A

SUMMER TRAINING PROJECT REPORT

ON
WEALTH MANAGEMENT SERVICE OF
ADITYA BIRLA MONEY

IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE

OF
MASTER IN BUSINESS ADMINISTRATION (M.B.A.)
(MARKETING)
2011-2013

APEX INSTITUTE OF ENGG. & TECHNOLOGY

(RAJASTHAN TECHNICAL UNIVERSITY)
2011-2013

A PROJECT REPORT ON
INSURANCE IN WEALTH MANAGEMENT
OF
ADITYA BIRLA MONEY

Companys guide name -:

Ms. SANGEETA UPADHYAY (AREA MANAGER)

Under the guidance of -:

Ms. NEHA ARORA (RELATIONSHIP MANAGER)

SUBMITTED TO -:

SUBMITTD BY-:

MRS. PALLAVI AGARWAL

SURENDRA SINGH SOLANKI

[2]

DECLARATION

I hereby declare that this project work titled INSURANCE IN WEALTH

MANAGEMENT AT ADITYA BIRLA MONEY is the result of my own
research work.
This has not been submitted earlier to any other university or institution for
the award of any degree/diploma/certificate or published any time before.

PLACE: JAIPUR

SURENDRA SINGH SOLANKI

DATE:

(M.B.A.)

[3]

ACKNOWLEGEMENT
I would like to express my sincere gratitude to the branch manager of Wealth management
department, Mrs. Sangeeta Upadhyay and project guide Ms. NEHA ARORA for her guidance
and support throughout my training at Wealth Management Department (ABM).
I would also like to show my greatest appreciation to all those who have directly & indirectly
supported me with their encouragement & guidance. Without their encouragement & guidance
this project would not have been a success.
Finally, I thank my institute Apex Institute of Management and Science for making this
experience of summer training in an esteemed organization like ABM.

[4]

TABLE OF CONTENTS

S.NO.

CHAPTER

PAGE NO.

Introduction To The Topic

7-8

Objective of the study

Concept of the wealth management 10-13

Company Profile

Financial Services provided by the 21-26

14-20

company
6

INTRODUCTION OF INSURANCE

27-61

Advantages and limitations

62

Strategy and outlook

63

Research

64-65

10

Conclusion and recommendation

66

11

Bibliography

67

12

Annexure

68

13

Questionnaire

69-71

[5]

[6]

INTRODUCTION
The term wealth management now a days having very importance. So many financial
institutions are engaged in the business of wealth management. Now a days, Wealth
Management has very craze in the business world. In a survey, it was found that India
had 100,000 milliners day end of year 2006 is now growing up by 21% from a year
earlier (Asia pacific Wealth report).
Wealth management services area in financial sector has been witnessing more
attention during last couple of years. Capgemini Merrill Lynch Wealth Report 2007 cites
number of HNIs (high net worth individuals) globally to be around 9.5 million with wealth
held by them totaling to US$37.2 trillion in year 2006. Value of wealth held by HNIs
represents an increase of around 11.4% since 2005.
Considering long-term high value business proposition, number of banks and niche
players has started offering full range of wealth management services targeted to HNIs
and emerging affluent
While growing volume of premium services to affluent clients becomes the key driver for
most of the service provider firms, many unique elements inherent to wealth
management services requires completely different service offering model than the
existing model for transactional services.
Greatly accustomed in offering commoditized financial services so far, demand of
unconventional form of service model poses a big challenge in charting growth path for
these wealth management firms.

[7]

OBJECTIVE OF THE STUDY

The main objective of the study is to understand the procedure of wealth
management department.
To understand the concept of wealth management to the protection of assets from
creditors.
To understand the working principle of wealth management during ups and downs.
To understand the concept of wealth management for diversifying the risks.
To understand the investment strategies with the help of wealth management.
To understand the importance of accumulating and growing assets with the help of
wealth management.
To understand the concept of wealth management in reference of portfolio
allocation.
To understand the cash flows and maintain by understanding wealth management.
To know the potential market in urban and semi-urban area.
To know the investors preference for investment.
To understand the risk tolerance of people in the current scenario.
Investors awareness for wealth management services provided by the Aditya Birla
Money.

[8]

CONCEPT OF WEALTH MANAGEMENT

Wealth management is a service provided by financial institutions to help high net worth
individuals protect and grow their wealth. This advanced investment advisory discipline
involves providing a diverse range of services, such as financial planning, investment
management, tax planning and cash flow and debt management, based on client
requirements.

There are two aspects to the wealth management process; protecting assets from
creditors, market crashes or slowdowns, taxes, lawsuits and other unexpected events,
and growing asset values through methods that actively manage risk and reward
profiles to clients needs.
The term wealth Management formed with two words Wealth & Management. The
meaning of management they have already seen in the steering introduction. The
meaning of wealth is Funding, assets, investments and cash. It means the term
Wealth Management deft with fund assets, instrument, cash, and any other item of
similar nature. While defining the Wealth Management, they have to think in planned
manner. Wealth Management is an all inclusive set of strategies that aims to grow,
manage, protect and distribute assets in a much planned systematic and integrated
manner.

[9]

DEFINITION:
Wealth management is a practice that in its broadest sense describes the combining of
personal investment management, financial advisory, and planning disciplines directly
for the benefit of high-net-worth clients.
In the narrowest context, a wealth manager helps a client construct an entire investment
portfolio and advises on how to prepare for present and future financial needs. The
investment portion of wealth management normally entails both asset allocation of a
whole portfolio as well as the selection of individual investments. The planning function
of wealth management often incorporates tax planning around the investment portfolio
as well as estate planning.
A type of financial service that combines personal investments, tax planning strategies,
estate planning and legal counsel. It is designed to provide a broad array of services
within the confines of one office.

WEALTH MANAGEMENT RANGE:

The Indian market has been segmented by the wealth management service providers
into five categories namely;
Ultra high net worth individuals (UHNIs)-in excess of US $30 million
Super high net worth individuals (SHNIs)-between US $ 10 million- $30 million
High net worth individuals (HNIs)-between US $ 1 million- $ 10 million
Super affluent-between US $125,000- $1 million
Mass affluent between US $25,000- $ 125,000

[10]

OBJECTIVE OF THE WEALTH MANAGEMENT:

Diversification of the risk- Enhance value by broad-basing asset classes that
mitigate risks while maximizing returns for clients.
Risk management- Judicious use of equities for above average returns.
Confidentiality and integrity- Protect client interest and serve with utmost
confidentiality and integrity.
Strong research guidance- Research back recommendations and portfolio
monitoring.

KEY ELEMENTS OF WEALTH MANAGEMENT:

Wealth management services involve various responsibilities in providing professional
investment advice and investment management services to a client. Dependent on the
mandate of the services given to the Wealth Manager, wealth management services
could be packaged at various levels:
Advisory Wealth mangers role is limited to the extent of providing guidance on
investment / financial planning and tax advisory, based on client profile. Investment
decisions are solely taken by the client, as per his /her own judgment.
Investment Processing (transaction oriented) Client engages wealth manager to
execute specific transaction or set of transactions. Investment planning, decision and
further management remain vested with the client
Custody, Safekeeping and Asset Servicing Client is responsible for investment
planning, decision and execution. Wealth manager is entrusted with management,
administration and oversight of investment process.
End-to-end Investment Lifecycle Management Wealth manager owns the whole gamut
of investment planning, decision, execution and management, on behalf of the client.
He is mandated to make financial planning, implement investment decisions and
manage the investment throughout its life.

[11]

WEALTH MANAGEMENT PROCESS:

Wealth management process includes strategic asset planning, family

philanthropy, cash management, diversified portfolio, family, education and
reporting, financial advisory, annual management review, estate and tax
planning.

[12]

[13]

ADITYA BIRLA MONEY

BACKGROUND:
A US $40 billion corporation, the Aditya Birla Group is in the league of Fortune 500. It is
belonging to 42 different nationalities. The Group has been ranked number 4 in the
Global Top Companies or Leaders survey and ranked number 1 in Asia Pacific for
2011.
The Group operates in 36 countries Australia, Austria, Bangladesh, Brazil, Canada,
China, Egypt, France, Germany, Hungary, India, Indonesia, Italy, Ivory Coast, Japan,
Korea, Laos, Luxembourg, Malaysia, Myanmar, Philippines, Poland, Russia, Singapore,
South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Turkey, UAE,
UK, USA and Vietnam.
The Aditya Birla Group nurtures a culture where success does not come in the way of
the need to keep learning afresh, to keep experimenting.
In India it is:
:: A top fashion (branded apparel) and lifestyle player
:: The second-largest player in viscose filament yarn
:: The largest producer in the chlor-alkali sector
:: Among the top three mobile telephony companies
:: A leading player in life insurance and asset management
:: Among the top two supermarket chains in the retail business
Among the top 10 BPO companies.

