOOMING INSURANCE MARKET With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32- 34% annually. This impressive growth in the market has been driven by liberalization, with new players significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market. Moreover, saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players. This research report will help the client to analyze the leading-edge opportunities critical to the success of insurance industry in
  27. 27. India. Based on this analysis, the report gives a future forecast of the market that is intended as a rough guide to the direction in which the market is likely to move. Total life insurance premium in India is projected to grow Rs 1,230,000 Crore by 2010-11. •Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11. •With the entry of several low-cost airlines, along with fleet expansion by existing ones and increasing corporate aircraft ownership, the Indian aviation insurance market is all set to boom in a big way in coming years. •Home insurance segment is set to achieve a 100% growth as financial institutions have made home insurance obligatory for housing loan approvals •A booming life insurance market has propelled the Indian life insurance agents into the‘top 10 country list’ in terms of membership to the Million Dollar Round Table (MDRT)— an exclusive club for the highest performing life insurance agent.
  28. 28. Chapter No. 5 5.1 ADVANTAGES OF LIFE INSURANCE 5.1.1 Protection against risk of untimely death Life insurance is a product, which offers protection against the risk of death the full sum assured is made available under a life assurance policy, whereas under other savings schemes, the total accumulated savings alone will be available. 5.1.2. Educational requirements and charity The object of insurance may be to serve as a security to educational funds in respect of loans advanced for educational purpose or to provide donations to charitable institutions like hospital and school. 5.2.3. Nomination and assignment The life insured can name the person or persons to whom the policy money would be payable in the event of his death .the proceeds of a life insurance policy can be protected against the claims of the creditors of the life insured by effecting a valid assignment of the policy. The beneficiaries are fully protected from creditors expect to the extent of any interest in the policy retained by the insured.21Marketability and suitability for borrowing After 3 years, if the policyholder finds that he is unable to continue payment of premiums he can surrender a policy for a cash sum. A life insurance policy is accepted as a security for a commercial loan.
  29. 29. 5.2.4. Loans from the insurance company A policy holder can take a loan from his insurance company against the Security of his life insurance policy provided the terms of the terms of his policy allow such a loan. This loan can be taken usually after a period of 3 years from commencement of the policy and is a percentage of its surrender value. 5.2.5 Investment options The unit link products gives comprehensive insurance solutions that cater to an individual’s dual need of earning potentially high returns as well as stay for life. Thus there is an option to invest money in the products that combine the best of insurance and investment. In a volatile market conditions it is possible to secure both as one can hedge the investment with saver investment vehicles that provide a diversified portfolio.
  30. 30. 5.2.6 . Tax benefits The Indian income tax act provides tax concessions to the policyholder both on payment of premium and on the maturity amount. Under sec 88 the tax benefits on premium paid by an individual for life insurance policies on his own lifeon the life of spouse children minor or major, including married daughters. Under sec 6 of the married women’s property act if a married man takes a policy of life insurance on his own life and expenses on the face of it to be for the benefit of his wife or of his wife and children or any of them, then it shall be deemed to be a trust for the benefit of his wife and children or any of them, According to the interest so expressed and shall not so long as any object of trust remains be subject to the control of the husband or to his creditors or form part of his estate. An insurance policy taken by a married man in the above manner is ideal way to protect the interest of his wife and children, even after his untimely death.
  31. 31. Chapter No. 6 6.1 Types of insurance products 6.1.1. Term assurance plan- In insurance language this is a “pure risk cover” and can be described as an insurance or risk management product in its purest and simplest form. In case of your untimely death, your dependents will receive the risk-cover amount or the ‘sum assured’. On the other hand, there is no survival benefits if you survive the policy term, and you also do not get back the premiums paid. 6.1.2. Endowment assurance plans- It is a traditional investment-cum-insurance plan. In other words, it provides both life cover (in the event of death of life insured) or maturity benefits if he/she survives the policy term. Endowment plans are typically front-loaded. Therefore it makes sense for you to remain in the policy for at least 12-15 years. 6.1.3. Money-back policy- It is a variant of the endowment assurance policy-the difference is that you get the survival benefits intermittently over the life of the policy. Thus taking care of his lump-sum monetary requirements to enable him to meet his financial goals and major commitments. The maturity benefit is the sum assured value less the survival benefits already paid under
  32. 32. the policy, plus bonuses accrued, if any. In case of untimely death the nominee will receive the entire sum assured without considering the payouts already made to you before the unfortunate death. 6.1.4. Whole life plan- This policy provides the life assurance cover for almost the entire life. Most of the insurance companies provide protection up to the age of 100 years. The sum assured is paid to you once you reach this age, and the policy is terminated. In this payment of premium is for whole life, and the sum assured is paid to your nominee in the event of your death. In other words, this is equivalent to a term plan over your lifetime. 6.1.5. Pension plan- A pension plan can be looked as more of an investment product offered by insurers to cater to the “golden” retirement years of an individual. Also referred to as retirement plans, these are designed to ensure that you are financially independent during your retirement years. Most of the pension plans also provide an optional life assurance cover in them.
