A

RESEARCH PROJECT REPORT

ON

Comparative study of life insurance in India with

special reference to HDFC

TO BE SUBMITTED TO UTTAR PRADESH TECHNICAL,

UNIVERSITY, LUCKNOW. IN THE PARTIAL FULFILLMENT
OF THE REQUIREMENT FOR THE DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION

Batch 2013-15

Submitted To :
Mr. Deepak Gupta
Faculty of Finance

Submitted By :
SAVITA
M.B.A. (IV Sem)
Roll No. - 1280470347

APS COLLEGE OF EDUCATION AND

TECHNOLOGY, MEERUT

CONTENTS
Acknowledgement
Student declaration
Executive summary
Chapter 1
Introduction

1-2

Chapter 2
Conceptual framework

3-17

Chapter 3
History and growth of
life insurance in india

18-28

Chapter 4
Private life insurance players

29-70

Chapter 5
Research methodology

71-75

Chapter 6
Data analysais

76-82

Chapter 7
Conclusion & recommandation

83-86

Chapter 8
Annexure
Questionnaire
Bibliography

87-91

ACKNOWLEDGMENT

A single person alone can never be credited for performing any

extraordinary work successfully. It is only possible with the continuous and
constant help and guidance that they receive from others.
This research report too has taken its shape because of the valuable and
precious guidance of our Professor. We are gratefully acknowledged.
I further personally feel that making of this project provided us with good
exposure to the subject of Finance and especially the Indian insurance sector
and it was a very good learning experience.
My sincere thanks are also due to for their significant help extended for
the successful completion of the project. I highly the help I got from them in
providing me and lot of information regarding the functioning of this
organization.
My sincere thanks are also due to Mr. Deepak Gupta, Faculty of
Management Dept, APS College of Education and Technology, Meerut for
their significant help extended for the successful completion of the project. I
highly the help I got from them in providing me and lot of information
regarding the functioning of this organization.
Roll No. 1280470347
SAVITA
M.B.A. (IV Sem)

STUDENT DECLARATION
I am SAVITA student of MBA here by declares that the summer training report titled
COMPARATIVE STUDY OF LIFE INSURANCE INDUSTRY IN INDIA with special
reference to HDFC standard Life Insurance is completed and submitted under
the guidance of Mr. Deepak Gupta, Faculty of Management Dept, APS

College of Education and Technology, Meerut is my original work.

The imperial finding in this report are based on the data collected by me. This project
has submitted UPTU, Lucknow for the purpose of compliance of requirement this
examination.

SAVITA
M.B.A. (IV Sem)
Roll No. 1280470347

EXECUTIVE SUMMARY
A well-developed and evolved insurance sector is needed for economic
development as it provides long term funds for infrastructure development and
the same time strengthens the risk taking ability.
Life insurance is also now being regarded as a versatile financial planning tool
in India. India being a country having a huge population of around one billion
people with only 22% of the insurable population in India possessing life
insurance the country has a vast potential which has been left untapped till now.
Therefore what this has led to is the flooding of the life insurance market with a
number of private players which in collaboration with recognized foreign
companies promise to deliver the best of services at the least price. But will
these companies be able to survive in the future is the question we have tried to
answer.
This report is an effort made by us to study the Indian insurance market. This
report sheds light on the impact and the prospects of private life insurance
companies in India, which mainly has been measured through the responses we
got in our questionnaires.
The aspects covered in this project are meaning of life insurance and why we
need them, history of insurance in India (pre and post liberalization), types of
life insurance polices, their meanings & benefits and a checklist while buying
right life insurance policy. In this finding we have undertaken five major private
life insurance companies in India i.e., HDFC, ICICI, AVIVA, BIRLA SUNLIFE
& MAX NEWYORK LIFE. Under this we have written a brief about these
companies, their insurance policies and its comparative analysis. Based on the
5

market survey and in-depth interview a statistical analysis of the prospects of

private life insurance companies in India is done and represented in the form of
statistical diagram.
Thus by going through this report one will get to know about the private life
insurance companies in India and their future prospects.

INTRODUCTION

INTRODUCTION
Life Insurance Corporation of India till few years ago used to enjoy a complete
monopoly in the life insurance sector of the country. Because of the monopoly it
used to offer the consumers its products at unjustifiable rates and the services
were also not up to the mark.
But because of the changes which were and are being brought about in the
Insurance Act the life insurance sector has seen the emergence of many private
players. With the emergence of these private players the Life Insurance
Corporation of India is facing a stiff competition from them not only in terms of
price but also in terms of the services provided.
The big question which arises is that will the old horse be able to survive the
competition or will the new players emerge victorious. How will these players
differentiate their products? Will these private players be able to survive in the
future or is it just a temporary phase of flooding of the Indian life insurance
market with products in quantity and not in quality? What are the prospects of
these private players in the insurance market in future and how much impact
they have created on Indian consumer?

CONCEPTUAL FRAMEWORK

WHAT IS LIFE INSURANCE

Life Insurance is a contract for payment of a sum of money to the person

assured (or failing him/her, to the person entitled to receive the same) on the
happening of the event insured against.
Usually the insurance contract provides for the payment of an amount on the
date of maturity or at specified dates at periodic intervals or at unfortunate death
if it occurs earlier. Obviously, there is a price to be paid for this benefit. Among
other things, the contract also provides for the payment of premiums by the
assured. Life Insurance is universally acknowledged as a tool to eliminate risk,
substitute certainty for uncertainty and ensure timely aid of the family in the
unfortunate event of the death of the breadwinner. In other words, it is the
civilized world's partial solution to the problems caused by death. (1)
In a nutshell, life insurance helps in two ways: premature death, which leaves
dependent families to fend for itself and old age without visible means of
support.
Any person who has attained majority and is eligible to enter into a valid
contract can take out a life insurance policy for himself / herself. Policies can
also be taken out, subject to certain conditions, on the life of ones children.
The need for life insurance will change as you grow older. When you are young,
you may believe you have no need for life insurance. But as you grow older,
possibly get married and take on more responsibilities, your desire to take out
an insurance policy increases.

10

What is the reach and significance of Life Insurance as an economic activity?

So long as the maintenance of a family depends on the earning power of
the bread-winner.
So long as the earning can be destroyed by death, old age or disability.
Just so long life as insurance continues to be the keystone of the
individual and those who are dependent on him.(2)
Thus, life insurance is universal and will play a useful role as long as the family
set up survives. Life Insurance caters to an important social need.

NEED FOR LIFE INSURANCE

The need for life insurance comes from the need to safeguard our family. If you
care for your familys needs you will definitely consider insurance. Today
insurance has become even more important due to the disintegration of the
prevalent joint family system, a system in which a number of generations coexisted in harmony, a system in which a sense of financial security was always
there as there were more earning members. Times have changed and the nuclear
family has emerged. Therefore you need to save a part of income for the future
too.
This is where insurance helps us.
Factors such as fewer numbers of earning members, stress, pollution, increased
competition, higher ambitions etc are some of the reasons why insurance has
gained importance and where insurance plays a successful role.

11

Insurance provides a sense of security to the income earner as also to the family.
Buying insurance frees the individual from unnecessary financial burden that
can otherwise make him spend sleepless nights. The individual has a sense of
consolation that he has something to fall back on.
From the very beginning of your life, to your retirement age insurance can take
care of all your needs. Your child needs good education to mould him into a
good citizen. After his schooling he need to go for higher studies, to gain a
professional edge over the others - a necessity in this age where cut-throat
competition is the rule. His career needs have to be fulfilled.
Insurance is a must also because of the uncertain future adversities of life.
Accidents, illnesses, disability etc are facts of life which can be extremely
devastating. Disability can be taken care of by insurance. Your family will not
have to go through the grind due to your present inability.
Moreover, retirement, an age when every individual has almost fulfilled his
responsibilities and looks forward to relaxing can be painful if not planned
properly. Have we considered the increasing inflation and taxes? Will our
investment offer us attractive returns under such circumstances? Will it take
care of our family after us? An insurance policy will definitely take care of these
and a lot more. Insurance has become a necessity today. It provides timely
financial as also rewards with bonuses. Life Insurance has come a long way
from the earlier days when it was originally conceived as a risk covering
medium for short periods of time, covering temporary risk situations, such as
sea voyages.
Therefore after going through the discussion let us summarize our points and
understand the need of life insurance:

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a) Temporary needs / threats

The original purpose of life insurance remains an important element, namely
providing for replacement of income on death etc.
b) Regular Savings / Family Protection
Providing for one's family and oneself, as a medium to long term exercise
(through a series of regular payment of premiums). This has become more
relevant in recent times as people seek financial independence for their family.
c) Investment
Put simply, the building up of savings while safeguarding it from the ravages of
inflation. Unlike regular saving products, investment products are traditionally
lump sum investments, where the individual makes a one off payment.
d) Old age provision
Provision for later years becomes increasingly necessary, especially in a
changing cultural and social environment. One can buy a suitable insurance
policy, which will provide periodical payments in one's old age.
e) Children benefit
Provision for the education, marriage and start in life for the children.
f) Special needs provision
Protection against loss arising out of accident, disability, sickness, loan
repayment on death.

13

WHY IS INSURANCE SUPERIOR TO OTHER FORM OF SAVINGS?

