Chapter 1 INTRODUCTION

About the insurance industry

Insurance is a financial protection and it gives compensation against financial losses due to Death, Accident (Disability), Sickness, Retirement (long life), it serves as an excellent riskmanagement and wealth-preservation tool. Having the right kind of insurance is a critical component of any good financial plan. Insurance allows individuals, businesses and other entities to protect themselves against potential losses and financial losses at a reasonably affordable rate. Insurance is needed if we want to protect ourselves from any financial loss. Let us take life insurance as an example. If a father is the only earning member in his house, and if the earning member faces premature death then his family will come into trouble, this concept is called financial hardship. It would be very difficult for his family to replace his income, so the monthly premiums ensure that if he dies, his income will be replaced by the insured amount. The same principle applies to many other forms of insurance. Everyone that wants to protect themselves or someone else against financial hardship should consider insurance. This may include:

Protecting family after one's death from loss of income Ensuring debt repayment after death Protecting yourself against unforeseeable health expenses Protecting your home against theft, fire, flood and other hazards Protecting yourself in the event of disability Protecting your car against theft or losses incurred because of accidents

Basically there are three types of Insurance 1. Life Insurance 2. Health Insurance 3. Vehicle Insurance

Life insurance: It is a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money (a "Sum Assured) upon the death of the insured person. Depending on the contract, other events such as critical illness may also trigger payment. In return, the policy holder agrees to pay an amount (Premium). In some countries, death expenses such as funerals are included in the premium. The policy owner will be free from tensions because he knows that if anything happens to him his family will be safe because his family will get the Sum Assured from the Insurer. Few companies do not provide insurance benefits to the policy holder if he has committed suicide in the policy term and some companies provide insurance to those who commit suicide but only if the policy holder commits the suicide after 1 year of the completion of 1 st premium paid. Health insurance: It is an insurance which provides financial protection against the risk of incurring medical expenses. By estimating the overall risk of health care expenses, an insurer can develop a routine finance structure, such as a monthly premium, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit organization. Vehicle insurance: It is also known as auto insurance, car insurance, or motor insurance, it is the insurance purchased for cars, trucks, and other road vehicles. Its primary use is to provide protection against physical damage and/or body injury resulting from traffic collisions and against liability that could also arise from it.

1.1

HISTORY OF INDIAN INSURANCE

Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. Life Insurance was nationalized in 1956 by consolidating the operations of various insurance companies .General Insurance followed suit and was nationalized in 1973. It was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process, which commenced from 1991. In 1907, the Indian Mercantile Insurance Ltd was set up. This was the first company to transact all classes of general insurance business. In 1957 we saw the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973.

Reforms in Insurance Industry:

In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein it recommended that the private sector should be permitted to enter the insurance industry. They stated that foreign companies to be allowed to enter by floating Indian companies, preferably

a joint venture with Indian partners. So that foreign companies can act as support system for the Indian companies. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

List of Life Insurance Companies in India

LIC HDFC STANDRD LIFE ICICI PRUDENTIAL KOTAK LIFE INSURANCE METLIFE

TATA ING MAX NEWYORK BIRLA SUNLIFE RELIANCE BAJAJ ALLIANZ SBI LIFE

MARKET SHARE OF INDIAN LIFE INSURANCE COMPANIES

1.2

COMPANY PROFILE

Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited) - India's leading housing finance institution, and a Group Company of the Standard Life Plc, UK. HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others. Since its inception in 1977, the company has maintained the good will of consistent growth and hence it is the market leader in mortgages. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. HDFC Standard Life offers a range of individual and group insurance solutions. HDFC Standard Life's product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. Customers have the added advantage of customizing the plans, by adding optional benefits called riders, at a nominal price. The company currently has 32 retail and 4 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers. HDFC Standard Life continues to have one of the widest reaches among new insurance companies with 568 branches servicing customer needs in over 700 cities and towns. The
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company has a strong presence in its existing markets with a base of 2, 00,000 Financial Consultants.

INCOROPATION OF HDFC LIFE

HDFC Limited HDFC Limited, India's premier housing finance institution has assisted more than 3.8 million families own a home, since its inception in 1977 across 2400 cities and towns through its network of over 289 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRI's and PIO's to own a home back in India. On March 2011, the total asset size has crossed more than Rs. 1, 32,727crores. The corporation has a deposit base of over Rs. 24,625 crores, earning the trust of nearly one million depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry.