  33. 33. 6.1.6. Child plan- It basically aims at ensuring the achievement of life goals of your child. The goal can be higher education, financial help in establishing a business or profession, or even marriage. In a child plan, the life assured can be the parent or the child. The beneficiary for the policy, however, is the child. As a child is a minor, the life insurance contract is between the parent and the insurance company. In case of early death of the parent, the premium payment is waived off by the insurance company and the policy continues as originally planned. 6.1.7. Unit Linked Insurance Plan- ULIPs have been the darling of insurance companies, intermediaries and the insured population alike over the last five years. The main reason for this popularity is the twin advantage of a pure life cover (insurance component) and a range of investment funds or options (savings component) to match your risk profile. While the pure life cover provides the much needed financial security to your dependents in the event of your untimely death, the savings component allows you to participate in the capital markets and build wealth over the long-term tenure of the policy.
  34. 34. Chapter No. 7 7.1. Marketing Mix in Insurance Industry (7 P's) 7.1.1. INTRODUCTION: Wherever there is uncertainty there is risk. We do not have any control over uncertainties which involves financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc. Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. It also provides capital to the society as the funds accumulated are invested in productive heads. Insurance comes under the service sector and while marketing this service, due care is to be taken in quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures. It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions. The creativity in the promotional measures is the need of the hour. The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive care.
  35. 35. 7.1.2. INSURANCE MARKETING: The term Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. The Insurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Insurance organization survives and thrives in the right perspective. 7.1.3. MARKETING –MIX FOR INSURANCE COMPANIES: The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weightage in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P’s of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. The above mentioned 7 P’s can be used for Marketing of Insurance products, in the following manner: PRODUCT: A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. In India, the Life Insurance Corporation of India (LIC)
  36. 36. and the General Insurance Corporation (GIC) are the two leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. Investment in Government securities should be stopped and the investment should be channelized in private sector for maximizing profits. In short, the formulation of product-mix should be in the face of innovative product strategy. .
  37. 37. PRICING: In the insurance business the pricing decisions are concerned with: i) The premium charged against the policies, ii) Interest charged for defaulting the payment of premium and credit facility, and iii) Commission charged for underwriting and consultancy activities. With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors. • Mortality(deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases.
  38. 38. • Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy. • Interest: The rate of interest is one of the major factors which determines people’s willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums. PLACE: This component of the marketing mix is related to two important facets – i) Managing the insurance personnel, and ii) Locating a branch. The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services. This is also to process the services to the end
  39. 39. user in such a way that a gap between the services- promised and services – offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem. The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism. The front-line staff and the branch managers also are found not assigning due weightage to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality upgradation, the promised services hardly reach to the end users. It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellence. While recruiting agents, the branch managers need to prefer local persons and provide them training and conduct seminars. In addition to the agents, the front-line staff also needs an intensive training programme to focus mainly on behavioral management. Another important dimension to the Place Mix is related to the location of the insurance branches. While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises. In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place
  40. 40. management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellence to make place decisions productive. PROMOTION: The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organisation of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders.
  41. 41. PEOPLE: Understanding the customer better allows to design appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into. PROCESS: The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. The processing method should be easy and convenient to the customers. Installment schemes should be streamlined to cater to the ever growing demands of the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments.
  42. 42. PHYSICAL DISTRIBUTION: Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India’s large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries, not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. The financial services industries have successfully used remote distribution channels such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the largest motor insurance operators. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In India also, banks hope to
  43. 43. maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and banks will emerge, popularly known as bancassurance. Another innovative distribution channel that could be used are the non-financial organizations. For an example, insurance for consumer items like fridge and TV can be offered at the point of sale. This increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible and insurance can be one of the various incentives offered
  44. 44. Chapter No. 8 8.1 Customer for Reliance Life Insurance Life insurance is one of the best known insurance products today. People buy these products as investment tools and also as protection for themselves and their families. All the insurance companies the world over are looking at attracting the eye balls of customer and positioning their solutions innovatively to cater to niche and specific markets. One of the most critical aspects both from the view point of the customer and the insurer is getting important and relevant leads that can be beneficial for both. There is a big need for market intelligence, database of products and services and secondary data that can be converted in to leads for the companies to tap. The customer also needs to have relevant life insurance lead information on products that give him the best value for his money. The Internet is the best repository for all relevant information both for the potential customers as well as the insurance companies. The insurance companies can put up all kinds of data and information on their websites that a potential customer can conveniently use to arrive at a decision. On the other end of the spectrum, a customer can use relevant keywords to search for information on the Internet to get hold of a good insurance product. So, the key lies to getting “Search Engine Optimization” done by the insurance companies so that every time an insurance specific keyword is used to search the Internet, their website is one of the first to be displayed. This assures a large internet traffic that can help generate potential leads
  45. 45. from the information and digital footprints left by the visitors and can be later converted to paying customers. Various B2B and B2C portals offer a host of innovative services that can be used as leads by the insurance companies and also the potential customers who are looking for a good deal in today’s insurance jungle. Nowadays, banks have entered the insurance domain and since they have a variety of customers already in their folds, they can use their readily available database as leads to contact potential customers for their insurance products. For consultants and insurance agents, it is imperative that they get associated for a symbiotic relationship with retail shops and chains via the internet as well as otherwise to gain maximum visibility and use tools such as advertisement, mailers, flyers and sales incentives to gather life insurance leads and convert them to potential customers. The customer gets the best of everything in the present scenario. All that a prospective client has to do is log on to the internet, or call a toll free number or walk into an office to get the best deal. However, it is always good to use all the resources, leads and information available to ensure that he decides on the best product available. There are many ways in which both the customer and the insurer can get access to all important life insurance lead. The trick lies in using the leads well to get the most out of a particular situation. The endeavor of a company is to position itself favorably so that the customer chooses him over other similar products while the job of the client is to use the leads in such an effective way so that there is no reason for him to repent later that he could have opted for a better deal.