An immediate estate is created in favor of the policy holder.
Protection in case of death.
Liquidity in case of need easy loans are available .
Tax relief income tax, wealth tax etc..
Policies can be offered as collateral security.
Policies can be taken under M.W.P. Act 1874, to protect against
creditors.
Let us take an example to understand the need for insurance:
Mr. Atul is 45 and self-employed. His wife Nandini, who is a housewife, looks
after their two children aged 3 and 7 years. They stay in a rented
accommodation, where the rent is 15,000 rupees per month. Mr. Atul has taken
up a loan of Rs. 2 lakh. His monthly earnings on average are 40,000 rupees. Mr.
Atul passes away in an unfortunate road accident. What are some of the
financial implications of his death on his family.
There may be several financial implications on his family. Some of these are:
a) The monthly income, previously provided by Mr. Atul would stop.
b) His wife and children may have to seek financial assistance from other
relatives.
c) His wife may not have enough money to pay back the loan of Rs. 2 lakhs.
d) The family may have to move into a cheaper accommodation.
14

e) His widow may have to take up work to earn money.

f) The education of his children may suffer.
This simple example illustrates the impact premature death can have on a
family, where the main earner has no life cover.
Had Mr. Atul taken life cover, his family would not have faced such hardships
in the event of his unfortunate death. A simple life insurance policy could have
provided Mr. Atul's family with a lump sum that could have been invested to
provide an income equal to all or part of his income.
In simple words, insurance protects against untimely losses. Insurance has been
found useful in the lives of persons both in the short term and long term. Short
term needs like sudden medical costs and long term needs like marriage
expenses etc can be met with using life insurance.

TYPES OF INSURANCE POLICIES

Though there are a lot of policies available in the market under different names
and by different companies, the policies can broadly be classified into the
following categories:
Term Insurance Policy
Whole Life Policy
Money Back Policy
Endowment Policy
15

 Pension Plans Or Annuities

TERM INSURANCE POLICY

Term insurance provides life insurance coverage for a specific period of time.
Presently one year, five year, ten year, and fifteen year, are the periods one can
buy term life insurance policy. If the insured person dies during the period the
insurance is in force, the insurance company pays off the face value of the
policy. If the insured lives longer than the term of the policy, the policy is no
longer in effect and nothing is paid.
Term insurance is the least expensive form of life insurance. It is commonly
used when the insured needs temporary protection or cant afford the premiums
for the other forms of life insurance. The other reason an insured may want term
insurance is to purchase life insurance and invest the difference between the
term policy and cash value policy elsewhere.
Term insurance comes in several forms. There is renewable & non renewable.
Non renewable means that on the expiry of your policy you must go under
another physical test and filling out another questionnaire. On the other hand,
with renewable policy you dont need to undergo these formalities again and
you automatically re qualify to continue your policy.
Then there is convertible & non convertible policy. Convertible policy is the
one which can be converted into a permanent policy, whereas non convertible
is the one which cannot be converted into a permanent policy or in other words
the policy cannot be converted to any other form of life insurance policy.

16

WHOLE LIFE POLICY

The whole life policy provides insurance coverage for the entire life of the
insured regardless of how many years the insurance is paid. Premiums may be
paid throughout the insureds entire life or for a portion of his life. Additionally,
the premium can be paid in one lump sum when the policy is taken out. This
is referred to as a single premium whole life policy.
When the premium is paid through out the life it is known as straight life policy,
but when the premium is paid for a specified period of time it is known as
limited life policy.
The premiums are higher for Whole life insurance as opposed to term insurance.
The reason for this is that the policy has investment features as well as death
benefits. The cash value portion of the whole life insurance belongs to the
insured. One can take it out in the form of policy loans or can cash the policy in.
Another advantage of whole life insurance is that the premiums are fixed, i.e.
regardless of your age, you pay the same amount for the coverage each year.
Universal Life Insurance Policy
Universal life insurance is a variation of Whole Life. The difference is that with
Universal Life the insurance part of the policy is separated from the
investment portion of the policy. The cash value portion of the policy is
treated as an accumulation fund and investment income is credited to the
accumulation fund.

17

MONEY BACK POLICY

Money back policies provide for periodic payments of partial survival benefits
during the term of the policy, as long as the policy holder is alive.
An important feature of this type of policies is that in the event of the death at
nay time within the policy term, the death claim comprises the full sum assured,
without deduction of nay of any of the survival benefit amounts, which may
have already been paid as money back components. Similarly the bonus is also
calculated on the entire sum assured.

ENDOWMENT POLICY
An endowment policy covers the risk for a specified period, at the end of which
the sum assured is paid back to the policy holder, along with the bonus
accumulated during the term of the policy. This feature of payment of
endowment to the policy holder when the policys term is complete is
responsible for the popularity of endowment policies.
The amount received on maturity can either be utilized either to buy an annuity
policy to generate a monthly pension for the rest of the life, or put it into any
other suitable investment of our choice. This is one important benefit which the
endowment policy offers over a whole life insurance policy.
Overall, endowment policies are the most suitable of all insurance plans for
covering the risks to a family breadwinners life. Not only do these policies
provide financial risk cover for the family, were the policy holder to die
prematurely but the insurance amount is also repaid once this risk is over. The
endowment amount can then be used for meeting major expenditures such as
childrens education and marriage, etc.
18

Alternately, the endowment sum is available for a suitable investment geared to

providing an income for the remainder of ones own life. These type of plans are
particularly suitable to those who other than having a risk cover are also
interested in a savings component simultaneously.

PENSION PLAN OR ANNUITIES

An annuity is an investment that we make, either in a single lump sum or
through installments paid over a certain number of years, in return for which we
receive a specific sum every year, every half year or every month, either for
whole life or a fixed number of years.
After the death of an annuitant, or after the fixed annuity period expires for
annuity payments, the invested annuity fund is refunded, perhaps along with a
small addition, calculated at that time. Annuities differ from all the other form
of life insurance in one fundamental way an annuity does not provide any life
insurance cover but, instead offers a guaranteed income either for life or a
certain period.
Typically annuities are bought to generate income during ones retired life,
which is why they are also called pension plans. Annuity premiums and
payments are fixed with reference to the duration of human life.

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Kind Of Policy

Term Policy

Broad Definition

When Received

Like whole life but offers risk

Risk cover in case of

cover for defined periods.

death within term of

policy.

Whole life Policy

Allows risk cover for whole

Received only at the

life. Premiums are paid

time of death of life

throughout life.

assured.

Money Back Policy Allows planning return of sum

Endowment Policy

Received at fixed

assured as lump sum after

intervals during the

defined intervals of time.

term of the policy.

Available for a period and life.

Either on maturity or

Sum assured may be paid in

in the event of death

case of death within the term

of the insured,

of the policy.

whichever is earlier
the sum assured plus
the bonus is received
by the beneficiary.
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Pension Plans Or

Installments paid for certain

Either on the death of

Annuities

years and in turn a specific

the annuitant or on

sum is received every year or

expiry of the fixed

month.

annuity period.

21

SETTLEMENT OPTIONS
When the life insurance policy becomes payable, the insured or the beneficiaries
may elect to take payment in one lump sum. However, when the insured or the
beneficiary, elect not to take a lump sum payment, there are several other
options available to him for receiving his payment which are as follows:

1. INTEREST OPTION
According to this option, the entire proceeds are left with the insurance
company and it pays a guaranteed interest rate on your amount, it is similar
to leaving our money in a savings account. At any time in the future, the
beneficiary can withdraw the money.

2. FIXED AMOUNT OPTION

In this option the beneficiary receives a fixed amount of money each month
until the proceeds are exhausted.

3. FIXED PERIOD OPTION

The fixed period option will pay the beneficiary equal payments over a
fixed period of time, which may be 10 years ,20 tears or even just 5 years.
Excess interest earned will increase the amount of these payments.

4. LIFE INCOME OPTION

This option provides the beneficiary with the proceeds paid over the rest of
his life. However when the beneficiary dies the balance of the policy are
considered used up.

22

CHECK LIST FOR BUYING THE RIGHT

POLICY
DOS
Look out for no commission policies.
low load life insurance policies have fewer expenses built into them,
such as agent commissions and fees for marketing. This can translate into
lower premiums or for variable life insurance, these lower expenses mean
that a higher percentage of your premium goes to work for you right
away so that you can build your cash faster.
Buy as soon as the need exists
An advantage to buy life insurance earlier in life is that your premiums
will be low. As you grow old, the likelihood that you will die increases,
which is why older individuals pay more for life insurance.

23

DONTS
Dont buy a guaranteed issue policy if you are healthy
Guaranteed issue term life insurance policies normally require no medical
exam and are sold to anyone who comes along. While these policies can be a
great way for people who have medical problems to obtain a life insurance
policy, if you are healthy dont buy these policies as you will get better rates
by taking the tests.
Dont buy more or less than you need
Many experts say the best way to pinpoint a smart life insurance benefit
amount is through a needs analysis which can be broken into a simple
formula
Short term needs + long term needs resources = how much life insurance you
need

24

HISTORY AND GROWTH

OF LIFE INSURANCE IN
INDIA

25

HISTORY OF INSURANCE
The story so far
Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear
risk of the caravan trade by giving loans that had to be later repaid with interest
when the goods arrived safely. In 2100 BC, the Code of Hammurabi granted
legal status to the practice.
That, perhaps, was how insurance made its beginning.
Life insurance, on the other hand, had its origins in ancient Rome, where
citizens formed burial clubs that would meet the funeral expenses of its
members as well as help survivors by making some payments.
As European civilization progressed, its social institutions and welfare practices
also got more and more refined. With the discovery of new lands, sea routes and
the consequent growth in trade, Medieval guilds took it upon themselves to
protect their member traders from loss on account of fire, shipwrecks and the
like.
Since most of the trade took place by sea, there was also the fear of pirates. So
these guilds even offered ransom for members held captive by pirates. Burial
expenses and support in times of sickness and poverty were other services
offered. Essentially, all these revolved around the concept of insurance or risk
coverage. That's how old these concepts are, really.
In 1347, in Genoa, European maritime nations entered into the earliest known
26

insurance contract and decided to accept marine insurance as a practice.