[14]

PRODUCTS AND SERVICES PROVIDED BY THE

ADITYA BIRLA GROUP

Supermarkets

IT- ITes services

Financial services

Cellular services

Insulators

Wind power generation

Noble ferro alloys

Iron ore

Carbon black

Fertilizers, seeds, agrochemicals

Fibres, fabrics

Cement

[15]

ADITYA BIRLA MONEY

Aditya Birla Money is a single brand offering the combined

products and services of Aditya Birla Money Limited and Aditya Birla Money Mart
Limited.
Aditya Birla Money Limited is a broking and distribution player, offering equity and
derivative trading through NSE and BSE and currency derivative on MCX-SX. It is
registered as depository participant with both NSDL and CDSL and also provides
commodity trading on MCX and NCDEX through its subsidiary company.
Aditya Birla Money Mart Limited is a wealth management and distribution player,
offering third party products like company deposits, mutual funds, insurance, structured
products, alternate investments, property services and has a premier wealth
management service arm to cater to HNI customers.
These offerings are delivered through a strong pan India distribution network of about
1000 own and franchisee branches, a robust online and offline model with a strong
technology backbone to a large customer base, in excess of 4 lakhs.
VISION OF THE COMPANY
To be a global conglomerate with a clear focus on each business.

MISSION OF THE COMPANY

To deliver superior value to our customers, shareholders, employees, society at large.

[16]

KEY MANAGEMENT:
AJAY SRINIVASAN, CHIEF EXECUTIVE- FINANCIAL SERVICES
He has been with the Aditya Birla Group since July 2007
He sets the vision and provides strategic direction and leadership for the Groups
Financial Services Business.

PANKAJ RAZDAN, DY. CHIEF EXECUTIVE- FINANCIAL SERVICES

He has been with the Aditya Birla Group since July 2007
He makes strategies and operationalises the Aditya Birlas Group Growth in Financial
Services.

GIRISH VENKAT, HEAD- WEALTH MANAGEMENT, ADITYA BIRLA MONEY

He has 14 years of experience with financial services.

JOSEPH THOMAS, HEAD- INVESTMENT ADVISORY AND FINANCIAL PLANNING,

ABM

VIVEK MAHAJAN, HEAD-RESEARCH, ABM

[17]

COMPANYS PHILOSOPHY:

Some might say investing is a science, one that follows a fixed discipline, with
well defined principles and rules. But calculations and numbers will only take
ones to a certain point. Beyond that, its the expertise that counts.

For ABM creating the perfect portfolio is a skill; that we have polished and
mastered over the years. Picking the right investments, identifying growth
opportunities and knowing when to enter and quit the market, requires immense
skill and a keen sense of timing. Aditya Birla Money Wealth Management, offers
an expert panel of professionals who help to mould the goals and expectations
into sound investment strategies. With their guiding factors like capital protection
and strategic asset allocation, they help in translating ones financial dreams into
reality by carefully crafting individually specific portfolios that are Centered on
ones profile, risk appetite and of course aimed at getting the optimum out of
ones investment.

Deciding where to invest ones hard earned money can be a daunting task for
many people. But it doesnt have to be when they are with the ABM. With Aditya
Birla Money Wealth Management, one have a dedicated Relationship Manager
who not only ensures that his/her financial goals are met but also exceeds their
expectations at every step.

[18]

Wealth Management Services:

Wealth management offers the following services:

Investment planning: assists you in investing your money into various

investment markets, keeping in mind your investment goals.

Insurance planning: assists you in selecting from various types of insurances,

self insurance options and captive insurance companies.

Retirement planning: is critical to understand how much funds you require in

your old age.

Asset protection: begins with your financial advisor trying to understand your
preferred lifestyle and then helping you deal with threats, such as taxes,
volatility, inflation, creditors and lawsuits, to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might include planning for
charity, supporting your favorite causes while also receiving tax benefits.

Estate planning: helps in protecting you and your estate from creditors,
lawsuits and taxes. This service is critical for every person whose net worth is
high.

Business planning: This service aims at optimizing the tax free advantages of
running your own business.

Business succession planning: assists in planning for the inevitable to

maximize returns.

Wealth transfer: helps you pass on your wealth to your dependents.

[19]

FINANCIAL PRODUCTS AND SERVICES PROVIDED BY THE

COMPANY
Financial Products:
Aditya Birla Money provides various financial products like mutual fund, insurance, etc.
The range of financial products are :
TRADITIONAL PRODUCTS

Mutual Funds

Insurance

Ipo

Fixed Deposits

BROKING SOLUTIONS

Equity Strategies

Commodity Desk

Derivative Strategy

Currency Trading

Margin Funding

ALTERNATIVE INVESTMENTS

Portfolio Management System

Private Equity

Structured Products

Offshore Products

Gold

PROPERTY SERVICES

Commercial

Residential

Retail Shops

Loan Against Property

Secondary Sales
[20]

MUTUAL FUNDS
An investment vehicle that is made up of a pool of funds
collected from many investors for the purpose of investing in
securities such as stocks, bonds, money market instruments
&similar assets except hedge fund.
These are operated by money managers, who invest the funds capital and attempt to
produce capital gains & income for the funds investment. A mutual funds portfolio is
structured.

TYPES OF FUNDS:
Generally, mutual funds are open-ended and close- ended. These are defined as:
1. OPEN-END - The most common type, the open-end mutual fund, must be willing
to buy back its shares from its investors at the end of every business day at the
nav calculated that day.
2. CLOSE-END - Closed-end funds generally issue shares to the public only once,
when they are created through an initial public offering. Their shares are then
listed for trading on a stock exchange. Investors who no longer wish to invest in
the fund cannot sell their shares back to the fund (as they can with an open-end
fund). Instead, they must sell their shares to another investor in the market; the
price they receive may be significantly different from net asset value.

[21]

CLASSIFICATION ON THE BASIS OF INVESTMENT:

Mutual funds are classified by their principal investments. The four largest categories of
funds are money market funds, bond or fixed income funds, stock or equity funds and
hybrid funds
Money market funds
Money market funds invest in money market instruments, which are fixed income
securities with a very short time to maturity and high credit quality. Investors often use
money market funds as a substitute for bank savings accounts, though money market
funds are not government insured, unlike bank savings accounts.
Bond funds
Bond funds invest in fixed income securities. Bond funds can be sub-classified
according to the specific types of bonds owned (such as high-yield or junk bonds,
investment-grade corporate bonds, government bonds or municipal bonds) or by the
maturity of the bonds held (short-, intermediate- or long-term).
Stock or equity funds
Stock or equity funds invest in common stocks. Stock funds may invest in primarily U.S.
securities (domestic or U.S. funds), in both U.S. and foreign securities (global or world
funds), or primarily foreign securities (international funds). They may focus on a specific
industry or sector.
A stock fund may be sub-classified along two dimensions: (1) market capitalization and
(2) investment style (i.e., growth vs. blend/core vs. value).

[22]

Hybrid funds
Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced
funds, asset allocation funds, target date or target risk funds and lifecycle or lifestyle
funds are all types of hybrid funds.

WAYS OF MAKING MONEY THROUGH MUTUAL FUND:

1. Income is earned from dividend on stocks & interests on bonds. A fund pays out
nearly all of the income it receives over the year of fund owner in the form of a
distribution.
2. If the fund sells securities that have increased in price, the funds have a capital
gain. Most funds also pass on these gains to investors in a distribution.
3. If funds holding increase in price but not sold by the fund manager, the fund
share increase in price you can then sell your mutual fund for a profit.

[23]

ADVANTAGES AND LIMITATIONS

ADVANTAGES:

Increased diversification

Daily liquidity

Professional investment management

Ability to participate in investments that may be available only to larger investors

Service and convenience

Government oversight

Ease of comparison

Economies of scale

DISADVANTAGES:

Fees

Less control over timing of recognition of gains

Less predictable income

No opportunity to customize

Dilution(It is possible to have too much diversification because funds have small
holding in so many different companies, high returns from a few instruments
often dont make much difference on the overall return.)

Taxes

[24]

Mutual Funds give you access to Indian equity and debt

securities. We offer you advice on the entire universe of
mutual funds:
o equity funds growth or capital appreciation
o debt funds capital preservation

Choose from an array of more than 15 fund houses with various schemes like as:
Reliance mutual fund
Sundaram mutual fund
Kotak mutual fund
Religare mutual fund
Mirae mutual fund
SBI mutual fund
HDFC mutual fund
ICICI prudential mutual fund
Birla mutual fund
TATA mutual fund
AXIS mutual fund
UTI mutual fund
Franklin mutual fund
Fidelity mutual fund
DSP mutual fund
JM mutual fund

[25]

INTRODUCTION OF INSURANCE
Insurance is a form of risk management in which the
insured transfers the cost of potential loss to another
entity in exchange for monetary compensation known as
the premium.Insurance allows individuals, businesses
and

other

entities

to

protect

themselves

against

significant potential losses and financial hardship at a

reasonably affordable rate.
Everyone that wants to protect themselves or someone
else against financial hardship should consider insurance. This may include:

Protecting family after ones death from loss of insurance.

Ensuring debt repayment after death.

Covering contingent liabilities.

Protecting against the death or a key employee or person in the business.

Buying out a partner or co-shareholder after his/her death.

Protecting yourself against unforeseeable health expenses.

Protecting yourself in the event of disability.