  46. 46. Chapter No - 9 9.1 Changing face of Indian insurance industry Indian life-insurance market is the target market of all the companies who either want to extend or diversify their business. To tap the Indian market there has been tie-ups between the major Indian companies with other International insurance companies to start up their business. The government of India has set up rules that no foreign insurance company can setup their business individually here and they have to tie up with an Indian company and this foreign insurance company can have an investment of only 24% of the total start-up investment. Indian insurance industry can be featured by: Low market penetration Ever growing middle class component in population. Growth of customer’s interest with an increasing demand for better insurance products. Application of information technology for business. Rebate from government in the form of tax incentives to be insured. Today, the Indian life insurance industry has a dozen private players, each of which are making strides in raising awareness levels, introducing innovative products and increasing the penetration of life insurance in the vastly underinsured country. Several of private insurers have introduced attractive products to meet the needs of their target customers and in line with their business objectives
  47. 47. 9.1.1. India: The Next Insurance Giant Market Performance & Forecast: In 2000, Indian insurance market size was $21.71 billion. Between 2000 and 2007, it had an increase of 120% and reached $47.89 billion. Between 2000 and 2007, total premiums maintained an average growth rate of 11.96% and the CAGR growth during this time frame has been 11.96%. It was one of the most consistent growth patterns we have noticed in any other emerging economies in Asian as well as Global markets.
  48. 48. Indian Insurance Market Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is on the fulcrum of an ever increasing growth curve. Insurance is one major sector which has been on a continuous growth curve since the revival of Indian economy. Taking into account the huge population and growing per capita income besides several other driving factors, a huge opportunity is in store for the insurance companies in India. According to the latest research findings, nearly 80% of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subjected to weak social security and pension systems with hardly any old age income security. As per our findings, insurance in India is primarily used as a means to improve personal finances and for income tax planning; Indians have a tendency to invest in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small 4-5%. This in itself is an indicator that growth potential for the insurance sector is immense. It’s a business growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion.India is a vast market for life insurance that is directly proportional to the growth in premiums and an increase in life density. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant. Competition in this market is increasing with company’s
  49. 49. continuous effort to lure the customers with new product offerings. However, the market share of private insurance companies remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints. Major Driving Factors ✔ Growing demand from semi-urban population ✔ Entry of private players following the deregulation ✔ Rising demand for retirement provision in the ageing population ✔ The opening of the pension sector and the establishment of the new pension regulator ✔ Rising per capita incomes among the strong middle class, and spreading affluence ✔ Growing consumer class and increase in spending & saving capacity ✔ Public private partnerships infrastructure development ✔ Dearth of innovative & buyer-friendly insurance products
  50. 50. Emerging Areas ✔ Healthcare Insurance & Pension Plans ✔ Mutual fund linked insurance products ✔ Multiple Distribution Networks .i.e. Bank assurance The upward growth trend started from 2000 was mainly due to economic policies adopted by the then Indian government. This year saw initiation of an era of economic liberalization and globalization in the Indian economy followed by several reforms and long-term policies that created a perfect roadmap for the success of Indian financial markets. On the basis of several macroeconomic factors like increase in literacy rate & per capita income, decrease in death rate and unemployment, better tax rebates, growing GDP etc., we estimate that the Indian insurance sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a CAGR (compounded annual growth rate) of 12.44% and a growth of 59.82%.