Standard Life Standard Life is a U.K. based company established in 1825 provides life assurance, pensions and investment management propositions to over 6 million customers worldwide. The Standard Life Group has around 10,000 employees across the UK, Canada, Ireland, Germany, Austria, India, USA, Hong Kong and mainland China. At the end of December 2010 the Group had total assets under administration of 170.1bn. Standard Life's diverse business includes one of the largest life and pensions businesses in the UK with more than 4
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million customers and Standard Life Investments, currently manages assets of over 138.7bn globally. On 10 July 2006, after 80 years as a mutual company, Standard Life Assurance Company demutualised and Standard Life plc was listed on the London Stock Exchange.

+
MISSION
To be the top life insurance company in the market.

This not only means being the largest or most productive company in the market but a combination of several things like: Customer service of highest order Value for money for customers Professionalism in carrying out the business Increasing market share Use of best technology for improved service standards Innovative products to cater different needs of different customers.

VISION AND VALUES

The most successful and admired life insurance company, which mean that they are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry.

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

GROUP COMPANIES
HDFC Bank HDFC Home Loans HDFC Sales CIBIL: Credit Information Bureau India Limited HDFC Deposits HDFC Mutual Fund HDFC ERGO HDFC securities HDFC Life

PRODUCTS OF HDFC LIFE

PROTECTION PLANS: Protection Plans helps to shield family from uncertainties in life due to financial losses in terms of loss of income that may dawn upon them in case of your untimely demise or critical illness.

HDFC Terms Assurance Plan

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HDFC Premium Guarantee Plan HDFC Loan Cover Term Assurance Plan HDFC Home Loan Protection

RETIREMENT PLANS: Retirement Plans provide with financial security so that when professional income starts to ebb, one can still live with pride without compromising on their living standards.

HDFC Life Classic Pension Insurance Plan HDFC Personal Pension Plan HDFC Immediate Annuity HDFC SL Pension Maximus

SAVINGS & INVESTMENT PLAN: It basically focuses on people who thinks to keep their family happy and are dependent on them so future expenses of the family are need to be taken care of.

HDFC Life Sampoorn Samridhi Insurance Plan HDFC Endowment Assurance Plan HDFC SL Crest HDFC SL ProGrowth Super II HDFC SL ProGrowth Flexi HDFC SL ProGrowth Maximiser

HEALTH PLANS: Health plans give the financial security to meet health related contingencies. Due to changing lifestyles, health issues have acquired completely new dimension overtime, becoming more complex in nature.

HDFC Critical Care P lan

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HDFC Surgi Care Plan

CHILDRENS PLAN: Children's Plans helps to save so that one can fulfill their child's dreams and aspirations. As a parent, one wish to provide their child with the very best that life offers, the best possible education, marriage and life style.

HDFC Childrens Plan HDFC SL Young Star Super II HDFC SL Young Star Super Premium

SWOT ANALYSIS

STRENGTHS:
HDFC Standard life insurance offers a range of individual and group insurance solutions HDFC Standard Life has wide network to service customer needs All Investment made in graded assets with rating AA It has a disciplined process Free switching options online informing customers about the performance of their investment by sending monthly reports and statements Training provided to all people so that they themselves have product knowledge and make people choose best plans as per their needs First private company to get registered under IRDA
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HDFC Standard Life was one of the first private life insurers to disclose the embedded value of its business

WEAKNESSES:
They are unable to target rural areas as compared to LIC Negligence to customers after the investment is sold Customer rarely believes on private insurance companies as they prefer Government Company Retention of Employees and agents becomes difficult in this company

OPPORTUNITIES:
Life insurance has captured its mere15 20% growth therefore a wide open untapped market is open to the company to develop, grow and measure its success Strong brand helps to boost up the sales

THREATS:
People are hesitant to invest and put their money to the private life insurance company with the fear of getting lost Alternative financial services such as mutual fund, banking services, share and securities also pose problems and threats to the working of the life insurance sector Entry of more of Private Players in the market Faster rate of employee attrition

Awards and Honor

HDFC Standard Life has been adjudged one of the Best Companies to Work for in India in 2010

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'Young Star Super' Voted 'Product of the Year 2010' Ranked India's Most Trusted Private Life Insurance Brand in 2010 in a survey Conducted by Economic Times-Brand Equity and the Nielsen Company