Insurance is a form of risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as the
premium.
Insurance allows individuals, businesses and other entities to protect themselves
against significant potential losses and financial hardship at a reasonably affordable
rate. We say "significant" because if the potential loss is small, then it doesn't make
sense to pay a premium to protect against the loss. After all, you would not pay a
monthly premium to protect against a $50 loss because this would not be considered a
financial
hardship
for
most.
Insurance is appropriate when you want to protect against a significant monetary loss.
Take life insurance as an example. If you are the primary breadwinner in your home, the
loss of income that your family would experience as a result of our premature death is
considered a significant loss and hardship that you should protect them against. It would
be very difficult for your family to replace your income, so the monthly premiums ensure
that if you die, your income will be replaced by the insured amount. The same principle
applies to many other forms of insurance. If the potential loss will have a detrimental
effect
on
the
person
or
entity,
insurance
makes
sense.
[26]

Brief history of insurance sector

The insurance sector in India has completed all the facets of competition from being an
open competitive market to being nationalized and then getting back to the form of a
liberalized market once again. The history of the insurance sector in India reveals that it
has witnessed complete dynamism for the past two centuries approximately.
With the establishment of the Oriental Life Insurance Company in Kolkata, the business
of Indian life insurance started in the year 1818.
- Important milestones in the Indian life insurance business:
1912: The Indian Life Assurance Companies Act came into force for regulating the
life insurance business.
1928: The Indian Insurance Companies Act was enacted for enabling the government
to collect statistical information on both life and non-life insurance businesses.
1938: The earlier legislation consolidated the Insurance Act with the aim of
safeguarding the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies were taken over by the
central government and they got nationalized. LIC was formed by an Act of Parliament,
viz. LIC Act, 1956. It started off with a capital of ` 5 crore and that too from the
Government of India.
The history of general insurance business in India can be traced back to Triton
Insurance Company Ltd. (the first general insurance company) which was formed in the
year 1850 in Kolkata by the British.
Insurance companies in India:
IRDA has till now provided registration to 12 private life insurance companies and 9
general insurance companies. If the existing public sector insurance companies are
considered then there are presently 13 insurance companies in the life side and 13
companies functioning in general insurance business. General Insurance Corporation
has been sanctioned as the "Indian reinsurer" for underwriting only reinsurance
business.

[27]

Research STATEMENT
The research statement studied is entitled, A comparative study of Life Insurance
Corporation of India and Private Life Insurance Companies in India. The present study
focuses on the analysis of the performance of public 52and all private life insurance
companies in India with the help of mean, percentage, ratios, ANOVA, Data
Envelopment Analysis and linear trend.

RESEARCH DESIGN
A Research design is a plan of action to be carried out in connection with a research
project. It is the conceptual structure within which research is conducted and it
constitutes the blue print for the collection, measurement and analysis of data. It is the
specification of methods and procedures for acquiring the information needed for
solving the problem. Decisions regarding what, where, when, how much, by what
means concerning an inquiry or a research study constitute a research design.

OBJECTIVES OF THE STUDY

The objectives of the study are as follows:
- To understand the concept and mechanism of insurance.
- To compare and analyze the financial performance of private sector life insurance
companies and Life Insurance Corporation of India.
- To predict the volume of new business and total premium of life insurance companies.
- To compare the cost efficiency of life insurance companies in India.

Nature of data and sources of data

Collection of the data is essential part of research. The nature of data which is collected
and used for this research is secondary in nature. The relevant and required data has
been collected from journals, dailies, annual reports,magazines, literature and websites
of selected companies and through various search engines.
[28]

SAMPLE SELECTION
All private and public sector life insurance companies in India from 2000-01 to 2009-10
were selected for the study.The companies selected for the research work are as
follows:

List of Insurance companies in India:

LIFE INSURERS

Websites

Public Sector
Life Insurance Corporation of India

www.licindia.com

Private Sector
Allianz Bajaj Life Insurance Company
Limited

www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited

HDFC Standard Life Insurance Co.
Limited

www.birlasunlife.com
www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited

www.iciciprulife.com

ING Vysya Life Insurance Company

Limited

www.ingvysayalife.com

Max New York Life Insurance Co. Limited

www.maxnewyorklife.com

MetLife Insurance Company Limited

www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd

SBI Life Insurance Company Limited

www.omkotakmahnidra.com
www.sbilife.co.in

TATA AIG Life Insurance Company

Limited
AMP Sanmar Assurance Company
Limited
Dabur CGU Life Insurance Co. Pvt.
Limited

www.tata-aig.com

www.ampsanmar.com

[29]

GENERAL INSURERS

Public Sector
National Insurance Company Limited
New India Assurance Company Limited
Oriental Insurance Company Limited
United India Insurance Company Limited

www.nationalinsuranceindia.com
www.niacl.com

Private Sector
Bajaj Allianz General Insurance Co.
Limited

www.uiic.co.in

ICICI Lombard General Insurance Co. Ltd

IFFCO-Tokyo General Insurance Co. Ltd.

www.bajajallianz.co.in

Reliance General Insurance Co. Limited

Royal Sundaram Alliance Insurance Co.
Ltd

www.icicilombard.com

TATA AIG General Insurance Co. Limited

www.itgi.co.in

Cholamandalam General Insurance Co.

Ltd.

www.ril.com
www.royalsun.com

Export Credit Guarantee Corporation

HDFC Chubb General Insurance Co. Ltd.

www.tata-aig.com
www.cholainsurance.com

www.ecgcindia.com

[30]

TYPES OF INSURANCE
(A) LIFE INSURANCE:

Term Life Insurance

Permanent Life Insurance

(B) GENERAL INSURANCE

Fire Insurance
Marine Insurance
Accident Insurance

(A)Life Insurance
Life Insurance is a contract providing for payment of a sum of money to the person
assured or, following him to the person entitled to receive the same, on the happening
of a certain event. It is a good method to protect your family financially, in case of
death, by providing funds for the loss of income.

A1. TERM LIFE INSURANCE: Under a Term Life contract, the insurance company
pays a specific lump sum to the designated beneficiary in case of the death of the
insured. These policies are usually for 5, 10, 15, 20 or 30 years.
Term life insurance are the most popular in advance countries but were not so popular
in India. However, after the entry of the private operators and aggressive marketing by
few players this kind of policies are becoming popular. The premium on such type of
policies is comparatively quite low when compared with other types of life insurance
policies, mainly due to the fact that these policies do not carry cash value.
PLUS OF TERM LIFE INSURANCE

MINUSES OF TERM LIFE INSURANCE

- If one survives the period of the policy, he
/ she do not get any money at the end of
the policy.

- The premium payable on these policies is The premium on such policies keeps on
low as they do not carry any cash value.
increasing with age mainly because the risk
of death of older people is more. Over the
- One can afford for quite high value
page of 60, these policies become difficult
insurance policies
to afford.
[31]

A2. PERMANENT LIFE INSURANCE :

In a Permanent Life contract, a portion of the money paid as premiums is invested in
a fund that earns interest on a tax-deferred basis. Thus, over a period of time, this
policy will accumulate certain "cash value" which you will be able to get back either
during the period of the policy or at the end of the policy.
Your need for life insurance can change over a lifetime. At any age, you should consider
your individual circumstances and the standard of living you wish to maintain for your
dependents. In most cases, you need life insurance only if someone depends on you for
support. Your life insurance premium is based on the type of insurance you buy, the
amount you buy and your chance of death while the policy is in effect. This type of
policy not only provides protection for your dependents by paying a death benefit to
your designated beneficiary upon your death, but it also allows you to use some part of
the money while you are alive or at the end of the policy. Some examples of such
policies are: - Whole Life, Universal Life and Variable-Universal Life.
ENDOWMENT POLICIES
These policies provide for period payment of premiums and a lump sum amount either
in the event of death of the insured or on the date of expiry of the policy, whichever
occurs earlier.
MONEY BACK POLICIES
These policies provide for periodic payments of partial survival benefits during the term
of the policy itself. A unique feature associated with this type of policies is that in the
event of death of the insured during the policy term, the designated beneficiary will get
the full sum assured without deducting any of the survival benefit amounts, which have
already been paid as money-back components. Moreover, the bonus on such policies
is also calculated on the full sum assured.
ANNUITY / PENSION POLICIES / FUNDS
This policies / funds require the insured to pay the premium as a single lump sum
or through installments paid over a certain number of years. The insured in return will
receive back a specific sum periodically from a specified date onwards (the returns can
can be monthly, half yearly or annually), either for life or for a fixed number of years. In
case of the death of the insured, or after the fixed annuity period expires for annuity
payments, the invested annuity fund is refunded, usually with some additional amounts
as per the terms of the policy.

[32]

Basic Elements of Insurance

Insurance is a type of financial product that protects a party such as an individual or
business against unforeseeable losses or damages. For instance, a homeowner might
choose to purchase homeowners insurance, which would pay the homeowner for the
damage done to his home by certain events like fires and storms. There are many
different types of insurance policies, but all types of insurance have some basic
elements in common.

Policy
A policy or insurance policy is a contract that states all the specific conditions of an
insurance plan. It is important to read and understand everything written in a policy
before buying the insurance so that you know what benefits you are getting and the
limitations of those benefits.
Losses
A loss is the cost of damage inflicted upon a piece of property or person. For
instance, if you get in a car crash where the vehicle is totally destroyed, the loss would
equal the full value of the car. While "damage" describes harm to a person or object, the
term "damages" can describe the amount of money a person is legally obligated to pay
another party for damage she caused. For instance, if you were the cause of an auto
accident, you may be obligated to pay the other driver damages for losses he suffered.

