1

EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes
andgrowth in the years ahead. Delivering service, building trust and beinginnovative are key
areas in which any company will have to excel in order
todo well in the long road ahead. Different companies will take differentapproaches and it
would be myriad of solutions that will be found to delightthe Indian customer.During
the first part, I was given complete classroom training about the various unit linked as well as
the traditional plans and solutions which the company offers. Later, Market Research was
done through various activities and tele-calling which are discussed further in the report.
Activities led to practical exposure and taught me the aspects of customer dealing. Finally,
interesting conclusions were drawn out of the data collected regarding the Awareness of
Financial Planning among the people in todays environment.
It was great experience because selling an insurance productdemands a great deal of
confidence and product knowledge.








2




3

INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world, Insurance happens to be a
mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the
countrysGDP .In spite of all this growth the statistics of the penetration of theinsurance
in the country is very poor. Nearly 80 per cent of Indian populations without life insurance
cover while health insurance and non-life insurance continues to be below international
standards. And this part of the populations also subject to weak social security and pension
systems with hardly any old age income security. This it-self is an indicator that growth
potential for the insurance sector is immense.
Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life insurance
Corporation in 1818.The Indian life insurance company act 1912was the first statutory body
that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms
werebeen established in India. Then the central government took over thesecompanies and as
a result the LIC was formed. Since then LIC has worked towards spreading life insurance and
building a wide network across the length and the breath of the country





4

Important milestones in the life insurance business in India:
1912 : The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.
1956 : 245 Indian and foreign insurers and provident societies were takeover by the central
government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956- with a
capital contribution of Rs.5 cr. from the Government of India.
Important milestones in the general insurance business in India are:
1907 : The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes
of general insurance business.
1957 : General Insurance Council, a wing of the Insurance Association of India, frames
a code of conduct for ensuring fair conduct and sound business practices.
1972 : The general insurance business in India nationalized through TheGeneral Insurance
Business (Nationalization) Act, 1972 with effect from 1stJanuary 1973. 107 insurers
amalgamated and grouped into four companies-the National Insurance Company Limited,
the New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the
United India Insurance Company Ltd. GIC incorporated as a company







5

Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance wasmonopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.
Malhotra- was formed to evaluate the Indian insurance industry and recommend its future
direction. The Malhotra committee was set up withthe objective of complementing the
reforms initiated in the financial sector. The reforms were aimed at creating a more efficient
and competitive financial system suitable for the requirements of the economy keeping in
mind the structural changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary to address the need for
similar reforms. In 1994, the committee submitted the report and some of the key
recommendations included:
Structure
Government stake in the insurance Companies to be brought down to 50%.Government
should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as
independent corporations.
Competition
Private Companies with a minimum paid up capital of
Rs.1 billion
should be allowed to enter the sector. No Company should deal in both Life and General
Insurance through a single entity. Foreign companies may be allowed to enter the industry in
collaboration with the domestic companies.



6

Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up.
Controller of Insurance- a part of the Finance Ministry- should beamed independent
Investments
Mandatory Investments of LIC Life Fund in government securities to bereduced from 75% to
50%. GIC and its subsidiaries are not to hold more than5% in any company (there current
holdings to be brought down to this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurancecompanies must be encouraged to set up unit linked pension plans.Computerization
of operations and updating of technology is to be carried outing the insurance industry.











7

STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the Indian as well as the
Global insurance industry. These statistics would give important insights of where the
respective markets are headed for.
The global life insurance market stands at $1,521.2 billion while then on-life insurance
market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6billion global insurance
market and Japan stands next with a 20.62%share.
India takes the 23rd position with US $9.933 billion annual premium collections and a
meager 0.41% share.
Out of one billion people in India, only 35 million people are covered by insurance.
India's life insurance premium as a percentage of GDP is just 1.77 percent.
The income derived by GIC and its subsidiary companies through investment was
Rs.2491.76 core and the investable fund generated was Rs.2843 core in 1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per
cent real annual growth in GDP.






8


NATURE OF INDUSTRY
The insurance industry provides protection against financial losses
resultingfrom a variety of perils. By purchasing insurance policies, individuals andbusinesses
can receive reimbursement for losses due to car accidents, theft of property, and fire and
storm damage; medical expenses; and loss of incomedue to disability or death.
The insurance industry consists mainly of insurance carriers (or insurers ) an insurance
agencies and brokerages.
In general, insurance carriers arelarge companies that provide insurance and assume the risks
covered by thepolicy. Insurance agencies and brokerages sell insurance policies for
thecarriers Insurance companies assume the risk associated with annuities and insurance
policies and assign premiums to be paid for the policies. In the policy, thecompanies states
the length and conditions of the agreement, exactly whichlosses it will provide compensation
for, and how much will be awarded.The premium charged for the policy is based primarily on
the amount to beawarded in case of loss, as well as the likelihood that the insurance carrier
willactually have to pay. In order to be able to compensate policyholders for
theirlosses, insurance companies invest the money they receive in premiums,building up a
portfolio of financial assets and income-producing real estatewhich can then be used to pay
off any future claims that may be brought.





9


There are two basic types of insurance carriers: Direct and Reinsurance
Direct carriers are responsible for the initial underwriting of insurancepolicies and annuities,
while Reinsurance carriers assume all or part of therisk associated with the existing
insurance policies originally underwritten byother insurance carriers.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiariesusually spousesand dependent
childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person who isunable to work due
to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity (a contract or a group of contracts that furnishes a periodicincome at regular
intervals for a specified period) provides a steady incomeduring retirement for the remainder
of ones life.
Property-casualty insurance protects against loss or damage to propertyresulting from
hazards such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility forinjuries to others or
for damage to other peoples property. Most policies, suchas automobile and homeowners
insurance, combine both property-casualtyand liability coverage. Companies that underwrite
this kind of insurance arecalled property-casualty carriers.