The First Step
Insurance as we know it today owes its existence to 17th century England. In
fact, it began taking shape in 1688 at a rather interesting place called Lloyd's
Coffee House in London, where merchants, ship-owners and underwriters met
to discuss and transact business. By the end of the 18th century, Lloyd's had
brewed enough business to become one of the first modern insurance
companies.

Insurance and Math

Back to the 17th century. In 1693, astronomer Edmond Halley constructed the
first mortality table to provide a link between the life insurance premium and
the average life spans based on statistical laws of mortality and compound
interest. In 1756, Joseph Dodson reworked the table, linking premium rate to
age.
Enter Companies
The first stock companies to get into the business of insurance were chartered in
England in 1720. The year 1735 saw the birth of the first insurance company in
the American colonies in Charleston, SC.
In 1759, the Presbyterian Synod of Philadelphia sponsored the first life
insurance corporation in America for the benefit of ministers and their
dependents. This was followed by the formation of Fire Insurance Corporations,
first in New York City (1787) and then in Philadelphia (1794).
27

However, it was after 1840 that life insurance really took off in a big way. The
trigger: reducing opposition from religious groups.

The Growing Years

The 19th century saw huge developments in the field of insurance, with newer
products being devised to meet the growing needs of urbanization and
industrialization.
In 1835, the infamous New York fire drew people's attention to the need to
provide for sudden and large losses. Two years later, Massachusetts became the
first state to require companies by law to maintain such reserves. The great
Chicago fire of 1871 further emphasized how fires can cause huge losses in
densely populated modern cities. The practice of reinsurance, wherein the risks
are spread among several companies, was devised specifically for such
situations.
There were more offshoots of the process of industrialization. In 1897, the
British government passed the Workmen's Compensation Act, which made it
mandatory for a company to insure its employees against industrial accidents.
With the advent of the automobile, public liability insurance, which first made its appearance
in the 1880s gained importance and acceptance.

In the 19th century, many societies were founded to insure the life and health of their
members, while fraternal orders provided low-cost, members-only insurance.

Even today, such fraternal orders continue to provide insurance coverage to members as do
28

most labour organizations. Many employers sponsor group insurance policies for their
employees, providing not just life insurance, but sickness and accident benefits and old-age
pensions. Employees contribute a certain percentage of the premium for these policies.

29

IN INDIA
Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of
Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda.
The term suggests that a form of "community insurance" was prevalent around 1000 BC and
practiced by the Aryans.
Burial societies of the kind found in ancient Rome were formed in the Buddhist period to
help families build houses, protect widows and children.
Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in
1870. Other companies like Oriental, Bharat and Empire of India were also set up in the
1870-90s.
It was during the swadeshi movement in the early 20th century that insurance witnessed a big
boom in India with several more companies being set up.
As these companies grew, the government began to exercise control on them. The Insurance
Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that
looked into investments, expenditure and management of these companies' funds.

By the mid-1950s, there were around 170 insurance companies and 80 provident fund
societies in the country's life insurance scene. However, in the absence of regulatory systems,
scams and irregularities were almost a way of life at most of these companies.

As a result, the government decided nationalize the life assurance business in

India. The Life Insurance Corporation of India was set up in 1956 to take over
around 250 life companies.
For years thereafter, insurance remained a monopoly of the public sector. It was
only after seven years of deliberation and debate - after the RN Malhotra
30

Committee report of 1994 became the first serious document calling for the reopening up of the insurance sector to private players -- that the sector was
finally opened up to private players in 2001.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about both life and non-life insurance
businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government
of India.
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again.
Tracing the developments in the Indian insurance sector reveals the 360 degree
turn witnessed over a period of almost two centuries.

31

EFFECT OF LIBERALISATION
The winds of liberalization have initiated vast changes in the functioning of the
industry today. Increasing number of multi national partnerships with private
insurers have paved the way for radical shift in insurance selling through a
number of new distribution channels besides bringing about more awareness on
the need for insurance and also stressing on the important role technology can
play.
With major trade barriers, gone the Indian insurance industry is slowly opening
itself from a protected environment to e business, incorporating newer
technology in insurance.
The opening up of the sector is paving way for :
Faster decision making
Easier claim settlement
Bank assurance
Improved customer service
Utilizing the extensive network of banks for selling insurance will over a period
of time bring about an increase in insurance density besides improving
insurance penetration in rural areas wherein a large unexploited potential exists.

32

Insurance sector reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI
Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry
and recommend its future direction.
The Malhotra committee was set up with the objective of complementing the
reforms initiated in the financial sector.
The reforms were aimed at creating a more efficient and competitive financial
system suitable for the requirements of the economy keeping in mind the
structural changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary to address
the need for similar reforms
The committee emphasized that in order to improve the customer services and
increase the coverage of the insurance industry should be opened up to
competition. But at the same time, the committee felt the need to exercise
caution as any failure on the part of new players could ruin the public
confidence in the industry.
Hence, it was decided to allow competition in a limited way by stipulating the
minimum capital requirement of Rs.100 crores. The committee felt the need to
provide greater autonomy to insurance companies in order to improve their
performance and enable them to act as independent companies with economic
motives. For this purpose, it had proposed setting up an independent regulatory
body.

33

THE INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY
Reforms in the Insurance sector were initiated with the passage of the IRDA
Bill in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April 2000 has fastidiously stuck to its schedule of framing
regulations and registering the private sector insurance companies.
The other decisions taken simultaneously to provide the supporting systems to
the insurance sector and in particular the life insurance companies was the
launch of the IRDAs online service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured
that the insurance companies would have a trained workforce of insurance
agents in place to sell their products, which are expected to be introduced by
early next year.
Since being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations. In the private sector 12 life
insurance and 6 general insurance companies have been registered.
The important functions of IRDA are as follows:
To exercise all powers & functions of controller of Insurance.
Protection of the interest of the policyholders.
To issue, renew, modify, withdraw or suspend certificate of registration.
To specify requisite qualification & training for insurance intermediaries
& agents
34

 To promote & regulate professional organization connected with

Insurance.
To conduct Inspection/investigations etc.
To prescribe method of Insurance Accounting.
To regulate investment of funds & margins of solvency.
To adjudication upon disputes.
To conduct inspection & audit of insurers, intermediaries & other
organizations concerned with Insurance.

Current Status
The IRDA bill had been introduced in the Lok Sabha during the Vajpayee
governments last tenure with the expected mixed reactions. The Banking
Regulation Act is to be modified to allow banks to become active players in the
insurance sector. This comes as a major move
The takeout of the amendment made to Section 6 (0) of the Banking Regulation
Act, 1949 is this: the current act does not permit banks to handle insurance
products. The proposed change will permit banks to either distribute or to
market insurance products. In addition to this, banks will also be allowed entry
to the insurance sector through the joint venture route and bank assurance. It is
understood that only strong banks with three-year track records will be allowed
to enter the business - entry is a strict no-no to the weaker banks. The Insurance
Regulatory and Development Authority (IRDA) Bill provides for three levels of
players - an insurance company, insurance broker and an agent. Banks will work
as agents and brokers in this proposed structure.

35

This is an attempt to make the insurance sector more dynamic - this is likely to
happen as banks will use their formidable branch network to market and
distribute the insurance products.
The Indian insurance industry which until now was a controlled sector, with
only two players for the last four and half decades, has suddenly turned itself
into a battleground. Though the sector remained in the strong clutches of the
government enterprises, the growth has been slow. The industry is characterized
by a number of players, both domestic and international, competing for the huge
untapped market.
The Indian insurance sector is witnessing a slow and steady change. Though the
sector is yet to come out of the Government control completely, the new
entrants are hopeful of competing head-on with the state-owned monopolies and
create a niche for themselves.

36

PRIVATE LIFE
INSURANCE PLAYERS:
HEAD TO HEAD

37

HDFC STANDARD LIFE INSURANCE

HDFC Standard Life Insurance HDFC Standard Life Insurance Company is a
joint venture between India's largest housing finance provider, HDFC and
Europe's largest mutual life assurance company - The Standard Life Assurance
Company (U. K).
HDFC Standard Life Insurance Company Limited is the First Private Sector
Life Insurance Company to be granted a license.
FOREIGN PARTNER:
Standard Life, UK
Standard Life, UK, founded in 1825, has been at the forefront of the UK
insurance industry for 175 years by combining sound financial judgement with
integrity and reliability. It is the Largest Mutual Life company in Europe and
has total assets of Rs. 5,50,000 crore.
It is one of the very few insurance companies in the world to have received
'AAA' rating from two of the leading international credit rating agencies,
Moody's and Standard & Poor's. Standard Life was recently voted 'Company of
the Decade' in U.K. by the Independent Brokers called IFAs.
THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture, to
enter the Life Insurance market, in January 1995. It was clear from the outset
that both companies shared similar values and beliefs and a strong relationship
quickly formed.

38

Towards the end of 1999, the opening of the market looked very promising and
both companies agreed the time was right to move the operation to the next
level. Therefore, in January 2000 an expert team from the UK joined a hand
picked team from HDFC to form the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and a
5% stake in HDFC Bank.

In a further development Standard Life agreed to participate in the Asset

Management Company promoted by HDFC to enter the mutual fund market.
The Mutual Fund was launched on 20th July 2000.
Incorporation of HDFC Standard Life Insurance Company Limited:
The company was incorporated on 14th August 2000 under the name of HDFC
Standard Life Insurance Company Limited.
Their ambition since October 1995, was to be the first private company to reenter the life insurance market in India. On the 23rd of October 2000, this
ambition was realised when HDFC Standard Life was the only life company to
be granted a certificate of registration.
HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while
Standard Life owns 18.6%. Given Standard Life's existing investment in the
HDFC Group, this is the maximum investment allowed under current
regulations.
HDFC and Standard Life have a long and close relationship built upon shared
values and trust. The ambition of HDFC Standard Life is to mirror the success

39

of the parent companies and be the yardstick by which all other insurance
company's in India are measured.
Their Mission:
They aim to be the top new life insurance company in the market.
This does not just mean being the largest or the most productive company in the
market, rather it is a combination of several things like

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

Their Values:

SECURITY: Providing long term financial security to our policy holders

will be our constant endeavor. We will be do this by offering life
insurance and pension products.