Perils and Risk

All insurance policies deal with compensating the policyholder against perils. Perils
are unpredictable events that can cause damages or losses. Every peril is associated
with a certain amount of risk, which is the likelihood that the peril will occur. Glico
defines risk as "the chance of suffering a loss." For instance, in auto insurance, a
common peril is getting into a collision with another vehicle. When an insurance
company creates an auto insurance policy, they assess the risk of the drivers. Drivers
with clean driving records will typically be considered less risky and therefore might pay
less for insurance.
Premium
The premium is the cost of an insurance policy. Premiums are typically paid on a
normal recurring schedule, such as on a monthly, quarterly, biannual or annual basis.

[33]

Deductibles
Deductibles are costs that a person must pay toward losses and damages before
an insurance company will pay. For instance, if your auto insurance has a $1,000
deductible on collisions and you get in a fender-bender that causes $1,250 worth of
damage to your car, you must pay the first $1,000 to fix the car and the insurance
company will pay the remaining $250. Deductibles protect insurance companies from
having to pay for small losses. Choosing higher deductibles usually reduces premiums
for the policyholder.

Insurance Specialists
Insurance specialists are individuals who know their specialties inside out. A specialist
can be defined as An expert who is devoted to one occupation or branch of learning.
There are insurance specialists in every area of insurance. This includes health
insurance, auto insurance, and life insurance and so on. Here we take a look at what an
auto insurance specialist does.
When you are preparing to purchase an auto insurance policy you will at some point in
the process work with an auto insurance specialist. A specialist in this capacity can help
you to find the absolute best insurance policy possible. First he will help you to
determine what you need in an auto insurance plan. Your driving habits will be taken
into consideration as will your lifestyle needs. This is necessary for a specialist to find a
plan that the customer can afford and one that is suitable to their needs.
Insurance specialists are there to make sure that you get what you want. As the
customer it is your job to provide as much information to the specialist as possible and
from there he can find you the absolute best deal he can on vehicle insurance. As a
specialist he is privy to information that you do not have access to on your own. That
makes him an expert at what he does which is what you require.
The auto specialist will take the information you have provided to him and use that to
find out what policies are out there and which ones are most suitable to your needs as
you have described them to him. He will then negotiate on your behalf to find you the
best deal possible. With a specialist working for you do not need to worry that you will
sign up for a vehicle policy that is too expensive or will not suit your needs. Insurance
specialists have the inside track on the industry and know exactly what to look for.
The number one goal of an insurance specialist is to find his or her customers the best
deal possible on auto insurance. This person needs to be able to effectively
communicate with you about your coverage and what you are looking for in a policy. He
or she should also be the first one to let you know if changes need to be made with your
insurance policy. If you have any questions then do not hesitate to ask the specialist.
That is what he or she is there for to do the best job possible to find you an auto
insurance policy that will suit you in every way possible.

[34]

Benefits associated with the policy such as:

1)

Basic Insurance benefit

2)

Optional Insurance benefit

3)

Pre-tax Insurance benefit

Details of the insurance company issuing the concerned insurance policy:

1) Life span of the insurance policy
2) Restrictions or hindrances, if any.
In addition to the company's data source, the insurance brokers and agents may also be
rich source of Insurance Information. The insurance brokers are considered to be the
unbiased information sources because they are attached with all types of insurance
companies. They are supposed to give correct Insurance Information on the insurance
policies comprising of both positive and negative aspects.
The department of state insurance can also be the most authentic Insurance
Information source. This can help a customer in seeking relevant informations on a
insurance company and its present status. In addition, the department can also give
informations on the grievances and complaints against the concerned insurance
company/companies in the present and past.\
Insurance Information helps a customer to choose he right policy of the right service
provider. This also helps them to gauge the benefits out of the policy before applying for
the same. Hence, Insurance Information plays a very important role in the process of
searching, comparing and selecting a particular insurance policy.

[35]

Intro To Insurance: Conclusion

Insurance is an integral part of any personal financial plan. The type of insurance and
the amount of coverage you obtain all depends on your unique financial and family
circumstances, and must be evaluated carefully. When considering purchasing
coverage, you should review all the potential risks and the financial impact of these risks
on your financial health. This will help you determine what options to look for and what
questions to ask. What you need to keep in mind is that you do not want to be
underinsured or over insured, which means you have to do your homework before you
buy. And as with any type of financial product, you must read the fine print and consult
with
a
competent
advisor.
Let's review what we've learned:

Insurance is a form is risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as
the premium.
Insurance works by pooling risks. Because the number of insured individuals is
so large, insurance companies can use statistical analysis to project what their
actual losses will be within the given class. This allows the insurance companies
to operate profitably and at the same time pay for claims that may arise.
The insurance contract is a legal document that spells out the coverage,
features, conditions and limitations of an insurance policy.
Homeowners insurance typically covers the dwelling (the structure), personal
property and contents, and some forms of personal liability. The policy may cover
direct and consequential loss resulting from damage to the property itself, loss or
damage to personal property, and liability for unintentional acts arising out of the
non-business, non-automobile activities of the insured and members of that
insured's household.
Health insurance is a type of insurance that pays for medical expenses in
exchange for premiums. The way it works is that you pay your monthly or annual
premium and the insurance policy contracts healthcare providers and hospitals to
provide benefits to its members at a discounted rate.
PPOs are a group of healthcare providers that contract with an insurance
company, third-party administrators, or others (like employers) to provide medical
care services at a reduced fee.
Disability insurance can replace a portion of the salary you were making before
you became disabled and unable to work after a serious injury or illness.
Disability insurance providers rate their premiums based on your job and the
level of risk involved in doing that job.
The reason to buy long term care insurance is to protect your assets in case you
need to pay for assisted living, home care or a nursing home stay.
Life insurance provides you with the opportunity to protect yourself and your
family from personal risk exposures like repayment of debts after death,
providing for a surviving spouse and children, fulfilling other economic goals
(such as putting your kids through college), leaving a charitable legacy, paying
for funeral expenses, etc.
[36]

Whole life insurance provides guaranteed insurance protection for the entire life
of the insured, otherwise known as permanent coverage. These policies carry a
"cash value" component that grows tax deferred at a contractually guaranteed
amount (usually a low interest rate) until the contract is surrendered.
Universal life insurance, also known as flexible premium or adjustable life, is a
variation of whole life insurance. Like whole life, it is also a permanent policy
providing cash value benefits based on current interest rate.

Advantages of Having Life Insurance

Like whole-life insurance, joint-life-insurance, pension-life-insurance etc are essential for
family's financial security, but they are equally important for individuals. Term Insurance
policies protect your financial resources against the uncertainties of life so you can
protect your family's future.
Some it is a general belief that life insurance is meant only for those with families. It is
true that Policies of the life insurance advantages are:

If an estate owner has not accumulated enough assets for his family,
Insurance quote helps create an instant estate for the sake of the Familys
security.
Life Insurance provides the option to pass equal assets to the children who are
not active in the Family business at the time the family business is passed on.
Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy increases on
a minors or parents life.
The growth of a cash-value policy is tax-deferred - you do not pay taxes on the
cash value accumulation until you withdraw funds from the policy.
Life Insurance can be useful in paying estate taxes, along with other estate
settlement amounts. Federal Estate Taxes are due nine months after death.
If theres a Business Transfer, life insurance can provide ready cash to finance a
transaction between business owners who are ready to buy the deceased
owners share from his or her estate after death.
If theres a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance Policy
for the same. It is preferred to have a decreasing term policy that decreases in
face amount as the mortgage balance is paid down.
Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the business.
The right insurance proceeds can provide liquidity to pay off personal loans or
business loans.
[37]

Need of life insurance:-

Who will take care of my family if tomorrow something unfortunate happens to me? If
this
question
bothers
you,
then
Life
Insurance
is
the
answer.
Of course, under any circumstances, the loss of a loved one is a traumatic
experience. But, if your family is also left without sufficient money to meet basic living
needs or prepare for future goals, they will have to cope with a financial crisis at the
same time. A Life Insurance plan ensures that your family is financially secure even if
tomorrow you are no longer around to care for them.
Today, there is no shortage of investment options for a person to choose from. Modern
day investments include gold, property, fixed income instruments, mutual funds and of
course, life insurance. Given the plethora of choices, it becomes imperative to make the
right choice when investing your hard-earned money. Life insurance is a unique
investment that helps you to meet your dual needs - saving for life's important goals,
and protecting your assets.
Asset Protection:
From an investor's point of view, an investment can play two roles - asset appreciation
or asset protection. While most financial instruments have the underlying benefit of
asset appreciation, life insurance is unique in that it gives the customer the reassurance
of asset protection, along with a strong element of asset appreciation.
The core benefit of life insurance is that the financial interests of ones family remain
protected from circumstances such as loss of income due to critical illness or death of
the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth
creation proposition. The customer therefore benefits on two counts and life insurance
occupies a unique space in the landscape of investment options available to a
customer.
Goal based savings:
Each of us has some goals in life for which we need to save. For a young, newly
married couple, it could be buying a house. Once, they decide to start a family, the goal
changes to planning for the education or marriage of their children. As one grows older,
planning
for
one's
retirement
will
begin
to
take
precedence.
Clearly, as your life stage and therefore your financial goals change, the instrument in
which you invest should offer corresponding benefits pertinent to the new life stage..