10

What is Life Insurance?
Human life is subject to risks of death and disability due to natural andaccidental causes.
When human life is lost or a person is disabled permanentlyor temporarily, there is a loss of
income to the household. The family is put tohardship. Risks are unpredictable.
Death/disability may occur when one least expects it. There are a number of life insurance
products which offerprotection and also coupled with savings.A Term insurance product
provides a fixed amount of money on death duringthe period of contract.A Whole Life
insurance product provides a fixed amount of money on death.An Endowment Assurance
product provided a fixed amount of money eitheron death during the period of contract or at
the expiry of contract if lifeassured is alive.A
Money Back Assurance
product provides not only fixed amounts which arepayable on specified dates during the
period of contract, but also the fullamount of money assured on death during the period of
contract.An Annuity product provides a series of monthly payments on stipulateddates
provided that the life assured is alive on the stipulated dates. A Linked product
provides not only a fixed amount of money on death butalso sums of money which are linked
with the underlying value of assets onthe desired dates.There are a variety of life insurance
products to suit to the needs of variouscategories of people
children, youth, women, middle-aged persons, oldpeople; and also rural people, film actors
and unorganized labor
Life insurance products could be purchased from registered life insurersnotified by the
IRDA. Insurers appoint insurance agents to sell their products.As per regulations, insurers
have to give the various features of the productsat the point of sale. The insured should also


11

go through the various terms andconditions of the products and understand what they have
bought and mettheir insurance needs. They ought to understand the claim procedures so
thatthey know what to do in the event of a loss.


















12


INDIAN INSURANCE SECTOR
REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals withinsurance
business in India is: Insurance Act, 1938, and Insurance Regulatory& Development Authority
Act, 1999.
The Insurance Regulatory and DevelopmentAuthority (IRDA)
Reforms in the Insurance sector were initiated with the passage of the IRDABill in
Parliament in December 1999. The IRDA since its incorporation as astatutory body in April
2000 has fastidiously stuck to its schedule of framingregulations and registering the private
sector insurance companies.The other decision taken simultaneously to provide the
supporting systems tothe insurance sector and in particular the life insurance companies was
thelaunch of the IRDAs online service for issue and renewal of licenses to agents.Since
being set up as an independent statutory body the IRDA has put in aframework of globally
compatible regulations.
MISSION-IRDA
To protect the interests of the policyholders, to regulate, promoteand ensure orderly
growth of the insurance industry and for mattersconnected therewith or incidental
thereto.




13

IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors
inthe dull industry. The initiatives taken by the private players are verycompetitive and have
given immense competition to the on time monopoly of the market LIC. Since the advent of
the private players in the market theindustry has seen new and innovative steps taken by the
players in thissector.The new players have improved the service quality of the insurance. As
aresult LIC down the years have seen the declining phase in its career. Themarket share was
distributed among the private players. Though LIC still holdsthe 79% of the insurance sector
but the upcoming natures of these privateplayers are enough to give more competition to LIC
in the near future. LICmarket share has decreased from 95% (2002-03) to 81 %( 2004-
05).LIC has the current market share of 79%.Among the private players ICICI Prudential has
the maximum of appx 5.60%Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life
of about 3.11%.Below is the table that shows the market share of various players of
theindustry.
The liberalization of the Indian insurance sector has opened new doors
toprivate competition and the new and improved insurance sector todaypromises several new
job opportunities. With private players now in thefield, there will be innovative products,
better packaging, improved customerservice, and, most importantly, greater employment
opportunities.There are a number of options to choose from for a career in Insurance.Ideally
an insurance company will have openings in the following fields:
Actuaries
Underwriter
Surveyor


14

Investment
Marketing & Distribution
Actuaries
Evaluates the risk for companies to be used for strategic managementdecisions.
Actuaries use their analytical skills to predict the risk of writinginsurance policies through th
e use of mathematical, statistical andeconomic models.
An actuary not only fixes the premium rates for new products, but alsorevises both
products and prices. They calculate costs to assume risk
Underwriters Insurance underwriters review insurance applications and decidewhether
they should be accepted or rejected based on the degree of risks involved in insuring the
people or objects of concern.
In the life insurance business, an underwriter is expected to filter the"bad or substandard
lives". Whereas, in the general insurance segment,he takes care of risk management.
Agents/Brokers:
Insurance agents may work for one insurance company or asindependent agents selling for
several companies.
Insurance agents and brokers can find openings in the health insurancesector, financial
planning services, retirement planning counseling oreven provide other services, for e.g. sell
mutual funds, annuities etc.




15

Surveyor/Loss Assessor:
Surveyors are professionals who assess the loss or damage and serveas a link between the
insurer and the insured.
They usually function only in non life business.
Their job is to assess the actual loss and avoid false claims.
Sales/Marketing:
And who can forget the guys who make and break a brand. They would berequired in a large
number in order to promote the number of productsthat will be launched by numerous
companies in the insurance sector.












16

CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untappedpotential
for players in the insurance industry. Saturation of markets in manydeveloped economies has
made the Indian market even more attractive forglobal insurance majors. The insurance
sector in India has come to a positionof very high potential and competitiveness in the
market.
Innovative products and aggressive distribution have become the say of theday. Indians, have
always seen life insurance as a tax saving device, are nowsuddenly turning to the private
sector that are providing them new productsand variety for their choice. Life insurance
industry is waiting for a big growthas many Indian and foreign companies are waiting in the
line for the greensignal to start their operations. The Indian consumer should be ready
nowbecause the market is going to give them an array of products, different inprice, features
and benefits. How the customer is going to make his choice willdetermine the future of the
industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. Afterthe entry of the
foreign players the industry is seeing a lot of competition andthus improvement of the
customer service in the industry. Computerization of operations and updating of technology
has become imperative in the currentscenario. Foreign players are bringing in international
best practices in servicethrough use of latest technologies. The one time monopoly of the LIC
and itsagents are now going through a through revision and training programs tocatch up with
the other private players. Though lot is being done for theincreased customer service and


17

adding technology to it but there is a long wayto go and various customer surveys indicate
that the standards are still belowcustomer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through whichinsurance products are s
old. The concept is very well established in thecountry like India but still the increasing use
of other sources is imperative. Ittherefore makes sense to look at well-
balanced, alternative channels of distribution.
LIC has already well established and have an extensive distribution channeland presence.
New players may find it expensive and time consuming to bringup a distribution network to
such standards. Therefore they are looking to thediverse areas of distribution channel to have
an advantage.
At present thedistribution channels that are available in the market are:
Direct selling/Retai
Corporate agents
Group selling
Brokers and cooperative societies
Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. Thisis the main
distribution channel due to the complexity of mostinsurance products (Endowment, Whole of
Life, Unit Linked). This tends to bethe focus of most companies due to its past success as
well as its ability todeliver the right advice. However, this channel can be expensive and it is


18

atime consuming sales process. An agent is the public face of an
Insurancecompany. Hence it is important that this face is always smiling andpresentable and
the facts and figures at his/ her command are updated andcorrect.An agent should be a
pleasing personality with complete knowledge about thevarious plans and solutions which the
company has to offer and must alsounderstand the customers psychology well to deal in an
efficient manner.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the
bank'sdistribution channel. It is a phenomenon wherein insurance products areoffered through
the distribution channels of the banking services along with acomplete range of banking and
investment products and services. To put itsimply, Bancassurance, tries to exploit synergies
between both the insurancecompanies and banks.
Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof, they canimprove overall
customer satisfaction resulting in higher customer retentionlevels.
Increase in return on assets by building fee income through the sale of insurance products.
Can leverage on face-to-face contacts and awareness about thefinancialconditions of
customers to sell insurance products.
Banks can cross sell insurance products e.g.: Term insurance productswithloans.