Financial and Operational highlights of HDFC LIFE for year ended March, 2011
A robust 17% growth in individual new business (regular premium) Focus on single premium polices results in growth of 120% High quality of existing business & continued focus on persistency led to 36% Increase in renewal premium A growth of 29% in total premium One of the very few private insurers to achieve positive growth in FY11 HDFC LIFE is fastest growing amongst the top 15 private players Highest market share gain of 4.2% in private space in FY11 over same period last year Management action on cost containment and productivity enhancement programmes has seen operating expense ratio reduce over the last 3 years Solvency Ratio as at 31st Mar 2011 was 172% as against regulatory requirement of 150% 31% growth in assets under management over March 31, 2010 Strong inflows due to robust persistency has led to increase in Assets Under Management

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Ethical policies at HDFC LIFE

Fair Dealing Working with Honesty & Integrity The Board Members and Senior Management shall not engage in any business, relationship or activity, which may be in conflict of interest with the business of the Company Senior Management of the Company is expected to devote their full time and efforts during normal working hours to the service of the Company. No Discrimination and Harassment Compliance with Laws, Rules and Regulations

CORPORATE SOCIAL RESPONSIBILITY

HDFC has made consistent efforts towards social upliftment by maintaining an active Social Initiatives portfolio. The credit for crossing the confines of a mere profit making entity to
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embracing interrelated social concerns rests on the vision and leadership of our founder Chairman Mr. H. T. Parekh. Through the year, HDFC continued partnering with development organizations for a variety of programs in the social sphere. The projects are supported by HDFC through the Shelter Assistance Reserve. SHELTER ASSISTANCE RESERVE During FY 2010-11 through the Shelter Assistance Reserve around 190 social and development initiatives were supported. The overall utilization from the Reserve stood at Rs. 8.88 crores.

The segment-wise break-up of the utilization of reserve:

Some of development projects supported under the Shelter Assistance Reserve during 201011: DEEDS In India, there are 5 million hearing impaired individuals with over 20,000 babies. DEEDS works with hearing impaired individuals by making them financially self-reliant.
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DEEDS are the 'First ever catering institute for the Deaf in India'. One-year Diploma Course in Catering can be done by the Students who have successfully completed their tenth standard examinations and it is certified by the Maharashtra State Vocation Board.

Project Chirag Students of Mumbai's H.R. College of Commerce & Economics have come up with a 5-point Rural Transformation Model titled Project Chirag which deals with five areas - Environment, Education, Healthcare & Sanitation, Social Upliftment, and Economic Empowerment, with the aim of truly "lighting up rural lives in India". For this the primary requirement was electricity and thus Phase 1 of the project was taken up to light up dark villages through Solar lanterns which were made by physically & mentally challenged individuals from economically backward communities. In phase 2 economic upliftment activities was carried out by establishing public kitchens, improving educational infrastructure and aids, adult literacy programmes as well as other skill set enhancement training programs. For this the organization approached HDFC to partner lighting of villages in Wada Taluka, Thane District. SNEHA HDFC partnered SNEHA in its initiative of providing solutions to issues of nutrition and health in urban slum communities. SNEHA was founded in 1999 by a group of dedicated doctors and social workers led by neonatologist and former dean of Lokmanya Tilak Municipal General Hospital and Medical College in Dharavi, Mumbai to address the concerns of unhealthy newborn babies and mothers to improve quality of care through innovative solutions to problems in nutrition, education and health in urban communities. The program is run in 9 wards of Mumbai specifically with health posts covering a population of approximately 100,000 and with maternity homes/tertiary hospitals covering a radius of 6-7 kms.

UNIT LINKED INSURANCE PLAN

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Unit Linked Insurance Plan (ULIP) is a life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that is called Net Asset Value (NAV). ULIPs combine the benefits of an insurance policy and market-linked investment. ULIP came into play in the 1960s and in 1971 the Unit Trust of India offered the Unit Linked Insurance Plan. Unit Linked guidelines was notified by IRDA on 21st December, 2005 in India to ensure that they lead to transparency and understanding of the products among the insured. Out of premium amount a part is utilized to provide life cover and rest is invested in units. Different options such as 100% equity, balanced, debt etc are available to invest a part of premium amount in units. The return and risk vary as per the option selected. ULIPs have gained high acceptance due to attractive features they offer like flexibility, transparency, liquidity. Unit linked plans are suitable for all customer profiles; however as a general belief the risk averse investors tend to choose traditional plans and an informed customer prefers a ULIP. In ULIP , the invested amount of premium after deducting all the charges and premium for risk cover under all policies in a particular fund as chosen by the holder are pooled together to form a unit fund. The entire risk is borne by the policy holder.