TRUST: We appreciate the trust placed by our policy holders in us.

Hence, we will aim to manage their investments very carefully and live
up to this trust.

INNOVATION: Recognizing the different needs of our customers, we

will be offering a range of innovative products to meet these needs.

Their mission is to be the best new life insurance company in India and these
are the values that will guide us in this.

40

Insurance Products
1. Endowment Assurance Plan
This plan is a with profits saving plan and is well suited for saving money
for your long term financial goals. This plan also helps provide for the needs
of your family in your absence by paying out a lump sum in the event of
your unfortunate death during the term of the policy.
Indicative Premium*
Age

Basic Policy

Additional Premium

(yrs.)

Premium (Rs.)

20
30
40
50

4771
4835
5098
5813

for optional benefits (Rs.)

CI
DSA
ADB
WOP
304
322
136
236
442
388
144
300
925
641
156
475
1357
-

* The above quoted premium is for a male life assured for a period of 20 years
and a sum assured of Rs. 1lakh. The premium quoted above may vary as a result
of underwriting. The premium relatable to all the optional benefits put together
should not exceed 30% of the premium of the basic policy.
- Single Life Endowment Plan
- Joint Life Endowment Plan

2. Money Back Plan

41

This plan helps you plan for future anticipated expenses by paying periodic cash
lump sums to you at regular intervals. This plan also helps provide for the needs
of your family in your absence by paying them the basic sum assured plus any
bonus additions in the event of your unfortunate death during the term of the
policy.
Indicative Premium* for the basic policy
Age

Basic Policy

Additional Premium

(yrs.)

Premium (Rs.)

20
30
40
50

7491
7585
7925
8815

for optional benefits (Rs.)

CI
DSA
ADB
WOP
304
322
136
352
442
388
144
443
925
641
156
672
1890
1357
-

- Single Life Endowment Plan

- Joint Life Endowment Plan

42

3. Single Premium Whole of Life Plan

Single Premium Whole Of Life Insurance Plan is well suited to meet your long
term investment needs. This participating (with profits) plan offers you the
following
benefits:
A sound investment
Flexibility of term
Surrender value
In case of unfortunate death
No medical requirements

Indicative Premium
Minimum sum assured
: Rs. 25,000
Maximum sum assured
: Rs. 5,00,000
Premium: Rs. 950 per thousand of sum assured.

43

4. Term Assurance Plan

If you have a family that you care for, you should consider what would happen
in case of your unfortunate death. The emotional void cannot be filled, but
financial insecurity can be avoided. By taking this affordable life insurance
plan, you can
provide for the well-being of your family in case of your unfortunate death. This
plan comes to you at a minimal cost and is well-suited for the value-conscious
customer.
Indicative Premium
Age of

Premium* (Rs.)

Single

Quarterly Half-yearly Yearly

Life Assured
Premium (Rs.)
20 yrs.
467
862
1566
11970
25 yrs.
495
914
1662
13110
30 yrs.
529
979
1782
15726
35 yrs.
579
1074
1956
18216
40 yrs.
790
1473
2688
26400
* The premium quoted is for a healthy male, paying premiums for a 15 year
term for a sum assured of Rs. 6,00,000. The exact premium may vary as a result
of underwriting.

44

5. Loan Cover Term Assurance

If you are taking a loan to buy a house for your family, this plan can help you
ensure that life's uncertainties do not affect their shelter. It is an affordable plan
that has been designed to help your family repay the outstanding loan in case of
your unfortunate death.
Indicative Premium* for the basic policy

Age of Life Assured

30 yrs.
35 yrs.
40 yrs.
45 yrs.
50 yrs.

Annual Premium**

Single Premium

(Rs. p.a.)
Term of loan (in yrs.)
10
15
1592
1634
1757
1799
2114
2163
2782
2915
3955
4175

(Rs.)
Term of loan (in yrs.)
10
15
5781
7993
6324
9152
8515
12991
10636
16663
15921
25038

* The premium quoted above may vary as a result of underwriting. The above
rates are for a male life assured for an initial sum assured of Rs. 3.5 lakh.
** In case of annual premium payment, the premium is to be paid for only the
first 2/3 rd of the term while the cover continues for the full term.
Types of series
- Single Life Protection Series
- Joint Life Protection Series

45

6. Personal Pension Plans

This participating (with profits) plan is basically a savings contract, which is
designed to provide an income for life from retirement. It does this by providing
a notional lump sum on retirement, comprising of sum assured plus any
attaching bonus. Subject to the prevailing regulations, part of this lump sum can
be taken in form of cash and the rest converted to an annuity at the rate then
offered by HDFC Standard Life. Alternatively, if it is permitted by the
prevailing regulations, the notional lump sum can be used to buy an annuity
with any other insurance company
who will accept such business.
On earlier death after the first year, for Regular Premium policies all premiums
paid to date will be returned with interest at 8% per annum, subject to a
maximum of the sum assured plus bonuses declared to date. For Single
premiums, it is sum assured plus bonuses declared to date.

Normally, they will declare a reversionary bonus once a year. Once added, it
cannot be reduced. Reversionary bonus will take the form of a simple addition
to your policy benefits.
In addition, on maturity, a terminal bonus might be payable. On death, an
interim bonus, reflecting the period since the last addition of reversionary
bonus, might also be payable.

46

How much will it cost?

The cost of the plan depends on your age, the amount of benefit you have
chosen, the premium paying frequency and the term of the policy. To give you
an idea, here are the annual premiums in Rupees, payable on a policy with sum
assured of Rs. 100,000.
Term
Age
30
35
40

10
n/a
n/a
9,577

15
n/a
6,098
6,117

20
4,309
4,327
4,357

For Single premium policies, the premium payable with respect to the basic
benefit is equal to the basic sum assured as required by the policyholder.

Am I eligible?
The age and term limits for taking out a Personal Pension Plan are:
Minimum Maximum Minimum Maximum Minimum Maximum
Term3

Term

RP1 SP2 RP
10 5 40

SP
15

Age at

Age at

Entry
RP SP
18 35

Entry

Age at

Age at

Retirement Retirement

60
50
70
1 RP : Regular Premium 2 SP : Single Premium 3 Term to Retirement

47

ICICI PRUDENTIAL LIFE INSURANCE

ICICI Prudential Life Insurance is a joint venture between the ICICI Group and
Prudential plc, of the UK. ICICI started off its operations in 1955 with
providing finance for industrial development, and since then it has diversified
into housing finance, consumer finance, mutual funds to being a Virtual
Universal Bank and its latest venture Life Insurance.

FOREIGN PARTNER:
Established in 1848, Prudential plc. of U.K. has grown to be the largest life
insurance and mutual fund company in U.K. Prudential plc. has had its presence
in Asia for the past 75 years catering to over 1 million customers across 11
Asian countries.
Prudential is the largest life insurance company in the United Kingdom
(Source : S&P's UK Life Financial Digest, 1998).
ICICI and Prudential came together in 1993 to provide mutual fund products in
India and today are the largest private sector mutual fund company in India.
Their latest venture ICICI Prudential Life plans to take care of the insurance
needs at various stages of life.

THE COMPANY
ICICI Prudential Life Insurance Company is a joint venture between ICICI, a
premier financial powerhouse and Prudential plc, a leading international
financial services group headquartered in the United Kingdom. ICICI
48

Prudential was amongst the first private sector insurance companies to begin
operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA).
ICICI Prudentials equity base stands at Rs. 3.75 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. As of December 31,
2002, the company had issued nearly 230,000 policies with a sum assured of
over Rs 6,500 crore and premium income in excess of Rs. 340 crore. Today the
company is the #1 private life insurer in the country.

DISTRIBUTION
ICICI Prudential has one of the largest distribution networks amongst private
life insurers in India, having commenced operations in 23 cities and towns in
India. The company has the largest number of bancassurance tie-ups, having
agreements with ICICI Bank, Citibank, Allahabad Bank, Federal Bank, South
Indian Bank, Bank of India, Lord Krishna Bank, and Punjab & Maharashtra Cooperative Bank, as well as some corporate agents. It has also tied up with
organizations like Dhan for distribution of Salaam Zindagi, a policy for the
socially and economically underprivileged sections of society.
ICICI Prudential has recruited and trained over 16,000 insurance agents to
interface with and advise customers, and has the highest number amongst
private life insurers on the renowned Million Dollar Round Table (MDRT).

PRODUCTS
Savings Solutions
ICICI Pru Save n Protect is a traditional endowment savings plan that offers
life protection along with adequate returns.
49

ICICI Pru CashBak is an anticipated endowment policy ideal for meeting

milestone expenses like a child's marriage, expenses for a childs higher
education or purchase of an asset.
It is a three in one plan that combines savings, liquidity and protection through
the following:
Fixed term of 15 or 20 years
Survival benefit payments at regular intervals
Premiums are payable throughout the term of the policy.
How?
The survival benefits available to you are as follows:

Policy Term 15 years

At end of

Survival Payment as a

year
3
6
9
12

% of basic sum assured

10%
15%
20%
25%
50% plus guaranteed

15(Maturity) additions plus vested

bonuses.