19

Advantages to insurers
Insurers can exploit the banks' wide network of branches for distributionof products. The
penetration of banks' branches into the rural areas canbe utilized to sell products in those
areas.
Customer database like customers' financial standing, spending habits,investment and
purchase capability can be used to customize productsand sell accordingly.
Since banks have already established relationship with customers,conversion ratio of leads
to sales is likely to be high. Further serviceaspect can also be tackled easily.
Advantages to consumers
Comprehensive financial advisory services under one roof. i.e.,insurance services along
with other financial services such as banking,mutual funds, personal loans etc.
Enhanced convenience on the part of the insured
Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges








20

WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For some, itis a premium to
be paid on time. For others it offers liquidity since cash can beborrowed when needed. For
the investment-minded, it denotes a constantlygrowing capital account and numerous other
benefits.
The contractual guarantee is the promise to pay, backed by one of the oldestand most stably
regulated financial industry operating in the Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being thatlife insurance
proceeds are paid to the insured's beneficiaries in case of death.The money proffered by
life insurance helps buy time to adjust to the changeof circumstances. Insurance provides
large amounts of cash that will keep thelifestyle for the survivors the way it was before the
insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and completepeace of mind.
He or she knows that the decision made by him will providesound benefits in the future,
whether or not the individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he orshe will live.
The investment benefit is paid to the insured's beneficiaries afterhis death or it can be used
during the life as well. Life insurance policy ownerscan turn to the cash value of the policy in
case of a financial emergency whenall avenues are either blocked or denied.


21

4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the insured cankeep several
long-term goals in mind once he or she invests in the insuranceplan. The cash value of the
policy can be allocated towards augmenting themonthly income during the retirement years.
Leisure years should be turned into pleasure years. Permanent life insurance is designed on
the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for peaceof mind when
they buy life insurance. Life insurance offers complete financialsecurity. The purchase of life
insurance demonstrates concern for a family'sfuture financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the peoplethe policy
owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can backits products
with reserves and surplus as sound as those of the insuranceindustry.The proof of strength
and safety that insurance companies have ensured evenunder the most adverse of conditions
is a matter of pride for the entireinsurance industry. For generation after generation, life
insurance has beenacclaimed as the very benchmark of security against which the other
industries are measured.




22

OPPORTUNITIES FOR INSURANCE COMPANIES
In the now open sector on insurance, the following is what I feel willdetermine the success of
the company in particular and the industry in general:
The contractual guarantee is the promise to pay, backed by one of the oldest and most stably
regulated financial industry operating in the Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being that life insurance
proceeds are paid to the insured's beneficiaries in case of death. The money proffered by
life insurance helps buy time to adjust to the change of circumstances. Insurance provides
large amounts of cash that will keep the lifestyle for the survivors the way it was before the
insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and complete peace of mind.
He or she knows that the decision made by him will provide sound benefits in the future,
whether or not the individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he orshe will live.
The investment benefit is paid to the insured's beneficiaries afterhis death or it can be used
during the life as well. Life insurance policy ownerscan turn to the cash value of the policy in
case of a financial emergency whenall avenues are either blocked or denied.



23

4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the insured cankeep several
long-term goals in mind once he or she invests in the insuranceplan. The cash value of the
policy can be allocated towards augmenting themonthly income during the retirement years.
Leisure years should be turned
into pleasure years. Permanent life insurance is designed on the concepts of long-term
flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for peaceof mind when
they buy life insurance. Life insurance offers complete financialsecurity. The purchase of life
insurance demonstrates concern for a family'sfuture financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the peoplethe policy
owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can backits products
with reserves and surplus as sound as those of the insuranceindustry.The proof of strength
and safety that insurance companies have ensured evenunder the most adverse of conditions
is a matter of pride for the entire insurance industry. For generation after generation, life
insurance has beenacclaimed as the very benchmark of security against which the other
industries are measured.



24


A change in the attitude of the population
Indians have always been wary of employing their hard-earned money in aventure that will
pay them on their death. Insurance has always been used asa Tax saving tool. No more, no
less. It is upon the insurers to educate thepeople to secure/insure their future against any
unknown calamity and make ashield around their families and businesses.

An open and transparent environment created under the IRDA.
The reason for this being on the top of our understanding is that when ever wehave seen any
sector open up in India there are always grey areas and unsurepolicies. These are not exactly
what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process.Insurance as a sector requires players who are strong financially
and are willing to wait for returns. Their confidence can be bolstered only if there is anopen
and a transparent policy guidelines. This will also help the consumersfeel safe that the
regulatory is an active one and cares to do everythingpossible to keep things under control
and help the insurance environmentgrow maturely.







25


A well-established distribution network.
To cater to the largest democracy in the world is by no means a cakewalk.Insurance profits
are directly related to number of insured and this is in turnrelated to the reach.

Trained professionals to build and sell the product.
It is said that the insurance agent is the best salesman in the world. He makesyou pay,
regularly, an amount promising to pay back only on your death. Thus the players will require
an excellent sales team to sell their products in thenow competitive environment.