STRUCTURE OF ULIPs

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ULIPs offered by different insurers have varying charge structures. The different types of fees and charges are as follows. The insurers have the right to revise or cancel the fees and charges over period of time.

Premium Allocation Charges: This is a percentage of premiums appropriated towards charges before allocating the units under the policy. Administration Charges: These are the fees for management of the plan and levied by cancellation of the units. Mortality Charges: These are the charges to offer for the cost of the insurance coverage under the plan. It depends upon number of factors such as age, state of health etc. Fund Management Charges: These are the fees levied for the management of funds and are deducted before arriving at Net Asset Value. Surrender Charges: Surrender charges may be deducted for premature partial or full encashment of units. Fund Switching Charges: A limited number of fund switches may be allowed each year without charges, with subsequent switches, subject to a charge. Service Tax Deduction: Before allotment of units the applicable service tax is deducted from the risk portion of the premium.

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TYPES OF FUNDS UNDER ULIPs

FUND

DETAILS

RISK & RETURN RATING

Short Term Fund

Low capital risk as exposure is only the short-term securities

Low

Income Fund

High potential return due to higher duration & credit exposure

Moderate

Balanced Fund

Dynamic Equity exposure to enhance returns

Moderate to High

Blue Chip Fund

Exposure to large-cap equities & equity related securities

Very High

Opportunities Fund

Exposure to mid-cap equities & equity related securities

Very High

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ADVANTAGES OF ULIPs
ULIPs distinguish it through multiple benefits that it provides to customers. The plan is one stop solution for everything customer wants. ULIPs are different from traditional plans purely because they are much transparent, charges are shared with the customers before sale of products so as to enable customer to make an informed decision. Customers have the flexibility to choose their life cover. Also they have the choice of multiple fund options based on risk appetite, thereby enabling the investors to make desired returns.

Some of the advantages of ULIPs:

Life protection Flexibility Investment and saving Tax planning Transparency Riders Wealth creation Partial withdrawal
LIFE PROTECTIO N

WEALTH CREATION

SAVING and INVESTMENT TAX PLANNING

PARTIAL WITHDRAW L

ADVANTAGES OF ULIPS

RIDERS TRANSPAREN CY

FLEXIBILIT Y

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BUSINESS FIGURES FOR THE MONTH OF April 2011

Sales of ULIPs constitute a huge chunk of the business of life insurance companies. Insurance agents used to pitch ULIPs plans to prospective buyers due to high commissions on ULIPs. After the release of new guidelines on Unit-linked insurance plans (Ulips) in September last year, life insurance companies have had to restructure their Ulips plans and the scenario has changed to a certain extent. Now as the commissions on ULIPs have been slashed, agents do not find it as lucrative as earlier. Its impact can been in the business figures for the month of May 2011 that had been submitted by Life insurance companies in India to Insurance Regulatory and Development Authority (IRDA) looks a little bleak when compared with last years business figures . Out of 22 operational private life insurance companies, 16 companies have collected lesser premiums in April this year as compared to their collections in April last year. The 6 private life insurance companies that are an exception to this are SBI Life, Star Union Dai-chi, India First Life, AEGON Religare, Tata AIG and DLF Pramerica; which have shown improvement in their collections in May 2011 over that in May 2010.

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UNIT LINKED INSURANCE PLANS (ULIPs) OF DIFFERENT COMPANIES

HDFC LIFE

HDFC LIFE offers following ULIPs:

HDFC SL CREST HDFC SL Young Star Super II Unit Linked Pension Maximus
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HDFC SL CREST

HDFC SL Young Star Super II

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Min entry age Max entry age Max Maturity age Min premium Max premium

18 65 75 15000 No Limit Sum Assured is given to the family, future premiums are waived

Death Benefit

& company pays 50% of the premiums to the beneficiary on annually & fund value on maturity Fund Value 4% for year 1-7 1% for year 8+ 10 20 years

Maturity Benefit Fund Allocation Charges Premium Payment Term

UNIT LINKED PENSION MAXIMUS (SP)

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Min entry age

30 70

Max entry age Max Maturity age Min premium Max Premium Death Benefit Maturity Benefit Fund Allocation Charges 80 50000 No Limit Fund Value+ Sum Assured of Rs. 1000 Higher of Fund Value or Guarantee Vesting Value 2.5 %

Premium payment term

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ICICI PRUDENTIAL LIFE INSURANCE

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ICICI PRUDENTIAL Offers following types of ULIPs: ICICI Pru Pinnacle Super