[38]

There are various insurance plans run by the company.

These are as:
BSLI Foresight Plan
USP- Foresight plan gives the advantage of entering capital markets when they
are low and locking in gains when they are high, irrespective of when investor
decides to invest.
BSLI Vision
USP- whole life traditional life insurance plan that offers Whole life cover to age
100 plus a Guaranteed Survival Benefit payable at the end of the term selected
by investor.
Classic Life
USP- BSLI Classic Life Plan is a unit linked insurance plan that offers insurer to
conveniently save for the golden years through a wide choice of investment
options to grow and multiply their wealth.
Platinum
USP- BSLI Platinum Advantage is a short pay, medium term unit linked savings
plan which offers highest NAV of first 7 years and 3 months.
BSLI Bachat (Endowment plan)
USP- BSLI Bachat is a traditional plan that helps in build a corpus through
regular systematic savings.

[39]

Life Stage

Primary Need

Life Insurance Product

Young & Single

Asset creation

Wealth creation plans

Young & Just

married

Asset creation &

protection

Wealth creation and mortgage

protection plans

Children's education,
Married with kids Asset creation and
protection

Education insurance, mortgage

protection & wealth creation
plans

Middle aged with Planning for retirement &

grown up kids
asset protection

Retirement solutions & mortgage

protection

Across all lifestages

Life insurance for every stage...

You're married
You're married with kids
You're a single parent
You're a stay-at-home parent
You have grown children
You're retired
You're a small business owner
You're single

I
F someone will suffer financially when you die, chances are you need life insurance. Life
insurance provides cash to your family after your death. This cash (known as the death
benefit) replaces your income and can help your family meet many important financial
needs like funeral costs, daily living expenses and college funding. What's more, there is
no federal income tax on life insurance benefits.

[40]

Most Americans need life insurance. To figure out if you need life insurance, you need to
think through the worst-case scenario. If you died tomorrow, how would your loved ones
fare financially?
The truth is, it's always a struggle when you lose someone you love. But your emotional
struggles don't need to be compounded by financial difficulties. Life insurance helps make
sure that the people you care about will be provided for financially, even if you're not there
to care for them yourself.
To help you understand how life insurance might apply to your particular situation, we've
outlined a number of different scenarios below. So whether you're young or old, married or
single, have children or don't, take a moment to consider how life insurance might fit into
your financial plans.

You're Married

When you're married, you share everything with your significant other,
including your financial obligations. Many people mistakenly believe that they don't need to
think about life insurance until they have children. Not true. What it one of you was to die
tomorrow? Even with the surviving spouse's income, would that person be able to pay off
debts like credit-card balances and car loans, let alone cover the monthly rent and utility
bills. If you're planning to have children, you'll want to buy life insurance right away and not
wait until the mom-to-be is pregnant. Some companies won't issue a policy to a woman
during her pregnancy. Since health complications sometimes arise, they'll want to wait
until after the baby is born to issue the policy. Buying insurance before a baby is on the
way helps avoid this potential problem.
You're Married With Kids

Most families depend on two incomes to make ends meet. If you died
suddenly, could your family maintain their standard of living on your spouse's income
alone? Probably not. Life insurance makes sure that your plans for the future don't die
when you do.

[41]

You're a Single Parent

As a single parent, you're the caregiver, breadwinner, cook, chauffeur, and

so much more. Yet nearly four in ten single parents have no life insurance whatsoever,
and many with coverage say they need more than they have. With so much responsibility
resting on your shoulders, you need to make doubly sure that you have enough life
insurance to safeguard your children's financial future.

You're a Stay-At-Home Parent

Just because you don't earn a salary doesn't mean you don't make a
financial contribution to your family. Childcare, transportation, cleaning, cooking and other
household activities are all important tasks, the replacement value of which is often
severely underestimated. Surveys have estimated the value of these services at over
$40,000 per year. Could your spouse afford to pay someone for these services? With life
insurance, your family can afford to make the choice that best preserves their quality of
life.

You Have Grown Children

As the years go by, you may feel your need for life insurance has passed. But
just because the kids are through college and the mortgage is paid off doesn't necessarily
mean that Social Security and your savings will take care of whatever lies ahead. If you
died today, your spouse will still be faced with daily living expenses. What if your spouse
outlives you by 10, or even 30 years, which is certainly possible today. Would your
financial plan, without life insurance, enable your spouse to maintain the lifestyle you
worked so hard to achieve? And would you be able to pass on something to your children
or grandchildren?

[42]

You're Retired

Did you know that depending on the size of your estate, your heirs could be
hit with a large estate tax payment after you die (45% of your estate). The proceeds of a
life insurance policy are payable immediately, allowing heirs to take care of estate taxes,
funeral costs, and other debts without having to hastily liquidate other assets, often at a
fraction of their true value. And life insurance proceeds are generally income tax free and
can be arranged to avoid probate. Finally, if your insurance program is properly structured,
the proceeds from your life insurance policy won't add to your estate tax liability.
You're a Small Business Owner

Besides taking care of your family, life insurance can also protect your
business. What would happen to your business if you, one of your fellow owners, or
perhaps a key employee, died tomorrow? Life insurance can help in a number of ways.
For instance, a life insurance policy can be structured to fund a "buy-sell" agreement. This
would ensure that the remaining business owners have the funds to buy the company
interests of a deceased owner at a previously agreed upon price. That way, the owners
get the business and the family gets the money. To protect a business in case of the death
of a key employee, "key person insurance," payable to the company, provides the owners
with the financial flexibility needed to either hire a replacement or work out an alternative
arrangement.
You're Single

Most single people don't need life insurance because no one depends on them
financially. But there are exceptions. For instance, some single people provide financial
support for aging parents or siblings. Others may be carrying significant debt that they
wouldn't want to pass on to family members who survive them. Insurability is another
reason to consider life insurance when you're single. If youre young, healthy and have a
good family health history, your insurability is at its peak and youll be rewarded with the
best rates on life insurance. If you anticipate a need for life insurance down the road (e.g.,
youre the marrying type) and you can fit the premiums into your budget, it might make
sense to lock in coverage while you're young and single.

[43]

Four Ways to Buy

1. Through an Agent or Other Financial Advisor:

Most people buy life insurance through agents or other financial advisors, and for
good reason. Determining how much and what kind of insurance to buy is one of
the most important financial decisions you'll ever make, but it's also one of the
most complicated. A qualified insurance professional will conduct a comprehensive
financial needs analysis, and walk you through the multitude of questions you need
to consider to determine how much and what kind of insurance is right for you. Of
course, the quality of advice you get is dependent on how good your agent is.
You'll obviously want to work with someone who has the right licensing, training
and experience. But don't underestimate the importance of finding someone who's
a good listener.

2. At the Workplace:
Obtaining life insurance through your employer is another option to consider. Your
first step should be to make sure you understand how much coverage your
employer provides at no cost to you. Many employers provide, at their own
expense, a "basic" life insurance benefit, often equal to one to two times your base
salary. While this is a nice benefit to have, insurance experts believe that most
people need somewhere in the range of 10 to 20 times their net income and
sometimes even more than that. Check to see if your employer offers you the
option to purchase additional coverage through its group plan. Many employers do.
To qualify for additional coverage, you may have to answer a few basic questions
about your health. Its important to keep in mind that if you have group coverage
and you leave your job, you generally are not able to take the coverage with you.

[44]

3. Via the Internet:

Like most things nowadays, life insurance can be purchased online. You can get
instant quotes, apply for, and even purchase policies. To make sure you get the
right amount and type of insurance, the better sites won't allow you to complete the
purchasing process until you've spoken with a qualified insurance professional.
Some sites work like a brokerage agency. They'll have contractual relationships
with, say, 10 or 20 companies and they'll broker your case with the company that
offers the best product for your specific needs and circumstances. Other insurance
e-commerce sites are more like insurance policy marketplaces. They promote the
products of a large number of companies and function a lot like a search engine.
Their main objective is to take the data you enter into their online quote engine and
link you to a company that has a product that's compatible with your specifications.
Some insurance company Web sites also offer the option of buying online, but
most will typically try to direct you to an agent who can provide you with
personalized service. Keep in mind, most Web sites only offer term insurance, not
permanent. Also, if you buy online, the onus is often on you to figure out which
policy is right for you. If you're about to buy a policy but you're not sure that you're
making the right decision, it's never a bad idea to run the quotes by an agent in
your community.

4. Over the Phone or By Mail:

An internet purchase of life insurance is one form of direct buying, but certainly not
the only one. There are a number of companies that advertise and market almost
exclusively via toll-free numbers and/or direct mail solicitations. How might this
benefit you? If you want to buy term insurance and you have a good sense of how
much coverage you need, you may be able to get the right coverage you need by
buying directly. Just be aware of the possible limitations of buying direct. Most
direct sellers only offer term insurance, and you generally won't have the benefit of
advice from a qualified insurance professional.