Encouragement of new and better products and letting thehackneyed ones die out.
This will itself ensure the market grows. And that every class/society gets aproduct that best
suits them









26

SERVICE PROVISION
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance policy (not being a
Key Man policy) is also exempt from taxation. But it is wise to remember that Pensions
received from Annuity plans are not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an individual asses see for any
amount paid as a premium.
POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of theirpolicies or their
claims. As per Regulations for Protection of policyholders interests, 2002, every insurer
should have in place, a grievance redressalsystem to address the complaints of policyholders.
The IRDA has a Grievance Redressal Cell which plays a facilitative role by taking up
complaints against insurers with the respective companies for speedy resolution. The IRD A
however does not adjudicate on complaints








27

SWOT ANALYSIS OF INSURANCE INDUSTRY

STRENGTH
1. Best returns with the added advantage of 100% life insurance coverage.
2. Good option for new investors into the market as all the money is investedby best fund
managers so with less knowledge also they can earn goodreturns.
3. Best commission charges paid to the agents which vary from 12% to 35%which is
much higher as compared to mutual funds i.e. , only 2-2.5%.


WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs
.3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.






28


OPPORTUNITY
1.80 percent of Indian population is still under insured. Sothere is a big opportunity for
insurance companies.
2. As the stock market can be under the mark any time so it can bring loss tothe investors but
as in ULIPs there is proper mixture of debt securities andequity so the loss is incurred during
dark trading days also.
3. Unit-linked products are exempted from tax and they provide lifeinsurance.
4. Increasing consumer awareness about Insurance and its use.

THREAT
1. Cannibalism within the industry by providing misleading figures to theinvestors
.2. Govt.s instability has a long term repercussions affecting companyspolicies and its
growth.








29




30


COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.Incorporated in 1977 with a share
capital of Rs. 10 crores, HDFC has sinceemerged as the largest residential mortgage
finance institution in the country.The corporation has had a series of share issues raising
its capital to Rs. 119crores. HDFC operates through 75 locations throughout the country
with itsCorporate Headquarters in Mumbai, India.
OBJECTIVES AND BACKGROUND
Background
HDFC was incorporated in 1977 with the primary objective of meeting a socialneed that
of promoting home ownership by providing long-term finance tohouseholds for their
housing needs. HDFC was promoted with an initial sharecapital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in
thecountry through the provision of housing finance in a systematic andprofessional
manner, and to promote home ownership. Another objective is toincrease the flow of
resources to the housing sector by integrating the housingfinance sector with the overall
domestic financial markets..


31

ORGANIZATION AND MANAGEMENT
HDFC is a professionally managed organization with a board of directorsconsisting of
eminent persons who represent various fields including finance,taxation, construction and
urban policy & development. The board primarilyfocuses on strategy formulation, policy
and control, designed to deliverincreasing value to shareholders.
FOUNDER Mr. Hasmukhbhai Parekh
BOARD OF DIRECTORS
Mr. D S Parekh Chairman
Mr. Keshub Mahindra Vice Chairman
Ms. Rene S. Karnad Executive Director
Mr. K M Mistry Managing Director
Mr. Shirish B. Patel
Mr. B S Mehta
Mr. D M Sukthanka
rMr. D N Ghosh
Dr. S A Dave
Mr. S Venketaraman
Dr. Ram S. Tarneja
Mr. N M Munjee
Mr. D M Satwalekar
HDFC has a staff strength of 1029, which includes professionals from the fields of
finance, law, accountancy, engineering and marketing.


32

SUBSIDIARY & ASSOCIATE COMPANIES
HDFC Bank
HDFC Mutual Fund
HDFC Standard Life
Intelenet Global Services Ltd
HDFC Chubb General Insurance Company Ltd.
HDFC Reality
Other Companies Co-Promoted by HDFC
a) HDFC Trustee Company Ltd.
b) HDFC Developers Ltd.
c) HDFC Venture Capital Ltd.
d) HDFC Ventures Trustee Company Ltd.
e) HDFC Investments Ltd.
f) HDFC Holdings Ltd.
g) Home Loan Services India Pvt. Ltd.
h) Credit Information Bureau (India) Ltd






33

HDFC STANDARD LIFE INSURANCE



HDFC Standard Life Insurance Company Limited was one of the firstcompanies to be
granted license by the IRDA to operate in life insurancesector. Each of the JV player is
highly rated and been conferred with manyawards. HDFC is rated 'AAA' by both CRISIL
and ICRA. Similarly, Standard Lifeis rated 'AAA' both by Moody's and Standard and
Poors. These reflect theefficiency with which HDFC and Standard Life manage their
asset base of Rs.15,000 Cr and Rs. 600,000 Cr respectively.HDFC Standard Life
Insurance Company Ltd was incorporated on 14th August2000. HDFC is the majority
stakeholder in the insurance JV with 81.4 % stakeand Standard Life has a stake of 18.6%.
Mr. Deepak Satwalekar is the MD andCEO of the venture.






34


THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture, toenter the Life
Insurance market, in January 1995. It was clear from the
outsetthat both companies shared similar values and beliefs and a strongrelationship
quickly formed. In October 1995 the companies signed a 3 year joint venture
agreement.Around this time Standard Life purchased a 5% stake in HDFC, furtherstrengt
hening the relationship.In October 1998, the joint venture agreement was renewed and
additionalresource made available. Around this time Standard Life purchased 2%
of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life alsostarted
to use the services of the HDFC Treasury department to advise themupon their
investments in India.Towards the end of 1999, the opening of the market looked very
promisingand both companies agreed the time was right to move the operation to thenext
level. Therefore, in January 2000 an expert team from the UK joined ahand picked team
from HDFC to form the core project team, based in Mumbai.Around this time Standard
Life purchased a further 5% stake in HDFC and a5% stake in HDFC Bank.








35

COMPANYS MISSION:
To be the top life insurance company in the market.This not only means being the largest
or the most productive company in themarket, but a combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share
COMPANYS VALUES:
SECURITY
: Providing long term financial security to our policy holderswill be our constant
endeavor. This is done by offering life insurance andpension products.
TRUST:
Company appreciates the trust placed by our policy holders inus. Hence, company will
aim to manage their investments very carefullyand live up to this trust.
INNOVATION:
Recognizing the different needs of our customers,company will be offering a range of
innovative products to meet theseneeds.Companys mission is to be the best new life
insurance company in India andthese are the values that will guide us in this.