  51. 51. Chapter No. 10 10.1. Valuing the invaluable Both under insurance and over insurance can often be attributed to the lack of proper understanding of the exact insurance needs for oneself and the family, and the failure to spot and cover all liabilities properly and adequately, or being over-conservative in this regard. 10.1.1. Under Insurance Under insurance, typically occurs when the existing financial liabilities and insurance needs are fully taken care of. In the event of the untimely death of the only (or the main earning) member of the family, his financial liabilities would obviously fall on his dependents, leaving them in a state of financial distress that could threaten their need of sustenance. 10.1.2. Cover Insurance Conversely, there are also instances where individuals indulge in life insurance covers that far exceed in value than what is actually required. This is a classic case of over insurance, which leads to an unnecessarily higher premium payment, leaving you much poorer. It results in unnecessary expenditure that could otherwise be wisely invested Elsewhere. The need for an adequate insurance cover is never static and keeps on varying with changes in the life stages and important events of an individual. The table below provides an insight into the various life stages and events when life insurance cover usually requires a revision.
  52. 52. Busting some insurance myths With a range of products flooding the market, people today are more confused about insurance than ever. Here are a bagful of myths floating around and I have made an effort to bust a few of the significant ones. 1. I don’t want to put my hard-earned money into a pure term assurance plan if I don’t even get back all the premiums paid on survival of the term. ➢A pure term assurance plan is a risk mitigation tool and not an investment product. In the event of your untimely death during the policy term, your dependents get a “sum assured” to enable them to continue living their existing lifestyle, repay loan liabilities and meet long- term financial goals. To achieve this, you only need to pay a premium amount that is a fraction of the “sum assured”. Moreover unlike investments, where it takes years to build a suitable corpus, the “sum assured” on your insurance policy is payable, in the event of your untimely death, from the date of its commencement. 2. It would be enough if only the main breadwinner of the family takes life insurance. ➢While the main breadwinner should take out a life insurance policy on a priority basis; the other members of the family should also be covered. If the wife is working, then she should be covered to the extent of loss of income to the family in the event of her untimely death. On the other hand, even if she is not working, she should be covered, albeit for a smaller
  53. 53. sum, because her contribution to the family, in form of household services, has monetary value. 3. I will get back all my premiums when I surrender my endowment policy prematurely. ➢You couldn’t be more wrong! You only get back the “surrender value”, which is based on the “paid-up value” is a proportion of the original “sum assured” based on the number of years for which premium was paid against the total premium-paying years. The paid-up value of the policy is also calculated and available as per the policy conditions. 4. Insurance is primarily useful as a tax-saving instrument. ➢Again, this is a huge misconception! While you do get attractive tax breaks, the primary objective of insurance is risk mitigations followed by wealth creation for the long term. Many people end up taking this myth too seriously, particularly without considering the costs and benefits involved. 5. After three years, I can walk away from any ULIP, along with the accrued investment or the fund value. ➢Sure, you can do that! However, you need to remember that a ULIP, at least in the initial years, is very different from a mutual fund. While a mutual fund only charges o nominal fund management charge every year, a ULIP is front loaded. That means a significant chunk of your premium is allocated across various charges in the initial years of the policy and only the balance gets invested in a fund of your choice. As these charges taper
  54. 54. off and average over time, it makes sense to stay in a ULIP for at least 15 years. Therefore, if your investment horizon is just 3-5 years, you better off in a mutual fund, and you can take out a separate term assurance plan for the required risk cover.
  55. 55. Chapter No. 11 11.1. PROFILE OF ORGANIGATION RELIANCE LIFE INSURANCE FOUNDER Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring and timeless. •As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of India’s capital markets, the champion of shareholder interest. •But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, India’s largest private sector enterprise. •When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into a Rs 60,000 crore colossus—an achievement which earned
  56. 56. Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so. •Dhirubhai is widely regarded as the father of India’s capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronised by a small club of elite investors which dabbled in a handful of stocks. •Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets. •Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of the greatest growth stories in corporate history anywhere in the world, and went on to become India’s largest private sector enterprise. •Through out this amazing journey, Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind, in the process making millionaires out of many of the initial investors in the Reliance stock, and creating one of the world’s largest shareholder families. 11.1.1. ABOUT RELIANCE R.L.I. Company Limited is a part of Reliance Capital Ltd. of the Reliance - Anil
  57. 57. Dhirubhai Ambani Group. Reliance Capital is one of India’s leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, and general insurance, proprietary investments, private equity and other activities in financial services. •Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45IA of the Reserve Bank of India Act, 1934. •Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services. •R.L.I. is another step forward for Reliance Capital Limited to offer need based Insurance solutions to individuals and Corporates.