Policy
Term
At end of
year
4
8
12
16
20
(maturity)

20 years
Survival Payment as a
% of basic sum assured
10%
15%
20%
25%
50% plus guaranteed
additions plus vested
bonuses.

On the death of the life assured, the beneficiary will get the sum assured, the
guaranteed additions and the vested bonuses.
50

Who can apply?

You can apply if you are 16 years old and no older than 55 years. The minimum
sum assured you should apply for is Rs.75,000. The minimum premium amount
is Rs.4,800 p.a.
Protection Solutions
ICICI Pru Life Guard is a protection plan, which offers life cover at very low
cost. It is available in 3 options - level term assurance, level term assurance with
return of premium and single premium.
Child Solutions
ICICI Pru Smart Kid provides guaranteed educational benefits to a child along
with life insurance cover for the parent who purchases the policy. The policy is
designed to provide money at important milestones in the childs life.
Parents (between 20-60 years) with children in the age group of 0-12 years can
purchase this policy.
As parents with children aged 12 years and below, you can take this policy. You have the
flexibility to choose the exact age of the child (between 22 to 25 years), at which the policy
is to mature. You also have the option to choose between two structures of payout of
benefits.

For e.g.

Age of the child: 5 years

Chosen age of child at maturity: 23 years

Term of the plan: 23 - 5 = 18 years

Sum assured : Rs.5,00,000/-

Structure 1:

51

At the end of

Child's Age

% of Sum Assured

Amount

16 years

20% of SA*

Rs.1,00,000

18 years

25% of SA*

Rs.1,25,000

21 years

25% of SA*

Rs.1,25,000

30% of SA*

Rs.1,50,000

+ Guaranteed Additions

+ Guaranteed Additions

+ Estimated Bonus

+ Estimated Bonus

Child's Age

% of Sum Assured

Amount

19 years

25% of SA*

Rs.1,25,000

20 years

20% of SA*

Rs.1,00,000

21 years

20% of SA*

Rs.1,00,000

22 years

20% of SA*

Rs.1,00,000

11th year of
policy
(Term-7)
13th year of
policy
(Term-5)
16th year of
policy
(Term-2)
On Maturity

23 years

Structure 2:

At the end of
14th year of
policy
(Term-7)
15th year of
policy
(Term-5)
16th year of
policy
(Term-2)
17th year of

52

policy (Term)
On Maturity

*Sum

23 years

20% of SA*

Rs.1,00,000

+ Guaranteed Additions

+ Guaranteed Additions

+ Estimated Bonus

+ Estimated Bonus

Assured

What tax benefits will you get?

The premium that you will be paying will be tax exempt under section 88.
Market-linked Solutions
ICICI Pru Life Link is a single premium Market Linked Insurance Plan which
combines life insurance cover with the opportunity to stay invested in the stock
market.
ICICI Pru Life Time offers customers the flexibility and control to customize
the policy to meet the changing needs at different life stages. It offers 3
investment options - Growth Plan, Income Plan and Balanced Plan.
How do you start?
You can open an account with a Minimum Premium of
Rs 18,000/- p.a. for annual mode.
Rs 9,000/- per half year for half-yearly mode
Rs 4,500/- per quarter for quarterly mode
Rs 1,500/- per month for monthly mode
Benefits

53

Death Benefit: In case of the unfortunate event of death, your near and dear
ones are spared an uncertain future. The nominee/s will receive the death benefit
chosen (less any withdrawals) or value of the units, whichever is higher. 1
Withdrawal Benefit: There is no maturity date. Anytime after 3 years of
commencement (provided you have paid premium for 3 full years) you can
make withdrawals through partial or complete surrender of units.2
Retirement Solutions
ICICI Pru Forever Life is a retirement product targeted at individuals in their
thirties. Ideally, you should be between 30-35 years of age to take the maximum
benefit of this plan. This gives you a longer period for your retirement plan, thus
giving you the advantage of compounding over a long period of time to create a
sizeable retirement kitty.
Following table shows the annual premium payable for various age-term
combinations to get an annual Life Annuity of Rs100, 000 per annum from
vesting.

Age/Vesting Age

50

55

60

30

23084

13654

8159

35

40420

22383

12913

40

79090

38277

21158

54

The table below shows the yearly annuity payable for various age-term
combinations for an annual premium of Rs10, 000.

Age/Vesting Age

50

55

60

30

42375

73233

122583

35

23764

44686

77367

40

12386

25134

47228

*The calculations are based on the current annuity rates and the assumptions
taken in the benefit illustration. The annuities shown in the table are indicative
and are not guaranteed.
Annuity Benefit: On the date of vesting (retirement), you start receiving a
regular income for life. This amount would depend upon the annuity option
chosen by you and the accumulated value as on the vesting date. The annuity
would also depend upon the annuity rates offered by the company as on that
date and are not guaranteed.
What tax benefits are available with Forever Life ?
Tax benefit u/s 80CCC(1): up to Rs10, 000 deducted from your taxable income.
Market-linked retirement products
ICICI Pru Life Time Pension is a regular premium market-linked pension plan.
What tax benefits are available with LifeTime Pension?
Tax benefit u/s 80CCC(1): up to Rs10, 000 deducted from your taxable income.

55

How much you have to pay?

The minimum premium in this plan is Rs10, 000. However you have the
flexibility of paying yearly (Rs10, 000), half-yearly (Rs5, 000), Quarterly (Rs2,
500) and monthly (Rs 833)
What are your entry conditions?
You can apply for this plan if you are between 18 and 60 years of age. The
minimum age of vesting is 50 years. You have the flexibility of choosing the
vesting age between 50 and 70 years of age. Minimum Term of the product is
10 years.
ICICI Pru Life Link Pension is a single premium market-linked pension plan.
What tax benefits are available with LifeLink Pension?
Tax benefit u/s 80CCC(1): up to Rs.10, 000 deducted from your taxable income.
How much you have to pay?
The minimum premium in this plan is Rs.25, 000.
What are your entry conditions?
You can apply for this plan if you are between 18 and 62 years of age. You have
the flexibility of choosing the vesting age between 50 and 70 years of age.
Minimum term of the product is 3 years.
Allocation Rate
For premiums between Rs. 25,000/- and Rs. 39,999/- the allocation is 97%, for
premiums between Rs. 40,000/-and Rs. 99,999/- it is 98%, for premiums
between Rs. 1,00,000 and Rs. 4,99,999 it is 98.5% and for premiums of Rs.
5,00,000/- or above it is 98.75%
What would be the charges on your policy?.

56

Mortality Charges towards Death Benefit

Top Up Charges - 1% of the top up amount

Other Charges: Annual administrative charges of 1.00% p.a. of net assets for
protector (Income) and 1.25% p.a. for Maximiser (Growth) and Balancer
(Balanced) options. Annual investment charge of 0.5% p.a. of the net assets for
Protector and 1% p.a. of the net assets for Maximiser and Balanced.
Single Premium Solutions
ICICI Pru AssureInvest is a single premium savings product with life cover
that offers returns ranging from 4.1% to 5.8% for a term of 5, 7 or 10 years.
On date of maturity, depending on the term and the single premium amount
paid, guaranteed additions (w.e.f. 10th December '02) as given in the table
below:
Term
Single Premium (in Rs.)
25,000 - 49,999

50,000 - 199,999

200,000 +

Age
7 to 45
46 - 55
56 & above
7 to 45
46 - 55
56 & above
7 to 45
46 - 55
56 & above

5 years 7 years 10 years

Guaranteed rates
3.80
4.10
4.45
3.80
4.05
4.40
3.65
3.95
4.35
4.35
4.55
4.85
4.30
4.50
4.75
4.20
4.40
4.75
4.75
4.85
5.10
4.70
4.80
5.05
4.55
4.70
5.00

The maturity benefits are payable even if death benefit has been paid earlier.
ICICI Pru ReAssure is a retirement product for senior citizens who are on the
verge of retirement or have just retired.

57

The policy is available for a term of 5 or 7 years.

Survival benefits: Depending on the term and the Single Premium, the new rates
(w.e.f. 10th December '02) for ReAssure are as following:
Term
5 years
7 years
Single Premium (in Rs.) Survival Benefits (%)
50,000 - 199,999
5.30
5.05
200,000 +
6.00
5.65
Maturity benefit: On maturity the entire amount of single premium is paid to
you.
What happens on death during the term of the policy?
If death occurs within the first year of buying the policy, the nominee will
receive the premium. If death occurs after first year, the nominee will receive
110% of the premium paid.
Who can apply?
Anyone in the age group of 07-62 years can apply for the ReAssure policy
(maximum age at entry is 60 yrs in case of 7yr term). The maximum coverceasing age is 67 years.
What tax benefits will you get?
The premium is eligible for tax exemption under Sec88.
ICICI Prudential also launched ''Salaam Zindagi'', a social sector group
insurance policy targeted at the economically underprivileged sections of the
society.

58

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking
to enhance benefits to their employees.
ICICI Pru Group Gratuity Plan: ICICI Pru's group gratuity plan helps
employers fund their statutory gratuity obligation in a scientific manner. The
plan can also be customized to structure schemes that can provide benefits
beyond the statutory obligations.
ICICI Pru Group Term Plan: ICICI Pru flexible group term solution helps
provide affordable cover to members of a group. The cover could be uniform or
based on designation/rank or a multiple of salary. The benefit under the policy is
paid to the beneficiary nominated by the member on his/her death.

FLEXIBLE RIDER OPTIONS

ICICI Pru Life offers 4 flexible riders, which can be added to the basic policy at
a marginal cost, depending on the specific needs of the customer.
1. Accident & disability benefit
If death occurs as the result of an accident during the term of the policy, the
beneficiary receives an additional amount equal to the sum assured under the
policy. If the death occurs while traveling in an authorized mass transport
vehicle, the beneficiary will be entitled to twice the sum assured as additional
benefit.