36

KEY MANAGEMENT PERSONNEL
Chairman
Mr. Deepak S. Parekh

Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain

Managing Director & CEO
Mr. D. M. Satwalekar

AUDIT COMMITTEE
Haribhakti & Company Chartered Accountants
B.K. Khare & Co. Chartered Accountants

Bankers
HDFC Bank Ltd. Union Bank of India
Indian BankThe Saraswat Co-operative Bank Ltd.Federal Bank




37

When Should One Go For Insurance?
Your insurance need will change as your life does, from starting to work toenjoying your
golden years and all the stages in between. Each one of thesestages may pose a different
insurance need/cover for you. In this section, wehave drawn up the basic life stages and
help you analyze various insurance needs accordingly.








38

Stage 1 : Young and Single
This is an important stage where one lays down the foundation of a successfullife ahead.
Take advantage of the time and power of compounding to ensurethat you build up your
dreams, so start saving early.Your needs:
Save for a home and wedding
Tax Planning
Save for Golden yearsStage

2 - Just Married
Marriage brings about a significant change. New dreams and newopportunities also bring
in additional responsibilities. While both of you lookforward to a happy and secure life ,
it is equally important to ensure thateventualities dont come in the way of shaping your
dreams.Your needs:
Planning for home / securing your home loanliability
Save for vacation
Save for your first child







39

Stage 3 - Proud Parents
Once you have children, your need for life insurance is even more. You needto protect
your family from an untoward incident. Ensure your protectionumbrella takes into
account the future cost of securing your childs dream. Youwill want life to go on for
your loved ones, and having enough life insurance isa way to help ensure that.Your
needs:
Provide for childrens education
Safeguarding family against loan liabilities
Savings for post-retirementStage

4 - Planning for Retirement
While you are busy climbing the ladder of success today, it is important foryou to take
time and plan for your life after retirement. Having an early startfor retirement planning
can make a significant difference to your savings.Think about your golden years even
before you have reached them. The key isto think ahead and plan well using your time
and money.Your needs:
Provide for regular income post retirement
Immediate Tax benefits
Lead a secure, independent and comfortablelife style after retirement





40

PRODUCT MIX
At HDFC Standard Life, there is a bouquet of insurance solutions to meetevery need.
They cater to both, individuals as well as to companies looking toprovide benefits to their
employees.For individuals, they have a range of protection, investment, pension andsavin
gs plans that assist and nurture dreams apart from providing protection.One can choose
from a range of products to suit ones life-stage and needs.For organizations they have
customized solutions that range from Group TermInsurance, Gratuity, Leave Encashment
and Superannuation Products.
PRODUCTS FOR INDIVIDUALS PROTECTION -
You can protect your family against the loss of your incomeor the burden of a loan in the
event of your unfortunate demise, disability orsickness. These plans offer valuable peace
of mind at a small price.
Plans : Term Assurance PlanLoan Cover Term Assurance Plan.
INVESTMENT -
This includes a plan that is well suited to meet your long terminvestment needs. We
provide you with attractive long term returns throughregular bonuses.
Plan : Single Premium Whole Of Life
PENSION -
Our Pension Plans help you secure your financial independenceeven after
retirement and live a relaxed retired life.



41


Plans : Personal Pension PlanUnit Linked PensionUnit Linked Pension Plus
SAVING -
Our Savings Plans offer you flexible options to build savings foryour future needs
such as buying a dream home or fulfilling your childrensimmediate and future
needs.
Plans :
Endowment Assurance Plan
,Unit Linked Endowment,
Unit Linked Endowment Plus,Money Back Plan
,Childrens Plan,Unit Linked Youngstar,
Unit Linked Youngstar Plus
GROUP PLANS
HDFC Standard Life has the most comprehensive list of products forprogressive employe
rs who wish to provide the best and most innovativeemployee benefit solutions to their
employees. They offer different productsfor different needs of employers ranging from
term insurance plans for pureprotection to voluntary plans such as superannuation and
leave encashment.
Plans: Group Term Insurance with RidersGroup Term Insurance with Profit-ShareGroup
Unit-Linked PlanFor GratuityFor Defined Benefit SuperannuationFor Defined
Contribution SuperannuationGroup Leave Encashment Plan


42

RURAL CUSTOMER -
According to research findings, there is keennessamong rural customers to invest in
savings cum protection plan with a term of five years, especially, if the premium amount
is low and affordable. Keepingthis in view, HDFC STD> LIFE has plans like:
Plans : Bima Bachat Yojana.Super Bachat Yojana
DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169
officesin over 135 cities/towns in the country. It has a widespread network of Financial
Consultants, Corporate Agents and Brokers servicing customers inthese cities and towns.













43

CURRENT SALES- HDFC Standard Life
HDFC STANDARD LIFE PACING AHEAD
The Financial Express
15th May 2006
HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period
April-March 2005-06, in comparison to the same period 2004-05,with a new business
first year premium of Rs 1,029 crore .In terms of effective premium income (EPI), which
gives a 10% value to aSingle Premium policy and is an internationally-accepted
indicator of aninsurance company's performance, the EPI grew by 103% to Rs 887 cr
from Rs 436 crore.HDFC Standard Life's growth in new business is a manifestation of the
number f lives insured as well as an increase in the average premium. For
theindividual business, volume measured by the number of lives insuredwitnessed a 32%
growth .The average premium also grew by 62% to Rs 27,500 in 2005-06 from
Rs17,000 in 2004-05.During the year the company issued over 3,97,000 policies and has
covered more than 5,80,000 lives








44


FUTURE PLANS

HDFC has always been market-oriented and dynamic with respect to resource
mobilization as well as its lending program. This renders it more than capableto meet the
new challenges that have emerged. Over the years, HDFC hasdeveloped a vast client
base of borrowers, depositors, shareholders andagents, and it hopes to capitalize on this
loyal and satisfied client base forfuture growth. Internal systems have been developed to
be robust and agile,to take into account changes in the volatile external environment.
HDFC has developed a network of institutions through partnerships with someof the best
institutions in the world, for providing specialized financial services.Each institution is
being fine-tuned for a specific market, while offering theentire HDFC customer base the
highest standards of quality in product design,facilities and service.