[45]

Types of life insurance:There are two major types of life insuranceterm and whole life. Whole life is
sometimes called permanent life insurance, and it encompasses several subcategories,
including traditional whole life, universal life, variable life and variable universal life. In
2003, about 6.4 million individual life insurance policies bought were term and about 7.1
million
were
whole
life.
Life insurance products for groups are different from life insurance sold to individuals.
The information below focuses on life insurance sold to individuals.
1. Term:
Term Insurance is the simplest form of life insurance. It pays only if death occurs during
the term of the policy, which is usually from one to 30 years. Most term policies have no
other
benefit
provisions.
There are two basic types of term life insurance policieslevel term and decreasing
term.

Level term means that the death benefit stays the same throughout the duration
of the policy.
Decreasing term means that the death benefit drops, usually in one-year
increments, over the course of the policys term.

In 2003, virtually all (97 percent) of the term life insurance bought was level term.

2. Whole Life/Permanent:
Whole life or permanent insurance pays a death benefit whenever you dieeven if you
live to 100! There are three major types of whole life or permanent life insurance
traditional whole life, universal life, and variable universal life, and there are variations
within
each
type.
In the case of traditional whole life, both the death benefit and the premium are
designed to stay the same (level) throughout the life of the policy. The cost per $1,000
of benefit increases as the insured person ages, and it obviously gets very high when
the insured lives to 80 and beyond. The insurance company could charge a premium
that increases each year, but that would make it very hard for most people to afford life
insurance at advanced ages. So the company keeps the premium level by charging a
premium that, in the early years, is higher than whats needed to pay claims, investing
that money, and then using it to supplement the level premium to help pay the cost of
life
insurance
for
older
people.

[46]

By law, when these overpayments reach a certain amount, they must be available to
the policyholder as a cash value if he or she decides not to continue with the original
plan. The cash value is an alternative, not an additional, benefit under the policy.
In the 1970s and 1980s, life insurance companies introduced two variations on the
traditional whole life productuniversal life insurance and variable universal life
insurance.
Types of term insurance policies:Term insurance comes in two basic varietieslevel term and decreasing term. These
days, almost everyone buys level term insurance. The terms level and decreasing
refer to the death benefit amount during the term of the policy. A level term policy pays
the same benefit amount if death occurs at any point during the term.

Common types of level term are:

yearly- (or annually-) renewable term

5-year renewable term
10-year term
15-year term
20-year term
25-year term
30-year term
term to a specified age (usually 65)

Yearly renewable term, once popular, is no longer a top seller. The most popular type is
now 20-year term. Most companies will not sell term insurance to an applicant for a term
that
ends
past
his
or
her
80th
birthday.
If a policy is renewable, that means it continues in force for an additional term or
terms, up to a specified age, even if the health of the insured (or other factors) would
cause him or her to be rejected if he or she applied for a new life insurance policy.
Generally, the premium for the policy is based on the insured persons age and health
at the policys start, and the premium remains the same (level) for the length of the
term. So, premiums for 5-year renewable term can be level for 5 years, then to a new
rate reflecting the new age of the insured, and so on every five years. Some longer term
policies will guarantee that the premium will not increase during the term; others dont
make that guarantee, enabling the insurance company to raise the rate during the
policys
term.
Some term policies are convertible. This means that the policys owner has the right to
change it into a permanent type of life insurance without additional evidence of
insurability.
[47]

Return of Premium
In most types of term insurance, including homeowners and auto insurance, if you
havent had a claim under the policy by the time it expires, you get no refund of the
premium. Your premium bought the protection that you had but didnt need, and youve
received fair value. Some term life insurance consumers have been unhappy at this
outcome, so some insurers have created term life with a return of premium feature.
The premiums for the insurance with this feature are often significantly higher than for
policies without it, and they generally require that you keep the policy in force to its term
or else you forfeit the return of premium benefit. Some policies will return the base
premium but not the extra premium (for the return benefit), and others will return both.
Different types of permanent policies:

Whole or ordinary life

This is the most common type of permanent insurance policy. It offers a death
benefit along with a savings account. If you pick this type of life insurance policy,
you are agreeing to pay a certain amount in premiums on a regular basis for a
specific death benefit. The savings element would grow based on dividends the
company pays to you.

Universal or adjustable life:

This type of policy offers you more flexibility than whole life insurance. You may
be able to increase the death benefit, if you pass a medical examination. The
savings vehicle (called a cash value account) generally earns a money market
rate of interest. After money has accumulated in your account, you will also have
the option of altering your premium payments providing there is enough money
in your account to cover the costs. This can be a useful feature if your economic
situation has suddenly changed. However, you would need to keep in mind that if
you stop or reduce your premiums and the saving accumulation gets used up,
the policy might lapse and your life insurance coverage will end. You should
check with your agent before deciding not to make premium payments for
extended periods because you might not have enough cash value to pay the
monthly charges to prevent a policy lapse.

Variable life:
This policy combines death protection with a savings account that you can invest
in stocks, bonds and money market mutual funds. The value of your policy may
grow more quickly, but you also have more risk. If your investments do not
perform well, your cash value and death benefit may decrease. Some policies,
however, guarantee that your death benefit will not fall below a minimum level.

[48]

Insurance Claims

Insurance claims are the requests of the insured policyholder to the insurer or insurance
issuing company for financial reimbursement whenever s/he suffers a loss related to the
insured property, life, auto or health. But the insurance claim should be done in
accordance with the specifications of the insurance policy or contract.
Insurance claims vary from person to person and from policy to policy. The maximum
amount of redemption in case of an insurance claim depends on the scheme under
which a person has enrolled and the regular premium amount s/he is paying. At the time
of repayment of the claim to the policyholder, the insurance company is only giving back
the premium amount, either in entirety or in part.
Insurance Claims: Genuine Claims versus Fraudulent Ones
Some insurance claims are fraudulent in an attempt to defraud the insurance company.
So it is necessary for the insurer to carefully process every insurance claim before
approving it in order to avoid insurance fraud.

Insurance Industry Claims Procedures

Insurance companies evaluate each claim that is submitted to determine if the claim is
eligible for payment. To determine this eligibility, each insurer, whether they are a life,
health, home or auto insurer, uses the same basic process when evaluating claims.
Verify Insurance Coverage:
When an insurance company receives a claim, it will first determine whether the
coverage is in force. Insurance is in force if either the person who owns the policy or the
person who is insured under the policy has paid the premiums.
Verify Identity:
When a person makes a claim either as the person who is insured under a policy
or on behalf of someone who is insured under a policy, such as a relative submitting a
claim because a loved one has died, the insurance company will ask for detailed
information to verify the identity of the insured person. This step protects the insurer
from paying benefits to someone who is not insured under the policy or to prevent a
beneficiary from submitting a claim when the insured person is still alive, in the case of
a life insurance policy.
Verify Event Occurred:
Whether a policy is a life, health, home or auto insurance policy, the insurance
company will verify that the event occurred. In the case of a life insurance policy, the
insurance company will ask for proof of death, while an insurer dealing with a health
insurance claim will ask the health care provider to fill out a claim form. In the case of
home or auto insurance, a claims analyst will be sent to the scene to survey the
damage done.
[49]

Determine If Event Covered:

In determining whether to pay the benefit on a policy, an insurer will look at whether
an event is covered. Policy exclusions detail what events are not covered, and if the
event falls into one of the excluded categories, the policy benefit will not be paid.
Calculate Benefits Payable:
The insurance company starts off with the basic policy benefit and factors in any
additions to the basic benefit, such as if a person paid premiums in advance. In that
circumstance, If an insured person dies before the premium is due, the premium is
refunded. Policies sometimes stipulate a deductible amount that the insured person
must pay before the insurance company pays out any benefits.
Identify Payee of Benefits:
Once the insurer has calculated the amount of benefits that need to be paid, it
determines to whom the benefits will be paid. In the case of a life insurance policy, the
insurer looks at the policy's beneficiary designation and pays that beneficiary. For
health, home, and auto insurance policies, the benefit is paid to the person insured
under the policy.