59

2. Level Term cover

This rider provides the option to increase the risk cover. The cover may be
increased for an additional amount up to a maximum of the existing basic sum
assured on your policy.
3. Critical Illness Benefit
Protects the insured against financial loss in the event of 9 specified critical
illnesses. Benefits are payable to the insured for medical expenses prior to
death.
4. Major Surgical Assistance Benefit
Provides financial support in the event of medical emergencies, ensuring that
benefits are payable to the life assured for medical expenses incurred for
surgical procedures. Cover is offered against 43 different surgical procedures.

60

AVIVA LIFE INSURANCE

THE COMPANY
Aviva Life Insurance is a joint venture between Dabur and Aviva. Aviva Plc is
UK's largest insurance group. Today, with 25 million customers in over 50
countries and assets under management in excess of US $300 billion AVIVA life
insurance is the oldest company in the world and is a pioneer in its own field. It
is the 3rd largest Life insurance company in the global. It has its root in U.K
where it is the largest insurer. Most lives in U.K are covered by AVIVA. The
asset of AVIVA is over $300 billion. It has got 25 million customers worldwide
and reaping the benefit of the product. Around 64,000 people are working for
AVIVA worldwide. It has 40 major partnerships with leading banks across the
globe.
In India it has tied up with well know and admired company DABUR. The joint
venture is form to cater the growing need of life insurance.
Founded in 1884, Dabur is one of India's oldest and largest group of companies
with annual sales of Rs. 1,200 crores. It is the country's leading producer of
traditional healthcare products.
Together they have been looking after generations of customers, over hundreds
of years, and are committed to ensuring that we enjoy the very best financial
health.
Aviva Life Insurance aims for superior long-term investment performance and
has the financial and management strength to deliver. Along with millions of
61

customers worldwide we can feel certain of our choice, whether we invest for
the future or provide against the unexpected.

WHO ARE THEY

Aviva Plc is the largest UK based life and general insurance group. A top
priority at Aviva Plc has been the establishment of truly international
businesses built on strong local partnerships and joint ventures. The Group's
success in combining this strategy with a well-balanced portfolio of life and
general business can be seen in a modern, unified operation across the
globe.
Aviva Plc is one of the major institutional investors in the UK, holding 3% of
British industry quoted on the London Stock Exchange and 7% of the UK gilt
market. It is a top-five European life insurer based on premium income, with
leading positions in the UK, the Netherlands, Ireland, Poland, Spain, Singapore
and Turkey. The Group is among the top 10 asset managers in Europe and the
second-largest UK-based fund manager by reference to funds under
management, which exceed US $300 billion.
Aviva Plc's service standards, responsiveness and portfolio of products are
customized to suit the individual needs and requirements of its customers across
the world. The Group's 64,000 employees serve more than 25 million customers
worldwide.

PRODUCTS AND SERVICES

At Aviva Life Insurance, insurance plans are created keeping in mind the
changing needs of you and your family. Our individual life insurance plans are
62

designed to provide you with flexible options that meet both protection and
savings needs.

LIFELONG
Life Long is a flexible whole life plan designed to suit your individual requirements, no
matter which life stage you are in and change as your needs change during your entire
life. For younger families, maximum protection can be provided at moderate cost but as
the need for protection in future reduces, the sum insured under the policy may be
reduced, thus increasing the savings content.

LIFESAVER
Life Saver is a flexible endowment plan designed to meet your specific longterm savings needs such as education and wedding costs, with the added
reassurance of life cover to meet those costs should something untoward happen
before the policy matures.
LIFEBOND

Life Bond is a single premium savings plan designed by Aviva to provide you
the maximum benefit of investment return and the security of the investment to
match your medium term savings needs.

CORPORATE LIFE
Corporate Life is a product designed primarily for the corporate sector to
provide life cover to their employees. The product can also be targeted at other
suitable groups. This is a group term insurance product, which provides cover
against risk of death. The Corporate is the master policyholder. It is a yearly

63

renewable product. Additional covers against accidental death and permanent

total disability are also available, if opted for by the master policyholder.

EASY LIFE PLUS

Easy Life Plus is designed to be a simple regular savings plan with the benefit
of life protection. By choosing an appropriate premium level and term, you can
match the maturity date of the policy to a specific savings need such as
childrens education, wedding, etc. Easy Life Plus is specially designed for
members of select groups such as Bank Customers, Employer-Employee, or any
other similar recognized group.

CREDIT PLUS
Credit Plus is a product specially designed for Micro Finance Institutions who
provide loans to individuals in the rural and social sectors and who would also
like to provide some financial security to the families of these individuals
(members).This is a yearly renewable group term insurance scheme which
provides death cover on group basis.

PENSION PLUS
Pension Plus is a tax efficient personal pension plan that is designed to help you
earn a regular income even after you stop working. Through this plan, you build
a fund till you retire which provides you financial security on retirement.
SECURE LIFE
Secure Life is an ideal life insurance plan that helps you protect your familys
future. Depending on your requirements, whether it be for your childs
education or marriage, loan repayments, etc., Secure Life ensures that your
familys needs are met should something unfortunate happen to you. What is
64

more, the entire premium that you pay during the policy term is returned to you
on survival, at maturity.

65

BIRLA SUN LIFE INSURANCE

The Aditya Birla Group consists of companies based at transnational locations,
comprising of some of the best-known companies in India. The group
companies have attained a leading position in a range of key core sector areas
and rank among the countrys largest, most profitable and fastest growing
companies. At the Aditya Birla Group, growth with excellence is a way of life.
With a turnover of over Rs 280 billion (US $6.01 billion), and fixed assets
worth Rs 265 billion (US $5.7 billion), the group is India's leading business
house. The Group's employs around 72,000 people and has 700,000 share
holders

spread

across

40

companies

situated

around

the

globe.

Sun Life Financial is a leading international financial services organization.

With a history that dates back to 1871, Sun Life Financial has evolved from a
single mutual life insurance to one of the most highly rated insurance and
wealth management institutions in the world. Sun Life Financial knows its value
lies in more than assets and history. It also lies in the culture of integrity and the
pursuit of excellence that have marked all of the organizations endeavors.
Today, the Sun Life Financial Group of companies and partners are represented
globally in Canada, the United States, the Philippines, Japan, Indonesia, India
and Bermuda.
Birla Sun Life Insurance is the coming together of the Aditya Birla group and
Sun Life Financial of Canada to enter the Indian insurance sector.

66

INSURANCE PRODUCTS
YOUNG SCHOLAR
Birla Sun Life Insurance, have specially designed the YOUNG SCHOLAR
PACKAGE for children aged 8 and below. Birla Sun Life's Young Scholar
package not only insures the parent, but also ensures the dream of your child
becomes a reality.
Savings... Easily achievable Guaranteed 6% Returns
If you are 30 years old and father of a child aged between 1 and 3 (both
inclusive) and if you select a package with a face amount of Rs. 1,00,000

At the end of the Year

1.16th policy year
2.17th policy year
A small amount 3.18th policy year
of Rs. 22.09 per 4.19th policy year
5.On Maturity
day for 15 years 6.If the Actual Return is
9%, then the additional

(Annual
Premium Rs.

Rupees
30,000
30,000
30,000
30,000
45,000

This ensures that your

child's higher education
and development is
funded
For his/her START in
life

82,720

amount paid on maturity

Coverage for you
1.Normal Death
2,00,000 This creates an
2.Accidental Death
3,00,000
emergency fund for the

8,064 payable 3.Dismemberment Cover 1,00,000 Protection of your

family
for 15 years)
67

If you are 35 years old and father of a child aged between 4 and 8 (both inclusive)
and you select a package with a face amount of Rs. 1,00,000

Salient Features of Young Scholar

At the end of the Year
1.11th policy year
2.12th policy year
3.13th policy year
A small amount 4.14th policy year
of Rs. 31.95 per 5.On Maturity
day for 10 years 6.If the Actual Return is
9%, then the additional
(Annual
Premium
Rs.11,664

Rupees
20,000
20,000
20,000
20,000
60,000

This ensures that your

child's higher education
and development is
funded
For his/her START in

55,996 life

amount paid on maturity

Coverage for you
1.Normal Death
2,00,000 This creates an
2.Accidental Death
3,00,000
emergency fund for the

payable for 10 3.Dismemberment Cover 1,00,000 Protection of your

family
years)
According to the Income Tax Act, 1961 premiums paid to buy or keep an
insurance in force is exempted from income tax to the extent of 20% of the
premium paid or Rs. 60,000, whichever is lower (i.e. Sec 88 of the Income Tax
Act). Benefits received from a life insurance policy is also exempted from
income tax (i.e. Sec10(10D) of the Income Tax Act).
FLEXI LIFE LINE WHOLE LIFE PLAN
Flexi Life Line Whole Life Plan is an investment in the future which ensures
that your hard earned money gives you higher returns as well as security to your
loved ones.
Unique Features :

Choice of Investment Options.

68

Automatic Premium Payment.

Free Look Period.

Access your funds during the duration of the plan.

Favorable premiums for Female Clients.