  58. 58. 11.1.2. CORPORATE OBJECTIVE At R.L.I. we strongly believe that as is different at every stage, insurance must offer flexibility and choice to go with that stage. We are fully prepared and committed to guide you on insurance products and services through our well-trained advisors, backed by competent marketing and customer services, in the best possible way. •It is our aim to become one of the top private insurance companies in India and to become a cornerstone of RLI integrated financial services business in India. 11.1.3. CORPORATE MISSION •“To set the standard in helping our customers manage their financial future”. BELOW ARE FEW OF THE PLANS THAT ARE OFFERED BY R.L.I. INSURANCE PLANS AVAILABLE 1. Products (Individual Plans) Savings (Endowment) 2.Reliance Endowment Plan (formerly Divya Shree) 3. Reliance Special Endowment Plan (formerly Subha Shree) 4. Reliance Cash Flow Plan (formerly Dhana Shree) 5. Reliance Child Plan (formerly Yuva Shree)
  59. 59. 6. Reliance Whole Plan (formerly Nithya Shree) Pensions 7.Reliance Golden Years Plan (formerly Bhagya Shree) Investments 8.Reliance Market Return Plan (formerly Kanaka Shree) 9. Risk / Protection 10. Reliance Term Plan (formerly Raksha Shree) Products (Group / Corporate Plans) Tax Benefits It is one kind on benefit from life insurance policy . Maximum people buy insurance because they want deduction in their income tax. Premiums paid for Life insurance - Deduction under Section 80C 1. Category of assesses allowed deduction: Individual assessee and Hindu Undivided Family assessee. 2. Eligible Savings: Premiums paid or deposited by assessee to effect or to keep in force insurance on the life of following persons: • In case of individual assessee – Himself/Herself, spouse, children of such individual • In case of HUF assesses – any member
  60. 60. 3. 20% limit: If the amount of premium paid in a financial year for a policy is in excess of 20% of the actual capital sum assured, then deduction will be allowed only for premiums upto 20% of the sum assured. 4. Limit on amount of deduction: Deduction will be restricted to investments upto Rs 100,000 in savings specified under Section 80C (including life insurance premiums). The limit of deduction under Section 80C will be part of the overall limit prescribed under Section 80CCE. 5. Disallowance: This benefit will be reversed if the policy is terminated/cease to be inforce within 2 years after the date of commencement of policy. Premiums paid for Pension plans - Section 80CCC 1. Permitted Deduction: Section 80CCC allows for deduction of premiums paid under a pension scheme. As per this Section, the whole of amount paid or deposited (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of Rs 100,000 is eligible for deduction from the total income. 2. Receipt under Policy: Amounts received on surrender (whole/part) of annuity plan, amounts received as Pension is taxed as income. 3. Limit: The limit of deduction under Section 80CCC will be part of the overall limit prescribed under Section 80CCE.
  61. 61. Overall deduction limit - Section 80CCE As per this section, the maximum amount of deduction that an assessee can claim under Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000. Premiums paid for medical insurance - Section 80D 1. Category of assesses allowed deduction: Individual assessee and Hindu Undivided Family assessee. 2. Eligible premiums: Premiums paid by assessee by any mode other than cash out of his taxable income to effect or to keep in force an insurance on the health of following persons: o In case of individual assessee – Himself/Herself, spouse, dependent children and parent or parents. The condition of dependency of parent has been removed from FY 2008-09. In other words, even if the parent is independent, the individual can pay the premium and claim the deduction. o In case of HUF assessee – any member of HUF 3. Deduction and upper limit: The qualifying amounts under Section 80D for self, spouse and dependent children is upto Rs. 15,000/- and additional deduction upto Rs. 15,000/- for the parents. However, a higher amount of upto Rs 20,000/- is permitted if the person, for whose health insurance the premium was paid, was aged 65 years or more at any time during the financial year in which the premium
  62. 62. was paid. Such amounts of premium paid would be allowed as deduction from the total income of the assessee. Benefits under insurance policy - Section 10(10D) As per Section 10(10D) of Income tax Act, 1961, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax. However, this rule does not apply to following amounts: • sum received under Section 80DD(3), or • any sum received under a Keyman Insurance Policy, or • any sum received other than as death benefit under an insurance policy which has been issued on or after April 1 2003 and if the premium paid in any of the years during the term of the policy is more than 20% of the sum assured.
  63. 63. Tax Rates for Individuals The rates of income-tax for FY 2010-11 Table No. 1 Surcharge on Income Tax: No surcharge on Income Tax for the Financial Year 2009-10 for Individuals. Education Cess on Income Tax Edcuation Cess @3% will be payable on the amount of income tax (including surcharge). Individual (except female/ senior citizen) Female (Below 65 years) Senior citizen (Above 65 years) Rate 0 – 160,000 0 - 190000 0 – 240000 Nil Rs. 160,001 to Rs. 500,000 Rs. 190,001 to Rs. 500,000 Rs. 240,001 to Rs. 500,000 10% Rs. 500,001 to Rs. 800,000 Rs. 500,001 to Rs. 800,000 Rs. 500,001 to Rs. 800,000 20% > Rs. 800,000 > Rs. 800,000 > Rs. 800,000 30%
  64. 64. Secondary & Higher Education Cess on Income Tax Additional Education Cess @1% will be payable on the amount of Income tax (Including surcharge).