45




INTRODUCTION
TO
TOPIC





46

FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies,
tax,corporate/trust structures, estate planning, legal issues, family law, assetallocation,
asset protection and investment advice.
Financial Planning takes into account:
Desired asset allocation, risk profile and return expectations.
Building cash flows correlating all expenses and income. Inflation andoutflows
due to loans are considering in building the financial plan.
Future goals like retirement, housing and children's education /marriage or other
needs.
Why do you need Financial Planning?
You may have many dreams, needs and desires. For example, you could bedreaming of:
Owning a new car,
Buying a dream house,
Providing your children with the best education,
Planning a grand wedding for your children
Having a great time after your retirementBut in today's world of skyrocketing costs and
increasing inflation, how manyof these dreams can you hope to turn into reality? By
planning well, you canutilize your limited resources to the fullest



47

EXPERIENCE THE POWER 360 FINANCIAL PLANNING
The only thing permanent in life is change. Times change. People change.
Sodoes life. You expect life to be much better tomorrow than it is today.Tomorrow, you h
ope to fulfill all your dreams and aspirations. But whathappens if things take an untoward
turn? Or, if there is an eventuality?Perhaps it's time for you to change the way you plan
your investments...
How will 360 Financial Planninghelp?

Instead of investing in an ad-hocmanner, 360 Financial Planning helpsyou take a
holistic, all-round view. Briefly, 360 Financial Planning comprises:
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children Future Planning
Retirement Planning



48

INVESTMENT PLANNING:
To make your wealth grow Everyone needs to save for a rainy day. Once you have saved
enough to take care of emergencies, you should start thinking about investing and to
make your money grow.
Investment Planning Service includes:
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic InvestmentPlans (SIP)
Regular review of progress and Portfolio Rebalancing

CASH FLOW PLANNING:
To provide for assets and meet the periodic cashrequirementsIn simple terms, cash flow
refers to the inflow and outflow of money. It is arecord of your income and
expenses.Cash flow planning refers to the process of identifying the major expendituresin
future (both short-term and long-term) and making planned investments sothat the
required amount is accumulated within the required time frame.






49

TAX PLANNING:
To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should becarried out
religiously.
According to the Income Tax Act, 1961, One will be eligible for Tax Benefitsunder
Section 80C and Section 10(10D) of the act.One has to compare the advantages of
several tax saving schemes anddepending upon your age, social liabilities, tax slabs and
personal preferences,decide upon a right mix of investments, which shall reduce your tax
liability tozero or the minimum possible.
INSURANCE PLANNING:
To protect yourself, your family and your Assets.
"Insurance is not for the person who passes away, it for those whosurvive,"
goes a popular saying that explains the importance of
InsurancePlanning.It is extremely important that every person, especially the breadwinner
,covers the risks to his life, so that his family's quality of life does not undergoany drastic
change in case of an unfortunate eventuality. Insurance Planning
isconcerned with ensuring adequate coverage against insurable risks.
CHILDREN'S FUTURE PLANNING:
To give your children a financially securefutureLike every parent, you too must be
overjoyed to watch your child grow.
Allparents want to give the best possible upbringing to their children. Thisincludes good
education and security, in case of any eventuality. Soon, yourlittle bundle of joy will


50

grow up, and it will be time to provide for his or herhigher education and wedding.The
purpose of Children's Future Planning is to create a corpus for foreseeableexpenditures
such as those on higher education and wedding, and to providefor an adequate security
cover during their growing years.
RETIREMENT PLANNING:
Because retirement is a time to relax, not to getworried Some like it. Some dont. But
retirement is a reality for every working person.Most young people today think of
retirement as a distant reality.However, it is important to plan for your post-retirement life
if you wish toretain your financial independence and maintain a comfortable standard
of living even when you are no longer earning. This is extremely important,because,
unlike developed nations, India does not have a social security net
CONSUMPTION PATTERN
The consumption pattern is determined by the income so more would be theincome more
would be the consumption. The consumption though can differ interms of areas where the
money is actually spent. The above representationtells us the consumption pattern of the
consumer in India i.e. where do theyactually invest their money and in what proportion do
they spend in variousareas. The chart shows that people are spending 6.9% of their
savings into savings and investments.
OBJECTIVE:
To generate leads for various Unit Linked Plans offeredby the company, by interacting
with walking and existingcustomers and to know the awareness level of
FinancialPlanning among them.



51

AN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get theinformation from
him about the industry or the company and understand thecustomers insight i.e. what
actually does a customer expects from the companies. The objective was to know the
awareness about Financial Planning among the customers and this was done by getting a
questionnaire filled by the people. The various activities performed were:
DELHI METRO :
Here we interacted with the commuters & collected the data.
MARKETS : (Cannaught Place & Karol Bagh)
During thisactivity, we interacted with the shopkeepers as well as the walkingpeople
regarding their views about the industry.
CANOPY AT NOIDA :
This activity was designed to target thepeople working in BPOs and other IT companies.
TELE-CALLING:
This was random calling from the data baseprovided by the company and the aim was to c
ollectinformation from them.
CORPORATE PRESENTATION:
A presentation was arranged forthe employees of VED RAM AND SONS (Paras), to
make them awareabout the importance of Financial Planning in todays un predicta ble
environment.



52

STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed arethen followed
up and an appointment is fixed for further details.The motive is to explain the customer in
detail, about the various plans offeredby the company. The customer is informed about
the procedure and theoptions he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly mode, quarterly
mode, or monthly mode.
Choose the amount of protection i.e. the sum assured, he desires.
1) With Maturity Benefit, choose the additional benefits like:
a) Life option
Death Benefit
b) Life & Health option
Death Benefit + AccidentalDeathBenefit
c) Extra Life & Health option
Death Benefit + CriticalIllnessBenefit + Accidental Death Benefit
2) Choose the Investment funds or funds one desires.The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund


53

Equity Managed Fund
Growth Fund
Other information like:a)
Tex Benefitb)Various Chargesc)Switching optiond)Surrenderinge)Terms & Conditions etc.
STEP 3: FILLING THE PROPOSAL FORM
After the second step, the interested customers are required to fill theproposal form which
requires the following information
:b) Personal details of the policy holder
,c)Personal details of Bene ficiary or Nominee
d)The Premium amount selected
E) The Term of the policy
F) The Fund choice for investment
STEP 4: COLLECTING THE DOCUMENTS
Once the form is filled all the necessary documents are collected like
:a)Address proof)DOB certificate etchant also the first premium amount in form of
cheque or cash is collected.Within 15 days, the policy documents reach the customers
place, and the customer is required to read the documents carefully.

Why do I need Protection Plans?
Protection Plans help you shield your 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. Securing the future of one's family is one of the most important goals of life.