ICICI Pru Smart Kid

ICICI Pru Life Link Pension SP

ICICI Pru Pinnacle Super

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Min entry age 18 Max entry age 65 Max Maturity age Min premium Max Premium Death Benefit Maturity Benefit Fund Allocation Charges 75 50000 NO LIMIT Sum Assured + Fund Value Guaranteed NAV of Rs. 10 6% for year 1 5% for year 2 3% for year 3-5 Premium payment term 5 years

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ICICI Pru Smart Kid SP

ICICI Pru Life Link Pension

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Min entry age

35

Max entry age

70

Max Maturity age

80

Min premium

Rs. 200000

Max Premium

No Limit

Death Benefit

Fund Value

Maturity Benefit

Higher of guaranteed NAV and NAV on date of maturity 5%

Fund Allocation Charges Premium payment term

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COMPARATIVE ANALYSIS
ICICI Pru Pinnacle Super and HDFC SL CREST
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Fund allocation charge is higher in ICICI Pru Pinnacle Super whereas HDFC SL CREST has a maximum charge of 4%. In ICICI Pru Pinnacle Super, on the death of the policy holder, company pays Sum Assured+ Fund Value where as in CREST, company pays higher of two but the mortality charges of Pinnacle Super is higher than CREST due to which the total of Sum Assured+ Fund Value results less than the total of CRESTs Sum Assured and Fund Value.

In CREST there is Guarantee NAV of Rs. 15 where as in Pinnacle Super it is Rs. 10.

ICICI Pru Smart Kid and HDFC SL Young Star Super II

Minimum and Maximum age at entry is 18-65 in Young Star Super II where as in ICICI Pru Smart Kid it is 20-60. Minimum Premium in Young Star Super II is only Rs.15000 as against in ICICI Pru Smart Kid it is Rs.18000. In Young Star Super II, there is no maximum limit for premium as against in ICICI Pru Smart Kid it is Rs. 100000. In ICICI Pru Smart Kid the product is offered only to those who have at least one child whereas in Young Star Super II, it is not mandatory to have a child.

ICICI Pru Life Link Pension (SP) and UNIT LINKED PENSION MAXIMUS (SP)
Minimum age at entry is 35 in ICICI Pru Life Link Pension (SP) whereas in Unit Linked Pension Maximus (SP) its 30 years. Minimum premium amount is Rs. 200000 in case of ICICI Pru Life Link Pension (SP) whereas its Rs. 50000 in case of Unit Linked Pension Maximus (SP). In case of ICICI Pru Life Link Pension (SP) Fund Allocation Charges is 5% whereas its 2.5% in case of Unit Linked Pension Maximus (SP).

AVIVA LIFE INSURANCE

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AVIVA LIFE offers following types of ULIPs: AVIVA Wealth Protect

AVIVA Young Scholar Advantage AVIVA does not offer any ULIP pension plans.

AVIVA Young Scholar Advantage Protect

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AVIVA Wealth

Min entry age

Max entry age

65

Max Maturity age

75

Min premium

60000

Max Premium Death Benefit

No limit Sum Assured or Fund Value whichever is higher

Maturity Benefit

Guaranteed maturity value or Fund Value whichever is higher

Fund Allocation Charges Premium Payment Term

15% for year 1 2% for year 2 to 5 5 years

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COMPARATIVE ANALYSIS
Aviva Wealth Protect and HDFC SL CREST
Minimum Premium is higher in AVIVA Wealth Protect where as CREST has minimum Premium amount of Rs. 50000. In AVIVA Wealth Protect, total fund allocation charges are 17% where as in CREST its 15%. In AVIVA Wealth Protect there is no guarantee of Minimum NAV at maturity. Only highest NAV would be given recorded in 7 yrs whereas in CREST, policy holder gets the benefit of minimum guaranteed NAV of Rs. 15 at maturity with Daily NAV tracking.

Aviva Young Scholar Advantage and HDFC SL Young Star Super II

Fund allocation charge is higher in Aviva Young Scholar Advantage where as Young Star Super II has a maximum charge of 4%. In Aviva Young Scholar Advantage, fund value is not paid on maturity in case of unfortunate death of the policy holder while in Young Star Super II, Fund Value is paid on the maturity date to the beneficiary in case of unfortunate death of policy holder. In Aviva Young Scholar Advantage the product is offered only to those who have at least one child whereas in Young Star Super II, it is not mandatory to have a child so as to invest. You can plan the future of your child to be born. In Aviva Young Scholar Advantage, minimum premium is Rs. 20000 whereas in Young Star Super II its Rs. 15000. In Aviva Young Scholar Advantage option of partial withdrawal is not available whereas in Young Star Super II, one can make lump sum partial withdrawals of minimum Rs. 10,000 after the 5th year of policy.