  65. 65. Chapter No. 12 12.1 OTHERS PLAYERS 12.1.1. Birla Sun Life Insurance Birla sun life Insurance Company limited is a joint venture between the Aditya Birla group, one of the largest business houses in India and Sun Life Financial Inc., as leading international financial services organization. The local knowledge of the Aditya Birla group combined with the expertise of Sun Life Financial Inc., offer a formidable protection for your future. The Aditya Birla group has a turnover of Rs. 1,33,875 corers (as on 31st march 2008). It has over 100,000 employees across all its units worldwide. It is led by its chairman – Mr. Kumar Mangalam Birla. Some of its key companies are Hindalco, Grasim and Aditya Birla Nuvo. Sun Life Financial Inc. and its partners, have operations in key markets worldwide. These include Canada, U.S, U.K, Hong Kong, the Philippines, Japan, Indonesia, India, china and Bermuda. Sun Life Financial Inc. has assets under management of over us$ 404.7 BILLION (as on 31 st March, 2008). It is a leading performer in the life insurance market in Canada.Birla sun life insurance (BSLI) has been operating for 7 years. It has contributed significantly to the growth and development of the life insurance industry in India. It pioneered the launch of unit linked life insurance plans amongst the private player in India. It pioneered the launch of united linked life insurance plans amongst the private players in India. It
  66. 66. was the first player in industry to sell its policies through the Bancassurance route and through the internet. It was the first private sector player to introduce a pure term plan in the Indian market. BSLI has covered more than 2 million lives since it commenced operations. 12.1.2. Life Insurance Corporation Of India Mission "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development." Vision "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India Every day we wake up to the fact that more than 220 million lives are part of our family called LIC.We are humbled by the magnitude of the responsibility we carry and realize that the lives that are associated with us are very valuable indeed. Although this journey started five decades ago, we are still conscious of the fact that, while insurance may be a business for us, being part of millions of lives every day for the past 52 years has been a process called TRUST.
  67. 67. 12.1.3. National Insurance Company Limited National Insurance Company Limited was incorporated in 1906 with its registered office in Kolkata. Consequent to passing of the General Insurance Business Nationalization Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by the Government of India. After the notification of the General Insurance Business (Nationalisation) Amendment Act, on 7th August 2002, National has been de-linked from its holding company GIC and presently operating as a Government of India undertaking.National Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non life insurance business. Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than 16,000 skilled personnel, is spread over the length and breadth of the country covering remote rural areas, townships and metropolitan cities. NIC's foreign operations are carried out from its branch offices in Nepal.National transacts general insurance business of Fire, Marine and Miscellaneous insurance. The Company offers protection against a wide range of risks to its customers. The Company is privileged to cater its services to almost every sector or industry in the Indian Economy viz. Banking, Telecom, Aviation, Shipping, Information Technology, Power, Oil & Energy, Agronomy, Plantations, Foreign Trade, Healthcare, Tea, Automobile, Education, Environment, Space Research etc. National Insurance is the
  68. 68. second largest non life insurer in India having a large market presence in Northern and Eastern India. 12.1.4. Tata AIG life-A New Look at Life Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. The Tata Group holds 74 percent stake in the insurance venture with AIG holding the balance 26 percent.Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed t operates in India on February 12,2001 and started operations on April 1, 2001. Tata AIG Life offers a broad array of life insurance coverage to both individuals and groups, providing various types of add-ons and options on basic life products to give consumers flexibility and choice.
  69. 69. Chapter No. 13 13.1. RESEARCH METHODOLOGY 13.1 Sources The success of any Insurance company depends on how well they are able to align with the objectives and needs of individual customers, and is able to provide proper solutions to them. To know how a company is performing and whether they have any cutting edge advantage over competitors, an intensive study of the market is absolutely necessary. In order to understand the performance of different companies in the market, we did two types of surveys, primary survey and secondary survey. 13.1.2. Primary survey Primary survey included:- ➢ Visiting websites and fixing appointments with their agents. ➢ Creation of database of prospective clients from different sources calling them up to fix appointment and then visiting them. ➢ Prepare a questionnaire for the market survey . ➢ Meeting different people to know their views, perception and preference of different insurance companies.
  70. 70. 13.1.3 Secondary survey Secondary survey included of consulting books, magazines, journals, internet and also taking reference from:- library. Internet. R.L.I. reports 13.1.4. Methodology We would go in for a qualitative research as our objective is to judge the perception and preference of different insurance products. The research would be done from primary data. 13.1.5. Sample Design Target population: The target population for the research would be people who are in theage group beyond 40 and age group between 25 to 40.We targeted this group of population because these populations are the potential customers of insurance. Sampling Frame : The research would be conducted in Varanasi. The survey has been conducted among the
  71. 71. potential customers of R.L.I. from different sectors as Reliance deals in many sectors of business. Sampling Technique : The sampling technique that is adopted is the simple random sampling wherein every element in the target population has an equal chance or probability of getting selected in the sample. That means every unit of the population who is more is in the above mentioned age group, have an equal chance of getting selected Sample Size: I did a survey among 100 people by taking two categories in consideration of 50 each; that is 1.) Age group beyond 40 2) Age group between 25 to 40
  72. 72. 13.1.6. Data Collection : The research would be conducted from the source of primary data collection. Secondary data would help us in knowing the trends prevailing in the insurance market and would help us in analyzing and interpretation of the primary data. 13.1.7. Findings and Interpretations We have presented below the findings and analysis of the questionnaire addressed to the respondents to gauge the attitude and perception of the people towards insurance.