Flexi Life Line - Whole Life Plan
Eligibility

18-65 years

Minimum Face Amount (Sum

Rs. 75,000 for a person

Assured)

fulfilling the eligibility

criteria

Duration of the plan

For the entire life till 100

years of age

Premium Paying Period

Single pay, 5,10, 15, 20

years or over the duration
of the plan

Premium Payment Frequency

Annually, semi-annually,
quarterly or one-time
payment
Review your decision for

Free Look Period

15 days from the date of

despatch of the policy
document

Transparency in Surrender Values Know the exact amount

due in case of pre-mature
69

Amount due on survival up to

plan termination
Surrender Value in the

maturity

maturity year + the

balance in Additional
Holding Account (NonGuaranteed)
Death benefit + the

Amount due to nominee in event

balance in Additional

of death of the life insured

Holding Account (NonGuaranteed)

Riders

Accidental Death &

Dismemberment, Term
and Critical Illness Riders

Unique Features

Protector*, Builder* and

Investment Options*

Enhancer*

Access to your funds

Loans, Withdrawals and

Death Benefit

Surrender

Automatic Premium

Applicable for all plans

Payment

Applicable for all plans

Tax Benefits

As per Sec 88 Sec 10(10

D) of the Income Tax Act

BIRLA SUN LIFE TERM PLAN

This low cost plan is for those who would like to buy an insurance cover at a
low cost. The premium of this plan is low and offers high life coverage. This

70

plan takes care of the policyholder's financial commitment to his family if

anything unfortunate happens to him.
Eligibility:
The minimum eligibility age is 18 and maximum is 55 years.
Duration of the plan:
The duration of the plan can be 5,10,15,20 or 25 years. (The maximum age at
maturity is 70 i.e., a person aged 55 can buy a maximum benefit period of 15
years).
Premium Payment:
Premiums can be paid annually, semi annually or quarterly throughout the
duration of the plan or by a one time single premium. In case of non-payment of
premiums on due dates, a grace period of 30 days is given after which the policy
will lapse.
Free plan Trial
This option called Free Look Period begins from the date of despatch of policy
document. Under this trial the customer is allowed to review his decision for 14
days. If the policyholder wishes to cancel his plan within this period, full refund
of the premium amount paid is offered.

Description

Birla Sun Life Term Plan

Eligibility

18 - 55 years

Minimum Face Amount

(Sum Assured)

Rs 2,50,000 in case of single premium and Rs 2 ,

00,000 in case of annual premium for a person
fulfilling the eligibility criteria
71

Duration of the plan

As per the policy terms - 5,10,15,20 or 25 years

Premium Paying Period

Single pay, or over the duration of the plan

Premium Payment

Annually, semi-annually, quarterly, monthly or One-

Frequency

time payment

Free Look Period

Review your decision for 14 days from the date of

despatch of the policy document.

Amount due to nominee in

event of death of the life

Face Amount ( Sum Assured)

insured
Amount due on survival
upto maturity
Surrender Value

Nil
Nil
Accidental Death & Dismemberment and Critical

Riders

Illness riders but only at the time of purchase of

policy

Tax Benefits

As per Sec. 88 and Sec.10(10D) of the Income Tax

Act

FLEXI SAVE PLUS ENDOWMENT PLAN

It is a flexible life insurance plan taken for a specified term, which offers you
the dual benefit of an insurance cover as well as investment opportunity, which
helps grow your savings. The Flexi Save Plus Endowment Plan is designed for
people who want to maximise their savings today by paying regular premiums
for a fixed duration of time or in a single lump sum, to realize their long term
goals and protect their families with an insurance policy.

72

Eligibility

1 65 years

Minimum face amount

Rs 50000 for minors and Rs 75000 for

Duration of the plan

adults.
As per policy terms 10, 15, 20, 25 or

Premium paying period

30 years or as per maturity age.

Single pay 5, 10, 15, 20 years or over

Premium paying frequency

the duration of the plan.

Annually, semi-annually, quarterly or

Free look period

one time payment.

15 days from the date of the policy

dispatch.
Amount due on survival up to maturity Surrender value in the maturity year +
balance in the additional holding
account.
Amount due to nominee in event of the Death benefit + balance in the
death of the life insured
Tax benefits

additional holding account

As per Sec 88 Sec 10(10D) of the

income tax act.

FLEXI CASH FLOW MONEY BACK PLAN
It is a flexible life insurance plan taken for a specified term, with periodic
payback of face amount (sum assured) at fixed intervals coupled with saving
growth. It is an investment, which ensures that your money also works as hard
as you do. The plan keeps on giving you a part of the face amount (sum assured)
at regular intervals as well as takes care of your savings needs.
Eligibility

1 65 years

Minimum face amount

Rs 50000 for minors and Rs 75000 for

Duration of the plan

adults.
As per policy terms 10, 15, 20 or 25
years.
73

Premium paying period

Single pay 5, 10, 15, 20 years or over

Premium paying frequency

the duration of the plan.

Annually, semi-annually, quarterly or

Free look period

one time payment.

15 days from the date of the policy

dispatch.
Amount due on survival up to maturity Surrender value in the maturity year +
balance in the additional holding
account.
Amount due to nominee in event of the Death benefit + balance in the
death of the life insured
Riders

additional holding account.

Accidental death and dismemberment,

Tax benefits

Term and critical illness riders.

As per Sec 88 Sec 10(10D) of the

income tax act.

KEY FINDINGS OF THE TERM POLICIES
Max New York Life provides the maximum sum assured w.r.t. any other
companys term insurance product.
Aviva's rider CI covers maximum ailments. Another, asset of this insurer
is that for term policies need no medical tests required while buying thus,
lots of hassle eliminated. Its wealth protector plan also of its exceptional
kinds it also give bonus on riders, which many insurers miss out at.
HDFC Standard Life gains at being the most affordable policy available.
The eligibility standards are also at better ends w.r.t. other private
insurers. The suicide exclusion clause dealt here by this insurer is
exceptional as what other insurers apply it for the term products.

74

ENDOWMENT INSURANCE
PARAMETERS

BIRLASUN

HDFC

LIFE

STANDARD

AVIVA

LIFE

Eligibility
(basic policy )

1-65 years

12-60 years

18-65 years

expiry or

expiry or at age 75

maximum maturity

maturity at 80

at 70 years

years

Minimum face

50,000(minors)

No minimum sum

Minimum term 5

amount

75,000(adults)

assured

years

Minimum premium

Maximumterm-52

is Rs 18,000 p.a.

years (depending
on the current age

Riders
Accidental

CI,

ADD, CI,

death and

DSA,ADB,WOP

Permanent Total

disimbersement

Disability

term ,CI

75

1) It is a unitized
Unique features

Investment

Can be taken on a

fixed term

options-

single life basic or a

protection cum

protestor,

joint life (first

savings plan.

builder,

claim) basis

2) Can be

enhancer

purchased on any
life between 18 to
65 years and for
any term subject to
a minimum of 5
years and the
insured not
exceeding 70 years
at the age of
maturity.
3) Can increase the
sum insured under
the policy
anniversary.
However an
increase will be
subject to evidence
of good health and
underwriters
approval.
4) Can be purchase
on single life as
well as on a joint
life (with spouse
76

only on first death

basis)
5)Regular premium
payable over the
whole term of the
policy
ICICI PRUDENTIAL
1) Save n Protect- 15 to 60 years

MAX NEW YORK LIFE

20-50 years

Maximum maturity at 70 years

2) CASHBAK-16-55 years

Save n protect-20000 minimum

1,00,000
1,00,00,000

Cashback-50000 minimum
(no limit of maximum amount)

Save n protect-minimum term 10

20 years

years.
Cashbak-minimum and maximum 15
or 20 years

ADB, CI, Major Surgical Assistance,

PAB, Term Renewable and Convertible

Level Term Insurance

Rider, Dread Disease, Payer Rider.

77

Save n protect
The sum that received on
Once the policy matures, can
get the full sum assured and
guaranteed additions as well as
the vested bonuses.
Also an extended term

maturity serves as an additional

source of income.
It has guaranteed death benefit
during the term of the policy.
Policy will acquire a cash

insurance cover for maturity

surrender value after policy has

date of the policy for 50% of

acquired a cash surrender value,

the sum assured for which not

to fund unexpected

have to pay any during the

requirements.

tenure of extended life cover

No rider benefits.
Can avail loan under policy.

A guaranteed, fixed premium

allows to plan finances better.
Will get bonus payable once the
policy has been in effect for at

Cashbak

least two years.

No loans are available under

this policy.
Can discontinue policy after
premiums are paid for 3 years.
A guaranteed surrender value is
payable, if terminate the policy
after 3 yrs premium are paid.

KEY FINDINGS OF ENDOWMENT INSURANCE:

78

 Birla Sun Life policy even caters to the infant aged one and which no
other insurer provides thus making it quite distinctive. Its investment
portfolio is also quite competitive and substantial returns apart from the
protection which other companys have.
AVIVA bounds the insured least, with its minimum term as 5 years, in the
policy whereas others have the minimum of 10 years.
ICICI Prudential Save n protect policy scores the highest among
endowment plans. Loan facilities that can be enjoyed on it make it a
highly attractive opinion. Cashbak also popular among those who feel
uncertain about their future premium paying capacities.

79

RESEARCH
METHODOLOGY

80

OBJECTIVE OF THE STUDY

The Objective of the study was to get an understanding of the life insurance
segment of the insurance industry. The Scope of the study involves

Measuring the impact of the private life insurance companies in the

Indian market and on Indian consumers.

Figure out the prospects of the private players in the Life insurance
market.

Familiarizing oneself with various products available and the additional

features or the riders attached to them.

Analyzing the schemes offered by the private sector players.

Comparison of the private Life Insurance Companies products.