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OBJECTIVE
The objective of the project is to make a comparative study of UNIT LINKED INSURANCE PLANS (ULIPs) of HDFC LIFE with that of some major selected players in the insurance industry and study the consumer perception towards the ULIPS and various insurance companies. The comparative analysis is based on the data collected from DelhiNCR.

OBJECTIVES OF THE PROJECT To identify the strength and the weaknesses of the HDFC LIFE. To identify the awareness among consumers about the ULIPs. To study the consumer perception towards various insurance companies.

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CHAPTER 2 RESEARCH METHODLOGY

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RESEARCH METHODOLOGY

Research is an art of scientific investigation through search for new facts in any branch of knowledge. It is a moment from known to unknown. Research always starts with a question or a problem. Its purpose is to find answers to questions through the application of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied. As marketing does not address itself to basic or fundamental question, it Does not qualify as basic research. On the contrary, it tackles problems, which seem to have immediate commercial potential. In view of the major consideration, marketing research should be regarded as applied research. We may also say that marketing research is of both types problem solving and problem oriented. Marketing research is as systematic and objectives study of the problems pertaining to the marketing of the goods and services. It may be emphasized that it is not restricted to any particular area of marketing, but is applied to all the phases and aspects.

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2.1

RESEARCH OBJECTIVES
To study the awareness about ULIPs among people To find out what factors people consider while making an investment and whose opinions do they consider while investing To find out their perception about HDFCs Unit Linked Insurance Plans.

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2.2

RESEARCH DESIGN

Research design is a framework for conducting project. Research design in this case is a Descriptive Research.

TYPE OF RESEARCH
This study is quantitative in nature as all the data collected with the help o the questionnaire has been analyzed in the form of percentages and depicted in the form of pie charts.

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2.3 1) Data to be collected.

DATA COLLECTION

Data includes facts and figures, which are required to be collected to achieve the objectives of the project, that is, to determine the present position and satisfaction of customer of HDFC Life.

a) Primary Data
The data that is being collected for the first time or to particularly fulfill the objectives of the project is known as primary data. These types of data were, - Responses of consumer. - Identifying pros and cons of the brand. The above primary data were collected through responses of consumer was conducted through questionnaires prepared for them.

b) Secondary Data
Secondary data are that type of data, which are already assembled and need not to collected from outside. These types of data were i) Company Profile ii) Product Profile iii) Competitors Profile The aforesaid data were collected through Internet and company s financial report.

2) Data Collection Method

For the given project, the primary data was gathered through Survey technique, which is the most popular and effective technique for data collection. The survey was completed with the use of questionnaire.

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3) Sampling
Sample is the small group taken under consideration from the total group. This small group represents the total group. The customer list was taken from HDFC Life Insurance customer database.

SAMPLE SIZE
The sample size of the survey was 100. Out of these 70 were male and 30 were female. The sample of respondents was carefully selected covering people in all age groups and with different occupations. . I have selected people of age group from 21 and above. AGE GROUP 21-30 31-40 41 and Above NUMBER OF PEOPLE 32 44 24

SAMPLING TECHNIQUE
Probability random sampling technique was used for the selection of respondents. Within Probability random sampling convenient sampling was adopted.

ULIPs which are focused on in Research are: Children Plan Saving and Investment Plan
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Retirement Plan

Target Respondent The study shall focus on the following focus groups in order to get an overall perception from people. People employed in private services Government Employee Self employed Retired people

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CHAPTER 3 DATA ANALYSIS

AGE:
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21 30

ccc 31 40

41 and above

The sample of respondents was heterogeneous with people of Among 100 respondents, 32 were from the age group of 21-30, 44 from the age group of 31-40 and 24 were from the age group of 41 and above. various occupations right from government service to ones who were self employed. Out of these, people who were working in private companies constituted around 60%.

OCCUPATION:
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1. 2. 3. 4. 5.

Business Govt. Service Retired Private Company Others (Please specify)

The sample of respondents was heterogeneous with people of various occupations right from government service to ones who were self employed. Out of these, people who were working in private companies constituted around 60%.

IN WHICH INSTRUMENT DO YOU INVEST?

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1. 2. 3. 4. 5.