  73. 73. Respondents having life Insurance The question was asked to the respondents to know how many of the respondents had a life insurance policy From the survey it was found out that 85% of the respondents had a life insurance policy whereas 15% of the respondents didn’t had a life insurance policy. In which company you believe most ? life Insurance The question was asked to the respondents to know how many of the respondents had a life insurance policy Figure No. 1 No. of respondent Yes 85 No 15 Table No. 2 From the survey it was found out that 85% of the respondents had a life insurance policy whereas 15% of the respondents didn’t had a life insurance policy. In which company you believe most ? 85% 15% Life Insurance Policy The question was asked to the respondents to know how many of the respondents From the survey it was found out that 85% of the respondents had a life insurance policy whereas 15% of the respondents didn’t had a life insurance policy. Yes No
  74. 74. Most of the people want to invest his money in public insurance company and in private insurance company only 22 respondent want to invest their money. Most of the people buy insurance from LIC and there are 24 private Insurance policy taken from which company The question was asked to the respondents so as to get to know from which insurance 62% Figure No.2 Company No. of respondent Private Company 22 Public Company 28 Table No. 3 Most of the people want to invest his money in public insurance company and in private insurance company only 22 respondent want to invest their money. Most of the people buy insurance from LIC and there are 24 private insurance company in India. Insurance policy taken from which company The question was asked to the respondents so as to get to know from which insurance 38% 62% Insurance Company Most of the people want to invest his money in public insurance company and in private insurance company only 22 respondent want to invest their money. Most of the people insurance company in India. The question was asked to the respondents so as to get to know from which insurance Private Company Public Company
  75. 75. company they have bought the policy The finding which came out from the survey was that 40% of the respondents who have a life insurance cover bought life insurance from Life Insurance Corporation of India (LIC). LIC is the most preferred brand in the insurance industry because it is the onl government company which offers insurance. People prefer to buy insurance from LIC because of the security being one of the prime factors. In the figure we can also see that nowadays people mindset have changed towards insurance. 0 5 10 15 20 company they have bought the policy Figure No.3 No. of Respondents LIC 19 ICICI Pru 12 Reliance Life Insurence 9 Bajaj life Insurance 6 Bharti AXA life INSURANCE 4 Table No.4 The finding which came out from the survey was that 40% of the respondents who have a life insurance cover bought life insurance from Life Insurance Corporation of India (LIC). LIC is the most preferred brand in the insurance industry because it is the onl government company which offers insurance. People prefer to buy insurance from LIC because of the security being one of the prime factors. In the figure we can also see that nowadays people mindset have changed towards insurance. Policy taken by consumer The finding which came out from the survey was that 40% of the respondents who have a life insurance cover bought life insurance from Life Insurance Corporation of India (LIC). LIC is the most preferred brand in the insurance industry because it is the only government company which offers insurance. People prefer to buy insurance from LIC because of the security being one of the prime factors. In the figure we can also see that Policy taken by consumer No. of Respondents
  76. 76. From whose suggestion have the respondents taken a policy? It was asked to gain an insight from the respondents that on whose suggestion did they opt for a life insurance cover or policy. Figure No. 4 After the survey it was found that most of the respondents took policy or life insurance cover from the suggestions of their friends or family.And only 23 respondents took policy on the recommendation of the agents.
  77. 77. Type of plan The respondents were asked which type of plan they go in for when they take up insurance cover or policy. Figure No. 5 After the survey it was found that term plan was the most preferred plan. Next on the list was endowment plan. Pension plan and health plan are the least preferred by customers .
  78. 78. Preference of insurance sector according to age group:- Age group beyond 40 Figure No.6 Most of the people want to invest his money in public insurance company and in private insurance company only 7 to 8 respondent want to invest their money. Most of the people buy insurance from LIC and there are 24 private insurance company in India.
  79. 79. Age Group Between 25 – 40 Figure No. 7 If we see the younger who doing job or business or making planning for his future then they are go with TATA AIG.
  80. 80. Pie Chart Figure No. 8 Here we see that LIC have more number of market share. People believe more in LIC because this is public sector insurance company.LIC have 60% market share in insurance industry but other like private secter insurance companies have less number of market share comparision than LIC.
  81. 81. Rank of your insurance company Figure No. 9 People who buy policy from TATA AIG that people give highest rank to their insurance company. Reliance have 10% share of their rank.