Description of the Life Cycle of an Insurance Claim

Basic claims life cycle:
Insurance protects you against loss or injury due to accidents, acts of nature, theft and
vandalism. Regardless of the kind of insurance you have or what company you use, the
basic procedure for filing a claim is similar. Knowing the "life cycle" of a claim may help
you get what you need from your coverage.
Basic Cycle:
Typically, you begin the insurance life cycle when you contact your insurance
company and file the claim paperwork. The second step in the cycle is when you
document your loss. A claims adjuster comes out to your home or business to verify
your loss and assess the dollar damage. The adjuster takes this information back to the
insurance company, which then adjusts and fully processes the claim. The company
contacts you with an offer and you accept or reject that offer. If you reject it, you may
have to go to court to get what is fair for your situation. Once your claim is settled, you
can make full repairs, if needed.
Duration:
Most insurance claims take a few weeks to process, if they are not complicated,
according to the Free Advice website. However, complex claims may take longer,
especially if you end up having to take your insurance company to court. You may be
able to speed the process along by keeping excellent documentation of everything
related to the claim, such as receipts for replacement materials or goods and letters
from the insurance company.
[50]

Expert Input:
A simple insurance claim usually involves only you and your insurance company.
However, depending on your circumstances, you also may need to pull in vendors or
contractors for quotes or even an attorney to complete the claim cycle. With auto
accidents, Police officers will need to file an accident report. Life insurance claims may
involve creditors, trustees and real estate tax agents. Your doctor, clinic or hospital may
need to be involved for health insurance claims.
Obligations:
Through the claim process, you and the insurance company both have obligations
under the contract. This means you and the insurance company must operate under
"duties of loyalty" and "duties of care," according to Tamar Frankel, author of "Fiduciary
Law." As the policy holder, you have the responsibility to initiate the claim and respond
cooperatively to any reasonable requests for information from the insurance company,
says Corey Harris, attorney with the Merlin Law Group. The insurance company must
process your claim in a timely fashion and under the same procedures as all other
clients.
Complications:
Not all insurance claims proceed through the claims process smoothly. In some
cases like health or disability claims, the insurance company may accuse you of
malingering. As explained by the Wrong Diagnosis website, malingering is exaggeration
done for non-psychological reasons; a type of fraud usually intended to garner financial
gain. You may need testimony from witnesses or a physician to prove your claim is
accurate or that there is a medical reason for your complaints. Conflicting testimony or
reports also may hinder the claims cycle, as can lack of proficiency on the part of the
insurance agent. Medical status also may prevent moving forward with a claim. For
example, you may be unable to continue negotiation with your insurance company if
you need a serious medical procedure.

Future growth in life insurance:The performance of the market is forecast to decelerate, with an anticipated CAGR of
10.4% for the five-year period 2010 - 2015, which is expected to drive the market to a
value of $110,797.2 million by the end of 2015.
Introduction
Life Insurance in India industry profile provides top-line qualitative and quantitative
summary information including: market share, market size (value 2006-10, and forecast
to 2015). The profile also contains.

[51]

Features:Save time carrying out entry-level research by identifying the size, growth, major
segments, and leading players in the life insurance market in India
Use the Five Forces analysis to determine the competitive intensity and therefore
attractiveness
of
the
life
insurance
market
in
India
Leading company profiles reveal details of key life insurance market players global
operations
and
financial
performance
Add weight to presentations and pitches by understanding the future growth prospects
of the India life insurance market with five year forecasts

Macroeconomic indicators provide insight into general trends within the India economy.

Life insurance companies are no more looking at micro-insurance segment just as

obligatory business but now they are looking at it as major driver for future growth. As
some life insurers have already achieved break even in this segment and they are even
looking to turn it profitable in coming future.
Biggest concern of insurers to reach out to rural people is lack of product awareness
among the rural people and shortage of funds.
As per insurers growth for life insurers in future will come from smaller cities and towns
as these are under penetrated areas hence they have immense potential for growth.
Insurers also says that biggest problem that insurers face to reach to the rural
population is high cost to reach rural areas and then after managing distribution channel
hence life insurers can use micro-finance institutions as their distribution channel so that
insurers can reach out to their customers.

[52]

Challenges in life insurance:From this context, life insurance undertakings are confronted with a number of
challenges:
Challenge#1:- Business growth and cost efficiency
Falling profits and deteriorating market capitalisation have spawned a situation, where
business growth and cost efficiency have become vital for the life insurance industry.
Business growth can be achieved by enhancing innovative products / services and
entering new or niche markets as well as new distribution channels. Cost efficiency can
be achieved by process optimisation and by a better use of IT as outlined below.

Challenge#2: Transparency and disclosure

A continuously evolving regulatory environment and severe competition trigger the need
for transparency on products for clients as well as for intermediaries. At the same time,
disclosure requirements get more and more demanding. This ranges over several
reporting levels: MIS for local and group dimension, regulatory, clients and
intermediaries. Particularly group reporting becomes more and more complex
regardless of the size of the insurance undertaking.

Challenge#3: IT alignment

IT needs to align to the business issues triggered by the first two challenges and to the
business strategy. IT strategies must therefore be set up in a way that IT is not only
operationally efficient but also cost-effective. For this reason, CIOs are experiencing a
shift in their objectives from merely supporting the business by IT to increasing the
value added of IT and creating a competitive advantage. In particular, growing
complexity can significantly enlarge functional scope of an application and therefore
strengthens the need for flexible systems. Yet many existing systems were not
designed to withstand such an evolution. Rather often, data models and programme
modules are insufficient to match the new prerequisites.

[53]

Some other products are briefly described as:

PMS
Portfolio Management System is a unique way to build a customized portfolio of
Indian equities. Aditya Birla Money act as authorized distributors for various PMS
providers to meet the growing needs of investors and expand a portfolio beyond
equities and bonds.

Direct Equity
Aditya Birla Money offers a convenient, simple and efficient trading in Indian equities. It
provides a seamless platform to invest in the Indian secondary markets. Investors
Wealth Management advisor will provide them valuable advice based on ABMs inhouse research.

Structured Products
ABM brings a customized investment solutions, giving access to various asset classes.
Unlike most other structures, returns can be linked to a variety of asset types such as
equity indices, basket of stocks, and commodities.

Alternate Asset Products

Aditya Birla Money offers a wide range of Private Equity Fund (which invest in unlisted
securities) to give the opportunity of investing in the growing Indian economy. With
these products and investment strategy, one can preserve their capital, ensure risk
protection, leverage and diversify.

Real Estate
It offers niche property investment services and bring in a combination of in-depth
market knowledge and real estate industry expertise to offer a range of specialized real
[54]

estate investment services. We provide expert advice and innovate real estate
solutions tailor made to the needs and objectives.

Loan Against Securities and Mutual Funds

It also provides loans against securities and mutual funds which makes able to
investment more, and increase the size of your overall portfolio.

Gold
It provides investment in gold to make diversified and protective portfolio.

FINANCIAL SERVICES:

Aditya Birla Money provides various financial services like financial planning, research
process etc. The range of financial services are as:

Research

Their quality research provides clients with the information they need to make informed
investment decisions. The Aditya Birla Money research team is dedicated to keeping
you updated with access to the latest publications and a wide range of industry
happenings including: market depth, breaking commentary, long-term forecasts,
detailed daily updates and the latest financial news.

Highly proactive services

It includes Daily Market Update, Weekly update on mutual Funds and Event Based
SMS to keep you completely informed on the markets.
[55]

Online Portfolio Access

Wherever you are, our network works for you. The online portfolio ensures every detail
of your investments is at your fingertips. You can constantly monitor the composition of
your portfolio, so you always know if your long term objectives are being met.

Financial planning

We offer a comprehensive financial planning session to help devise your investment

strategy. This is followed by complimentary personalized report outlining specific
recommendations on the step-by-step actions you need to take to achieve your financial
goals.

Regular Portfolio Reviews

Your portfolio undergoes regular reviews to ensure your money is constantly working in
your best interest, keeping your personal financial goals in sight. and towards your
personal financial goal.

[56]

FUNCTIONAL AREAS OF THE COMPANY

Aditya Birla Money works in many areas like portfolio construction, financial advisory
etc. The key functional areas of the company are as:
It functions with every stage of life of the individual.
It also functions with every occupation like business, sports etc.
It also provides financial advisory.
It also helps in portfolio construction to meet
needs and requirements.

STAGES OF LIFE:

Young and single

Helps in income protection.

Planning for future.

Helps in investment planning.

Married and no children

Helps in liability management.

Provides insurance protection.

Makes retirement planning.

Family with young children

Investment planning

Insurance protection

Planning for children

Retirement planning

Wealth protection

Estate planning
[57]

Family with adult children

Investment planning

Retirement planning

Estate planning

Retired

Medical expenses

Lifestyle expenses

Estate planning

OCCUPATION:

Salaried and professional

Income protection

Planning for future

Investment planning

Sports and entertainment

Annuity planning

Financial security planning

Planning for future

Investment planning

Entrepreneur

Fund management across family and business

Planning for future

Investment planning

Businessmen and professionals

Income protection

Annuity planning

Financial security planning

Investment planning
[58]

ADVISORY PROCESS:
Young family has goals related to child education/marriage, asset building, event
planning. It helps in achieving these goals.
It helps mature family in retirement planning and pension/superannuation.
It

helps

in

businesses

by

maintaining

their

cash

flows

(income/expenses,

assets/liabilities), makes investment in mutual funds, direct equity, real estate and also
insures risk through insurance.
PORTFOLIO CONSTRUCTION:

Portfolio Construction is all about investing in a range of funds that work together to
create an investment solution for investors. Building a portfolio involves understanding
the way various types of investments work, and combining them to address your
personal investment objectives and factors such as attitude to risk the investment and
the expected life of the investment.
When building an investment portfolio there are two very important considerations.

The first is asset allocation, which is concerned with how an investment is spread
across different asset types and regions.

The second is fund selection, which is concerned with the choice of fund
managers and funds to represent each of the chosen asset classes and
sectors.

Both of these considerations are important, although academic studies have

consistently shown that in the medium to long term, asset allocation usually has a much
larger

impact

on

the

variability

of

portfolio's

return.

To help in choosing a suitable asset allocation we have created a Risk Profiler that
helps identify your attitude to risk and therefore better identify a combination of
investments

to

build

portfolio.

With such a vast number of investment funds to choose from, spanning the full range of
asset classes and world markets it is easy to become confused when choosing which
investments to make. It is even more difficult to choose the right combination of
investment to potentially meet your investment goals.