Mutual Funds Fixed Deposits Shares and Stocks Insurance Others (please specify)

Out of the various forms of investment identified as mutual funds, stocks and shares, insurance products and government bonds, around 22% preferred stocks and shares and around 34% preferred insurance products. The rest of the respondents preferred other products.

WHAT DO YOU CONSIDER WHILE MAKING AN INVESTMENT DECISION?

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1. 2. 3. 4. 5.

Friends Opinion Brokers Opinion Family Opinion Own Decision Others

While making investment decisions around 45% of the respondents considered their own decision and another 40% respondents considered their familys opinion, 5% gives importance to the brokers advice and only 3% of them consider factors such as market share of the company. The remaining 7% took advice of people other than those mentioned above.

ACCORDING TO YOU WHAT IS THE AMOUNT OF RISK INVOLVED IN ULIPs?

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1. 2. 3. 4.

High risk Moderate risk Low Risk They are Safe

Among the people who own ULIPs, 54% of them had a view that moderate risk is involved in ULIPs

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WHEN DID YOU INVEST IN ULIP? 1. 2. 3. 4. Last year 2-3 years back 4-5 years back More than 5 years

Among the people who owns ULIPs of HDFC, 50% of them have invested 2-3 years back.

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WHILE INVESTING, DID YOU COMPARE IT WITH THE OTHER COMPANYs PLAN? 1. Yes If yes what features did you compared? 1. 2. 3. 4. 5. 6. 7. Annual Premium Maturity Benefit Min- Max Age at Entry Death Benefit Policy Term Premium Allocation Charge Others (Please specify in the box below) 2. No

Out of the respondents who invest in HDFC ULIPs, 62% compare the features of products with that of other company products. Maturity benefit is compared by 30% of the respondents and entry age is least compared i.e. only by 4%

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DID THE AGENT EXPLAIN ABOUT THE POLICY TERMS AND CONDITIONS? Yes No

Out of the respondents who invest in HDFC ULIPs 80% are completely aware about the policy terms and conditions and the rest 20% are not completely aware.

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HOW WAS THE AGENTS BEHAVIOUR TOWARDS YOUR QUESTIONS?

Excellent Good Satisfactory Bad

60% of the customers who invested in HDFC ULIPs feel that the behavior of the insurance agents was Excellent towards their questions and collected proper feedback from them, 30% of the customers feel that the behavior of agents was satisfactory and the remaining 10% feel that the behavior was not up to the mark.

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DO YOU THINK THERE IS TRANSPARENCY IN THE APPROACH OF HDFC STANDARD LIFE AGENTS

Yes No

85% of the customers feel that there is transparency in the approach of HDFC Standard Life Insurance and 15% of customers feel that the approach used is not transparent.

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DO YOU THINK THE PRODUCTS AND SERVICES OF HDFC ARE MORE LUCRATIVE THAN THE COMPETITORS?

Yes No

80% of the HDFC customers feel that the offers given by them are more lucrative than the competitors and the rest prefer other brands over HDFC.

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RATE THE AFTER SALES SERVICES OFFERED BY HDFC STANDARD LIFE INSURANCE. Excellent Not up to the mark

86% of the customers feel that the after sales services offered by HDFC Bank are Excellent and the rest 14% feel that the after sales service are not up to the mark.

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ARE THE UNIT LINKED INSURANCE PLANS PROVIDED BY HDFC BANK VALUE FOR MONEY.

Yes No

95% of the customers feel that HDFC Standard Life is Value for Money and the rest 5% feel that it is not.

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CHAPTER 4 FINDINGS

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FINDINGS

Majority of the respondents were aware about ULIPs.

HDFC Standard life is one of the most trusted private insurance companies.

Almost half of the respondents take decision on their own while making an investment while Family Opinion is the second most important factor considered by the respondents.

Majority of the respondents consider Maturity Benefit as the most important factor while making investment in ULIPs.

Majority of the customers feel that HDFC ULIPs provide value for money.

Most of the customers were extremely happy with the behavior of the insurance agents.

A large majority of the customers feel that HDFC Life Insurance policies are value for money.

Majority of the customers feel that HDFC staff provide good after sales services.

Majority of the customers feel that the offers provided by HDFC Life are more lucrative than the competitors.

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CHAPTER 5 CONCLUSION

59

CONCLUSION
I have learnt to explain the products to customers in the possible easiest way by preparing a flow of the basic details of the plans. I have learnt to identify the needs and want of the customers and suggesting them the best product that satisfies their needs. I have learnt to modify the benefits of the products as per the customers requirement. I have learnt to communicate well and convince people to listen me through cold callings. I have leant about various insurance products which will be helpful for me to suggest my near and dear ones while making an investment.