  82. 82. 13.1.8. Results After the survey it was found that still major portion of customers go for public insurance companies, but with the entry of more and more private companies the scenario is changing rapidly, people with a need of more and better returns are opting for private companies, and this can be justified by the increasing market share of private companies in the Indian insurance sector. There are various ways in which private companies are found much more lucrative than public companies and the facts which support this statement are as follows:- 1. Versatility of products. 2. Efficient fund managers. 3. Better customer services. 4. More returns. 5. Regular follow up. 6. Quicker settlement
  83. 83. 13.1.9. Suggestions and recommendation ✔ People are not aware of the life insurance. Most of them know only one company which provides life insurance i.e. LIC. So awareness campaign should be run so that people are aware of different life insurance companies in India. ✔ People should be educated about the different types of products or plans offered by the life insurance companies. Most of them don’t know much of the different types of plan or products. ✔ It was felt that most of the people took life for tax savings or just to cover up their life, not as an investment avenue. Life Insurance companies need to advertise in such a manner that people start investing in life insurance like the way they invest in the stock market ✔ Now at the time of global turmoil insurance company had to hold on to the policyholders trust which might lead the company to the path of success ✔ Insurance companies should try to adopt different strategies to market their products or plan. Companies should not primarily focus on the agents for their business.
  84. 84. 13.1.10. Conclusion Insurance is one sector that witnessed continuous growth owing to the reforms in 2000. The insurance sector is likely to attain a size of Rs. 2,00,000 crore ($ 51.2 billion) in 2009-10. In life insurance, the business grew by 23.3% to Rs. 93,000 crore in 2007-08 (Source:Assocham). The sector alone employs close to 30 lakh people (including agents and direct employees).A well-functioning insurance market plays an important role in economic development and financial stability of developing economies such as India’s. First, it inculcates and encourages the habit of saving. Second, it provides a safety net to rural and urban enterprise and productive individuals. The life insurance market in India is on a growth path. In spite of this, the country lags far behind the others in awareness about life insurance. The challenge is to spread awareness about life insurance and it true benefits. The industry has to convince people to park their hard earned money in long-term insurance and not just look at it as a tax saving instrument.
  85. 85. 13.1.11. Limitations 1. Useful Financial insights are not easily available. 2. Due to time constraint sufficient research on all the investment tools is difficult. 3. The survey sample is not very large for analysis 4. Properly convincing people to invest in insurance products is challenging. 5. Due to recession there is liquidity crunch in the market. 6. There might have been tendencies among the respondents to amplify or filter their responses under the testing conditions 7. The research is confined to Varanasi and does not necessarily shows a pattern applicable to other parts of the country.
  86. 86. BIBLIOGRAPHY Marketing Management- Philip Kotlor, edition-twelth edition….April 2004,. Publisher- Prentice Hall of India (p) Ltd, Analyzing Consumer Markets & Buyer behavior & consumer behaviour. Broachers from Reliance Life Insurence WEBSITES www.reliancelifeinsurence.com www.irdaindia.org wikipedia.org www.selling-well.com www.insureme.com www.advisortoday.com www.unlockthegame.com www.lic.com
  87. 87. Annexure QUESTIONNAIRES CLIENT DETAIL NAME:_____________________________SURNAME__________________________ _____ DATE OF BIRTH: ______________ (As On Document) Age Proof:_______________________________________________ PRESENTADDRESS_____________________________________________________ ________________________________________________________________________ ________________________________________________________________________ _____ LANDMARK: ______________________PIN ___________ PHONE NO _____________ MOBILE________________ PERMANENT ADDRESS: ____________________________________________________________ ________________________________________________________________________ _____EDUCATION: _____________ OCCUPATION: _______________________ DESIGNATION: ___________________________ GROSSINCOME:____________________________ NO. OF YEAR JOB / BUSINESS: _______________________ NAME OF ORGANISATION:_______________________________________________ PREVIOUS POLICY DETAILS (IF ANY):
  88. 88. _______________________________________________________________ PRODUCT: ______________ _________PREMIUM __________________________ MODE : Yearly/Half-yearly/monthly Payment Mode: CASH / DD / CHEQUE Reference: 1. Mr./Mrs./Miss.____________________Address:_____________Mobile No: 2. Mr./Mrs./Miss.____________________Address:_____________Mobile No: 1. Are you insured? 1. Yes 2. No 2. If yes then with Life / Non Life / Both 3. In which company ……………………………………… 4. How much give you rank your insurance company ? Excellent Very Good Good Fair Bad 5. Who suggest you take life insurance policy ? Friends Family Agent Others.. 6. In which of the insurance plan you like to invest your money ? Term Plan Endowment Plan Money back Plan Children Plan Pension Plan ULIP Health Plan
  89. 89. 7. Rank the Insurance Company according to your preference? Reliance Life Insurance Company LTD. Life Insurance Corporation of India Birla sun Life Insurance Company LTD. TATA AIG Life Insurance Company LTD. AVIVA Life Insurance Company LTD. Thank you !
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