54

Protection Plans go a long way in ensuring your family's financial independence in the event
of your unfortunate demise or critical illness. They are all the more important if you are the
chief wage earner in your family. No matter how much you have saved or invested over the
years, sudden eventualities, such as death or critical illness, always tend to affect your family
financially apart from the huge emotional loss.
For instance, consider the example of Amit who is a healthy 25 year old guy with a income of
Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10% per annum,
while the inflation rate is around 4%; this is how his income chart will look like, until he
retires at the age of 60 years. At 50 years of age, Amit's real income would have been around
Rs. 10,00,000/- per annum. However, in case of Amit's unfortunate demise at an early age of
42 years, the loss of income to his family would be nearly Rs. 5,00,000/- per annum.

However, with a Protection Plan, a mere sum of Rs. 2,280/- annually (exclusive of service
tax & educational cess) can help Amit provide a financial cushion of up to Rs. 10,00,000/- for
his family over a period of 25 years.




55




OBJECTIVE
OF
STUDY





56

OBJECTIVE OF THE STUDY
1 To have in depth study of my topic.
2 To find out proper recommendations for the company
3 To find out procedure for new customer.
4 SWOT Analysis.














57



RESEARCH
METHODOLOGY








58


RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people andparticularly the
insurance sector covers data collection through observation, questionnaire and interview of
consumers. Type of research
EXPLORATORY :
Type of research carried out was EXPLORATORY in nature; the objective of such research
is to determine the approximate area where the drawback of the company lies and also to
identify the course of action to solve it. For
thispurpose the information proved useful for giving right suggestion to thecompany.
Data Collection:
Primary data
Secondary data Data used for the research work was primary in nature.
Sample unit: -The research process
was done by interacting with number of customersduring the activities performed, which incl
uded markets, cold calling, canopies, etc. Sample Design consists of Random Sampling.
Sample size: - 100 people
Method of collection: -Field procedure for gathering primary data included observation and
interview schedule in which the questionnaires were filed by the interviewer



59

Personal interviews through self administered survey was done to collect the data, market
research was undertaken, that was accomplished by performing various activities designed.
Research Instrument
: Questionnaire
The questionnaire was formulated by keep in mind the followingPoints: -
Giving the respondents clear comprehension of the question.
Inducing the respondents to co-operate.
Giving instructions as to what is wanted.
Identifying the needs to be known.










60






LIMITATIONS









61

Limitations:
The following were the limitations that were there during the course of thestudy
: 1.Limited time period.
2.Less number of respondents.
3.Biasness of the respondents.













62








CONCLUSION







63

CONCLUSION

The various conclusions drawn from the project are: There has been a tremendous change
in the insurance industry. And with it there has been continuous growth in this sector both
in Indian as well as world context.The opening up of the insurance sector has changed the
whole look of the industry. While the LIC, in order to face the competition is coming up
with new strategies. New private players are leading the sector due to their strategic
management and tailored made projects. From the research, we also conclude that though
the awareness and people opting for LIC plans are more as compared to other private
players but the latter are gaining momentum in the market day by day. The demand for
insurance is likely to increase with rising per-capita income, rising literacy rates, and
growth of service sector. In-fact opening up of the insurance sector is an integral part of
the liberalization process being persuadably many developing countries. Life insurance as
a form of protection is the single-most important financial product any earning member of
a family must have. Having said this, a well-diversified portfolio is one of the first rules
of financial planning, and as such one should consider different instruments as the ability
to save increases. Possible investment options range from bank deposits and government
small saving schemes to mutual funds, stocks and property.
There is no right or wrong in this. The success of marketing insurance depend son
understanding the social and cultural needs of the target population, and matching the
market segment with the suitable intermediary segment.




64









RECOMMENDATION










65

RECOMMENDATION
Positioning insurance as a means to fulfilling ones duties during ones lifetime.
Fears relating to thefts, ailments, death could be addressed through sensitive
communication
Fears relating to claims:
Need to promote trust. Demonstrating claim testimonials, positioning as worry free.
Low returns:
Reposition insurance as a risk cover, security instrument rather than a financial
investment.
Lack of understanding:
Training of Channels
To provide quality advice on products best suited
Lack of Knowledge:
Ease of Process, simplifying the product and the procedure
Need to promote the quality of awareness
The benefits:
Leverage on Risk Protection or Returns oriented or both
The product:
Catering to life stages


66

Need for Branding in Insurance:
Branding is more relevant in
theInsurance market which not only faces the problem of securing andretaining customers
in an increasingly competitive marketplace but also experiences the need for heightened
relevance of the brand proposition in a world where brand has been termed the new
religion. In rural India, the LIC is especially synonymous with insurance. But in the wake
of competition insurance companies have to do a considerable brand building exercise at
least in urban India. Adequate time, investment and longer-term management of the brand
are essential, not only for success but also survival. All brands need to be built around
well-differentiated and credible positioning that springs from the organizations history.
The brand must not only be believed but lived by management and employees.

Focus on different segments to survive and
thrive in a competitiveenvironment. Each company has to choose its own unique positioni
ngbased on its unique strengths. Below-mentioned positioning alternatives can be worth
considering.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and
servicesrather than customer segments. It is a sensible strategy for thosecompanies who
have distinctive advantages or strengths in offering
certainproducts and services. In the insurance industry too, it is possible toachieve a
unique position by focusing on certain category of products.



67

NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on
thediffering needs of different groups of consumers. This can be donesuccessfully if a co
mpany has unique strengths to service a group of customer needs better than others. The
insurance needs of customers vary significantly for different groups of customers. The
insurance needs of young family with small children will be quite different from that of a
family in which the income-earner is closet retirement. However, in India most of the life
insurance companies have a wide variety of products tailored for different customer needs
and there is no company focusing on a particular customer need.

ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is
different groups of customers may be accessible in different ways even though they may
have similar needs. Access is typically a function of customer geography or customer
scale. There is excellent opportunity in the insurance industry to employ access-based
positioning by targeting the rural insurance sector. The rural market for life insurance is
very different from the urban marketing terms of needs, income levels and distribution
(seasonality, for example) , penetration of media and so on. Rural market can be a highly
profitable position if one is able to carefully plan and tailor an entire set of low-cost
activities of advertising, distribution, and product design etc. to successfully exploit the
potential.