[59]

STEPS OF CREATING A PORTFOLIO:

The 4 steps to creating a portfolio

The 4 steps to creating a portfolio

Create your risk profile Measure your perceived level of risk for an
investment (scale of 1 to 10)
Asset Allocation Determining the right combination of assets the most
important part of the portfolio construction process.
Fine tune your portfolio Choose to invest in and/or review your existing
portfolio to fit in with the asset allocation most suitable to you, potentially
reducing your risk and increasing your returns.
Review your portfolio regularly Once you have constructed your portfolio, it
is important to continue to review your asset allocation on a regular basis.
Investors failing to do this, may find they become overweight in a particular asset
class, potentially increasing the overall risk of their portfolio.

[60]

The portfolio construction becomes successful only when it is being constructed

according to clients need and objectives for a particular tenure.
Its analysis should be done timely as the market condition does not remain same
throughout the tenure. The following steps should be taken in consideration:

Analyse asset allocation as per client profile like debt, equity, alternate.

Analyse each asset class exposure level as per client profile on the basis
of sector exposure, market exposure, risk and maturity allocation.

Review each product on various factors like risk, returns, taxation, exit
load and other factors.

[61]

ADVANTAGES AND LIMITATIONS

Advantages of Wealth Management:

The customer can easily know the investment strategy and analyze return and
risk with the help of wealth management professional.

The Private wealth management professional provides the good service of tax
planning like how customers can minimize save and the tax more money.

Customer can also manage their estate with the help of wealth management
professional. Estate management provides protection of customers overall
estate.

Those Banks which are engaged in business of wealth management professional

are earning revenues from the foreign countries that mean outsourcing for
economy.

Wealth management professional helps the customer in future planning for

estate.

Disadvantages of Wealth Management:

The big limitation of Wealth management is that they do not show their actual
position to the customers. So, there may be chances of fraud and forgery with
customers.

As we know that wealth management is now only related with the rich people and
is not having any plans and solutions for poor, middle and lower class of people
of society.

Thus wealth management reduces the scope of Management.

Mostly customers do not know the actual position of market because everything
is done by some Wealth management professional. So, that results in inflation
and also there may be chances that the customers are in risk but they are
showing the false return etc.

[62]

STRATEGY AND OUTLOOK

Aditya Birla believe that a disciplined investment process is important for achieving
financial goals. Asset allocation is the times tested process of allocating funds across
multiple asset classes, for earning the best possible returns. Aditya Birla makes its
strategy of portfolio allocation on the basis of research done by them and on daily
market basis. It makes its strategy in the following manner:
COUNTRY RESEARCH
The company performs a research on macro level i.e. county level in which they
research on macro factors like political stability natural factors, etc. and seen
opportunities of wealth maximization in the current scenario.
They also perform SWOT analysis at country level.
ASSET CLASS
The research process is then done on the basis of asset class like equity, debt,
fixed income, real estate, commodities, etc. In this research they analyse the
performance of various assets in the current market condition and also analyse
the future opportunities in them.
PRODUCT RESEARCH
There are wide range of products in the market like equity, mutual funds,
insurance, fixed deposits, gold, real estate, commodities, government securities,
etc. So, the company performs a depth research on a variety of products. In this
research they analyse the risk and return associate with it.

In this way the company makes its strategy on the basis of depth research of the
performance of assets in the current scenario and constructs portfolio
accordingly.
It also provides financial planning to their customers.
[63]

RESEARCH
Research process is done by Aditya Birla to make its strategies, provide financial
advisory, and to make risk diversify portfolio. To perform research they work on fund
evaluation property. They have advisory team expertise in the field of research and also
possess advanced technologies. They have direct excess to fund houses. The brief
description of these as:

FUND EVALUATION PHILOSOPHY:

Identify funds that generate consistent returns.

Strike balance with amount of risk.

Keeping an eye on the expenses.

ADVISORY TEAM EXPERTISE:

They have experienced of 12 members with total experience of 48 years.

Regular guidance from Group Chief Economist Mr. Ajit Ranade.

TECHNOLOGY:

MFI Tracker(ICRA), ACE MF

Reuters Xtra 3000

Lipper analytics- Portfolio allocation to deliver optimal results with low risks

[64]

DIRECT ACCESS TO FUND HOUSES:

Regular interactions with fund managers.

They publish their research report in various forms like:

Equity market report

Market update (for trader and investor)

Fundamental report (for investor)

Technical report (trader)

Monthly (investors)

Derivatives product report

Derivative reports (traders)

Portfolios (trader and investors)

Mutual fund and alternate product report

They also provide monthly Investime magazine.

[65]

CONCLUSION AND RECOMMENDATION

CONCLUSION:
Today wealth management is necessary to a greater extent in the current scenario.
There is a need to maintain wealth along with growth. Today wealth management
service is provided by various organizations like HDFC, ADITYA BIRLA, ICICI etc. The
current market is full of risks so there is a need of better and right estimation of the
opportunity to sustain in the market. Wealth management is done on the basis of needs
and goals for a particular tenure which should be revised timely to maximize the return
and minimizes the risks.

RECOMMENDATION:

In the current scenario the market is full of risks. There is a lots of ups and downs in the
market in a second. So, to minimizes the loss the company that provides wealth
management services to investors have to analyse the market very well and take
decisions within a second as the market becomes changes in a second. The company
should provide weekly updates of the product to the investor as they can take decision
properly. There is a need of online access of such facilities. However some companies
provide such facilities but there is also some limitation like not timely updated
information, server down, etc. which should be removed.

[66]

ANNEXURE
The systematic and objective identification, collection, analysis, dissemination and use
of information for the purposes of assisting management in decision making relating to
the identification and solution of problems ( and opportunities) in marketing.

It is a way to systematically solve the research problem. In it we study various steps that
are generally adopted by a researcher in studying his research problem along with the
logic behind them. It is important for the researcher not only to understand the research
methods and techniques but also the methodology.

DATA COLLECTION:
In dealing with any real life problem it is often found that data at hand are inadequate
and hence, it becomes necessary to collect data that are appropriate. There are several
ways of collecting the appropriate data which differ considerably in context of money
costs, time and other resources at the disposal of the researcher.
I have taken both primary and secondary data in the project. Primary data through
questionnaire and secondary data through journals, office documents, and other
sources of published information like website of company. I have chosen survey
method because of some advantages.

[67]

QUESTIONNAIRE
Ques.1. Which of the following best describes your current stage of life?
a) Single
b) Single with dependent parents
c) Young family
d) Mature family
e) Nearing retirement
f) Retired

Ques.2. How familiar are you with financial markets?

a) I have no knowledge
b) I have basic knowledge and little experience with investment
c) I have a fair amount of knowledge and investment experience
d) I have considerable knowledge and comfortable with most investmen avenues
e) I have extensive knowledge of and experience in investing in different asset
classes

Ques.3 Which of the following best describes your purpose of investing?

a) To protect capital
b) To protect capital and earn regular income
c) To grow capital
d) To grow capital and generate regular income
e) To build long-term wealth
Ques.4 Have you planned for major life stage expenses like your childs higher
education, marriage, purchase of house, medical/hospitalization, retirement, etc.?
a) I have no separate provision for such expenses
b) I have made some provision for such expenses
c) Yes, I have a separate provision for such expenses

[68]

Ques.5 When do you plan to start withdrawing money from your investments for major
needs? (other than provisions made as mentioned in question 4)
a) Within 1 year
b) Between 1 and 3 years
c) Between 3 and 5 years
d) Between 5 and 10 years

Ques.6 Is your family sufficiently secured to face any unforeseen eventualities?

a) Along with life insurance coverage for self, I have insured all my major assets
(like house, vehicle etc.)
b) I have taken enough life insurance cover for self and my family
c) I have not taken enough life insurance coverage
d) I have not taken any insurance coverage
Ques.7 To meetforeseen and unforeseen circumstances you need to keepof your
investments in liquid instruments?
a) More than 50%
b) 25%-50%
c) 10%-25%
d) Below 10%
e) None of my investments
Ques.8 If your investment turns bad due to global economic melt-down, for how long
would you be prepared to see your investment performing poorly before getting worried
and/or liquidating it?
a) Less than 3 months
b) Upto 6 months
c) Upto 12 months
d) Upto 2 years
e) Upto 3 years or more

[69]

Ques.9 Assuming an inflation rate of 5-7%p.a. over a medium to long-term

horizon(3-5 years +) what return do you reasonably expect from your investment?
a) Inflation rate plus 2-4%p.a.
b) Inflation rate plus 5-7%p.a.
c) Inflation rate plus 8-10%p.a.
d) Inflation rate plus 11-15%p.a.
e) More than 15%p.a. over inflation rate
Ques.10 Do you leverage your investments?
a) Yes
b) No

[70]

BIBLIOGRAPHY
Refrence:-principle of risk management and insurance 7 t h edition by
George E. Rejda
www.BirlaSunlife.com
www.irda.gov.in
Birlasunlife New Advisor Book
www.adityabirlagroup.com
www.adityabirlamoney.com
www.investopedia.com
www.wikipedia.com
www.google.com
Investime magazine of Aditya Birla

[71]

[72]