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CHAPTER 6 RECOMMENDATIONS

61

RECOMMENDATIONS
HDFC Life should create more awareness among people about the ULIPs through advertisements. HDFC Life should provide better services even after the plan is taken by customer like the Financial Consultants can guide the customer in switching the fund option so that he/she can get maximum return. This will not only be beneficial for the customer but it will result in positive image of the company in the mind of the customer.

HDFC Life must understand the challenges that it is facing from the competitors and must use the strengths to overcome the threats it is facing.

Lastly, when it comes to looking into the future of the insurance companies it will be more and more competitive for all as almost all the products and services are same, therefore HDFC Life should devise more unique strategies to win over their customers, to retain them and to attract more customers.

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CHAPTER 7 LIMITATIONS

63

Limitations of the Research

Due to limited time the study was conducted in a limited area (Delhi), because of which the customer responses obtained may have some biasness specific to the region. The sample size also had to be kept small because of time constraint again and thus may not be sufficient to find out the appropriate results. The quality of the data collected may have been affected by reluctant nature of respondents to respond clearly to some of the questions.

64

BIBLIOGRAPHY
Books:

Armstrong, Gary; Marketing: An Introduction, 7/e, Pearson Education 2008 Kotler, Philip; Marketing Management (the Millennium Edition), Manohar Publishers & Distributors 2009

Kothari, 2011

C.R;

Research

Methodology:

Research

Methodology-An

Introduction, second Edition, New Delhi, New Age International Limited

Website and Links www.hdfclife.com http://www.myinsuranceclub.com/insurance-news/are-life-insurance-companies-missingthe-good-old-ulips http://www.hdfc.com/others/social_initiatives.asp

65

ANNEXURE

66

Questionnaire

RESPONDENTS PROFILE
NAME:

AGE: 21 30 cc 31 40 41 and above

GENDER: Male Female

OCCUPATION: 1. 2. 3. 4. 5. Business Govt. Service Retired Private Company Others (Please specify)

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1. IN WHICH INSTRUMENT DO YOU INVEST? 1. 2. 3. 4. 5. Mutual Funds Fixed Deposits Shares and Stocks Insurance Others (please specify)

2. ACCORDING TO YOU WHAT IS THE AMOUNT OF RISK INVOLVED IN ULIPs? 1. 2. 3. 4. High risk Moderate risk Low Risk They are Safe

3. WHEN DID YOU INVEST IN ULIP? 1. 2. 3. Last year 2-3 years back 4-5 years back

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4.

More than 5 years

4. WHAT DO YOU CONSIDER WHILE MAKING AN INVESTMENT DECISION? 1. 2. 3. 4. 5. Friends Opinion Brokers Opinion Family Opinion Own Decision Others

5. WHILE INVESTING, DID YOU COMPARE IT WITH THE OTHER COMPANYs PLAN? 1. Yes If yes what features did you compared? 1. 2. 3. 4. 5. 6. 7. Annual Premium Maturity Benefit Min- Max Age at Entry Death Benefit Policy Term Premium Allocation Charge Others (Please specify in the box below) 2. No

69

6.

DID

THE

AGENT

EXPLAIN

ABOUT

THE

POLICY

TERMS

AND

CONDITIONS? Yes No

7. HOW WAS THE AGENTS BEHAVIOUR TOWARDS YOUR QUESTIONS?

Excellent Good Satisfactory Bad

8. DO YOU THINK THERE IS TRANSPARENCY IN THE APPROACH OF HDFC STANDARD LIFE AGENTS Yes No

70

9. DO YOU THINK THE PRODUCTS AND SERVICES OF HDFC ARE MORE LUCRATIVE THAN THE COMPETITORS?

Yes No

10. DOES THE BANK INFORM YOU ABOUT THE DUE DATE OF THE NEXT PREMIUM ON TIME?

Yes No

11. DOES THE BANK INFORM YOU ABOUT NEW SCHEMES INRODUCED BY IT ?

Yes No

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12. RATE THE AFTER SALES SERVICES OFFERED BY HDFC STANDARD LIFE INSURANCE. Excellent Not up to the mark

13. ARE THE UNIT LINKED INSURANCE PLANS PROVIDED BY HDFC BANK VALUE FOR MONEY.

Yes No

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