68











BIBLIOGRAPHY






69


BIBLIOGRAPHY
Websites:-
www.rbi.org.in2
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
www.google.com
(search engine)

Other References:
Brochures of various plans




70






GLOSSARY






71

GLOSSARY
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event of death or injury
by accident
Annuity
An investment option that makes a series of regular payments to an individual in
exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
Bonus
The amount paid as return in a with-profit policy. The bonus, expressed as percentage of
the sum assured, is generally declared every year. The amount is linked to the profits
earned by the insurer. Depending on the time
of withdrawal, there are two kinds of bonuses reversionary and cash. Areversionary
bonus can be encased only on maturity of the policy; a cash bonus can be withdrawn
when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate. Long-term capital
gains arise from assets owned for more than a year while short-term capital gains are
made from assets owned for less than a year.



72

Corpus
The amount of money available with a scheme for investing. If alreadyinvested, the
corpus is the current value of the schemes portfolio.
Cover
Another word for insurance; it also refers to the amount of insurance.
Critical illness rider
A rider that provides a policyholder financial protection in the event of a critical illness
Death benefit
The amount payable to the nominee on death of the policyholder. The amount paid is the
sum assured plus benefits applicable (if any) less outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some return on investment.
Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)
Diversified equity funds that additionally offer a tax deduction under Section80C on
investments up to Rs.1 lakh.
Financial planning
It covers the essential elements of a persons financial affairs and is aimed at achieving a
persons financial goals.



73

Group Insurance
An insurance policy taken out by employers to provide life cover to their employees.
Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy
Insurer
The insurance company
Investments
Assets like fixed deposits, post office savings, bonds and stocks that are acquired for the
purpose of earning a return
Liquidity
The quality of assets that can be easily and quickly converted into cash without any, or
significant, loss in value.
Lock-in period
The period of time for which investments made in an investment option cannot be
withdrawn.
Maturity date
The date on which a policy term or fixed-income investment like fixed depositor bond
comes to an end.



74

Money-back plans
A variant of endowment plans in which survival benefits are disbursed through the policy
term, rather than in a lump sum at the end.
Net asset value (NAV)
The simplest measure of how a scheme is performing, it tells how much each unit of it is
worth at any point in time. A schemes NAV is its net assets (the
market value of the financial securities it owns minus whatever it owes) divided by the
number of units it has issued.
Nominee
The person(s) nominated by the policyholder to receive the policy benefits in the event of
his death.
Pension Plan
Investment products offered by insurance companies and mutual funds
thatrequired the investor to make defined contributions over regular periods, mostly every
year. The contributions are invested according to a pre-decided investment plan. At
retirement, the accumulation is paid out through regular pay-out options.
Policy
The legal document issued by an insurance company to a policyholder that states the
terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover


75

Post office schemes
Also known as Small Savings schemes, they are offered at post offices
andcarry the highest returns among fixed income instruments. Governmentbacking makes
these instruments like Public Provident Fund (PPF), National Savings Certificate (NSC),
Kisan Vikas Patra (KVP) and Post Office MonthlyIncome Scheme (POMIS) risk-free
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
The amount of cover taken under a life insurance policy, it is the minimum amount that
will be paid on death of the policyholder during the policy term.
Surrender value
The amount payable by the insurer to the owner of an investment-based plan in case he
opts to terminate the policy after three years (the mandatory lock-in period) but before its
maturity date. The surrender value will be the premia paid till date minus surrender
charges and any outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no return on the
premium paid.



76

Vesting date
In pension plans, it is the date from which the policyholder starts receiving pension. In
childrens plans, it is the date from which a child becomes the owner of a policy taken out
in his name (generally, around his 18th birthday).
Waiver of premium rider
A rider that waives the premier payable on the base policy and other riders
incertain circumstances mostly related to death, disability or injury. Animportant feature e
specially for investment products such as childrenspolicies.
Will
A document that designates the assets of a person-both financial and physical-to various
family members and other heirs.
Whole-life plans
Class of life insurance policies that provide cover through your lifetime.








77







ANNEXURE









78

QUESTIONNAIRE
Awareness of Financial Planning and Consumers Perception about Insurance
Industry
Name: ________________________
Age: ______
Gender: M ---------- F----------
Marital Status: Married Single Occupation: ___________________
Contact No: __________________
Annual Income (app. in Rs.
Up to 1.50 lacks-----------
1.50 lacs-3 lacks------------
1.51 3 lacs-5 lacks--------------
1.52 Above-------------------
1.53 5 lacks----------------
Q1) Are you aware about what is financial planning?
YES NO
Q2) mention the names of Life insurance companies you have heard of:
1) ________________ 2) ________________
3) ________________ 4) ________________
5) _______________ 6) ________________


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Q3) How much do you save approximately of your annual income?

Q4) where do you invest/would like to invest your savings?
(Rank in order of preference, 1 being most preferable)
1. Banks 2. Share
3. MarketInsurance 4. Bonds & Securities
5. Mutual Funds 6. Real Estate/Property

Q5) Have you taken any life insurance policy on your own life or on life of any of your
family member?
a. YES b. NO
(If no, switch to Q 9)

Q6) which company(s) policy(s) you have?
LIC
ICICI PRUDENTIAL
BIRLA SUNLIFE
ING VYSYA
BAJAJ ALLIANZ
SBI LIFE
HDFC STD. LIFE
TATA AIG
MAX NEW YORK LIFE
AVIVARELIANCE
KOTAK MAHINDRA
MET LIFE OTHER ____________(specify)


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Q7) which type of plan did you buy?
Money Back Plan--------------------------------
Endowment Plan-----------------------------------
Pension Plan---------------------------------------
ULIP----------------------------------------------------
Q8) What was your purpose/will be your likely purpose of taking insurance?
RANK THEM (1 being most ideal)
a) PROTECTIONOF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENTPLANNING

Q9) Have you ever been approached for Life insurance by any of the following
(Please ), also Rank according to your preference from whom you are mostlikely
To buy insurance?
( Here) (Rank) yes no
1) Known/Current Advisor
2) Advisors referred by friends/family
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Banc assurance)
5) Group Insurance Policies offered by your employer




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Q10) Do you feel opening up of the sector has created more insurance awarenessamong
the public?
YES
NO

Q11) How many dependents do you have?
--------<2 -------2-4 ------ 4-6 ------ >6

Q12) Do you really think insurance cover in todays scenario is nonessential?
_______________________________________________________________________
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