81

RESEARCH METHODOLOGY
We have conducted our research taking into consideration only 5 private players
existing in the market namely HDFC STANDARD LIFE INSURANCE, ICICI
PRUDENTIAL LIFE INSURANCE, AVIVA LIFE INSURANCE, BIRLA SUN
LIFE INSURANCE and MAX NEW YORK LIFE INSURANCE. On the basis
of their performance we have drawn conclusions for the whole sector.
The information for the project of finance on life insurance industry has
been collected from both primary as well as secondary sources.
In case of primary sources the information was retrieved directly from the
concerned people and the authorities. We have conducted our research mainly
with the help of the invaluable inputs provided by the consumers of products of
the private players in the form of a questionnaire drafted by us. The
questionnaire method was used as it is more versatile than any other method and
further a questionnaire is pre planned and thus less time is wasted since a
planned set of questions are available. We have taken a sample size of 200
people. Our analysis is completely based on the responses given to us by the
respondents and the result for the same has been presented in the form of pie
charts and graphs. While there was some information, which could not be
obtained through questionnaires, for that purpose we resort to personal
interviews. A total of six In depth interviews were also taken of the agents and
managers of these private players.
Since secondary data are information published by others and the companies
they were easily available and not much effort was required in obtaining the
information.

82

SOURCES OF DATA
PRIMARY SOURCES
Questionnaires.
In depth interviews with the agents and managers of private life insurance
companies.

SECONDARY SOURCES
Newspapers.
Magazines.
Internet sites.

83

DATA COLLECTION
PRIMARY DATA
The primary data are those data which are collected afresh and for the first time
and happen to be original in character. The primary data to be collected for the
study are-

By Structured Questionnaire (Customer)

SECONDARY DATA
Secondary data are those data which have already been collected by someone
else and which already had been passed through the statically process. The
secondary data to be collected for the study arePublication of the company
Periodical of the company
By Internet Websites

RESEARCH INSTRUMENT
STRUCTURED QUESTIONNAIRE:
A Questionnaire consist of a number of questions printed or typed n a definite
order on a form or set of forms. It is the set of questions presented to the
retailers for their answers. When the questions have only two alternatives or of
multiple choice, then it is known as closed-end questionnaire, which is hence
used the given study.

84

DATA ANALYSIS

85

ANALYSIS OF THE MARKET

FINDINGS
It may be noted that the pie charts and bar diagrams have been drawn on the
basis of the total number of questionnaires filled i.e. 200 and on the basis of the
number of responses we have received for each question. The interpretation for
the same has been done in percentage form.
1. Thinking of insurance, what comes to your mind?

INSURANCE MEANS
20%

LIC
SECURITY
TAX SAVING

50%

30%

Majority of the population(50%), when they think of insurance it means LIC

where as 20% & 30% of the population think it as tax saving and security
respectively. Thus it can be seen that LIC is well based in the minds of the
people.

86

2. Out of the following, you have an insurance policy of (put tick mark)
LIC

AVIVA

ICICI

NEW YORK MAXLIFE

BIRLA SUNLIFE

HDFC

No. OF PEOPLE

Others, specify

50
40
30
20
10
0

INSURANCE POLICY PEOPLE HAVE

40

LIC
AVIVA
NEW YORK MAXLIFE

20
9

18
7

ICICI
BIRLA SUNLIFE
HDFC

COMPANIES

Major part of the population has their insurance policy in LIC. And the private
players are only able to get few policies done after the insurance sector was
privatized of which, ICICI & HDFC have the majority of it.

87

3. What type of policy do you have?

TYPES OF POLICIES PEOPLE HAVE

28

No. OF PEOPLE

30
25
20
15

20 20
ENDOWMENT

12

14

10

MONEY BACK
SINGLE PREMIUM
TERM POLICY

5
0

WHOLE LIFE

POLICIES

Most of the people have term policies; endowment and whole life are on the
same platform. Money back and single premium are less desirable by the
people.

88

4. What do you look for, while opting for a Life Insurance Company?
PEOPLE LOOK FOR WHILE OPTING FOR
LIFE INSURANCE COMPANY
24%
RETURN ON
INVESTMENT

34%

GOODWILL
ADDITIONAL
BENEFITS
SECURITY

9%

33%

When people opt for a Life Insurance Company, most of them look for security
of their money, goodwill of the company and return on their investment. Not
many of them look for additional benefits.

89

5. What do you look for, while opting for a Life Insurance policy?

PEOPLE LOOK FOR WHILE OPTING FOR

LIFE INSURANCE POLICY
23%
31%

TAX SAVING
INCOME
SECURITY
OLD AGE
BENEFITS
SAVINGS

24%
22%

In India most of people take insurance policy because it gives them tax benefits.
It plays a major role. Others such as income security, savings and old age
benefits go behind it.

90

6. Do you think insurance is superior to other forms of savings?

INSURANCE SUPERIOR TO OTHER

FORM OF SAVINGS
16%

YES
NO

84%

Majority of the population believe that insurance is superior to other form of

savings. It provides tax benefits which is not provided in other forms of savings
and to the more it provides security for the future.

91

7. Is price an important consideration while opting for an insurance policy?

PRICE IS AN IMPORTANT CONSIDERATION
26%

YES
NO

74%

Most of the people when they opt for an insurance policy, price is an important
consideration for them. However, about 26% of the population do not consider
price as an important consideration while opting for an insurance policy.

92

CONCLUSION
&
RECOMMENDATIONS

93

CONCLUSION
Life insurance is also now being regarded as a versatile financial planning tool.
Research indicates that Indians have four basic financial needs during their life asset accumulation (such as buying a house or car), protecting their family,
securing their children's education, and provision for their retirement. So, while
there are three basic types of insurance, these have been structured with
increased flexibility to meet focused requirements. Furthermore, these can be
enhanced with riders to protect one against disability and provide monetary
compensation at times of critical illnesses or surgeries.
India being a country having a huge population of around one billion people
with only 22% of the insurable population in India possessing life insurance the
country has a vast potential which has been left untapped till now.
The competition in the insurance sector is becoming so intense that it has
become difficult to identify the crucial success factors though the distribution
strength will always be the key to success. Another area of vast improvement is
in service attitude and delivery. Undoubtedly, the biggest beneficiary of the
competition amongst life insurers has been the consumer. A wide range of
products, customer-focused service and professional advice has become the
mainstay of the industry, and the Indian consumer has become the focus of each
of the companys strategy.
Consumers today also seek products that offering flexible options, preferring
products with benefits unbundled and customizable to suit their diverse needs.
The trend in developed economies where people not only live longer and retire
earlier is now emerging in India. With the breakdown of traditional forms of
94

social security like the joint family system, consumers are now concerning
themselves with the need to provide for a comfortable retirement.
This trend has been further driven by the long-term decline in interest rates,
which makes it all the more necessary to start saving early to ensure long term
wealth creation. Today's consumers are increasingly interested in products to
help build wealth and provide for retirement income.
This all adds up to major change in demand for insurance products. Firms will
need to constantly innovate in terms of product development to meet everchanging consumer needs.
Competition will result in the market to grow beyond current rates and offer
additional consumer choice through the introduction of new products, services
and price options. With the heightened awareness and consumer education
comes a willingness to view life insurance as an integral part of the financial
portfolio. No longer is life insurance a poorly understood product that is pushed
onto people. Nor is it a product that is only to be bought hurriedly at the time of
filing taxes. It's now catching on as an important element that is purchased to
fulfill specific rational and emotional needs and has clear benefits and advisors
are being trained to sell insurance as a solution to meet these needs.
To conclude with we would just like to say that the Indian life insurance market
is quite a big one and more importantly a huge part of it has been left untapped
till now, therefore there is enough room for all the private players to establish
themselves provided they give the Indian consumer the best value for their
money in the long run because it will take time for the people to get out of the
nutshell of being getting insured only with LIC as till few years ago it used to
have an absolute monopoly in this market.

95

RECOMMENDATIONS
Need to create and effectively deploy differentiated strategies in sales,
distribution and marketing.
Right customer identification and thus segmentation which need to be
appropriate.

Design and manage sales force, which yields high performance. Training
of the employees can be done so that they produce best results.

Star brands can be used for promoting companys existence, as it is one of

the cheapest and most effective source just like Amitabh Bachhan is
doing for ICICI bank.
Need to create better, differentiated and detailed brochures.
Increase its agent sales force quantity as well as quality.
Target the rural population which is one of the biggest untapped area.
Less harassing documentation w.r.t insurability and claims.

Generate

some

innovative

and

alternative

channels

of

distribution, using the sources that can straight play with the
emotions of the person and influence so high that it forces the
being to go for insurance and that too willingly
96

ANNEXURE

97

QUESTIONNAIRE
Dear Sir/Madam,
We are conducting a survey to measure the prospects of private
insurers in life insurance business. We like to include your opinion in this
survey. We request you to answers the following questions.

1. Thinking of insurance, what comes to your mind?

2. Out of the following, you have an insurance policy of (put tick mark)
LIC

AVIVA

ICICI

BIRLA SUNLIFE

NEW YORK MAXLIFE

HDFC

Others, specify
3. What type of policy do you have? (Put tick mark)
Endowment

Money Back

Whole Life

Single Premium

Term Policy

Other, specify..
4. What do you look for, while opting for a Life Insurance Company? (Put
tick mark)
Return on Investment

Goodwill

Additional Benefits

Security

Others, specify

98

5. What do you look for, while opting for a Life Insurance policy?
Tax Saving

Income Security

Old Age Benefits

Savings

Other, specify.
6. Do you think insurance is superior to other forms of savings?
Yes

No

7. Is price an important consideration while opting for an insurance policy?

Yes

No

8. At any point of policy period, have you ever claimed your policy?
Yes

No

9. Have you ever insured with LIC?

Yes

No

10. Any particular reason for opting out of the LIC?

Yes

No

If yes, why?
11. Which private Life Insurance Company advertisement is more
informative? (put tick mark)
Parameters
AVIVA
ICICI
HDFC
Birla Sunlife
New York MaxLife

Excellent

Very Good

Good

Average

Poor

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12. Any suggestions to improve the services offered by various insurers?

100

BIBLIOGRAPHY
Beri G.C., Marketing Research, Tata McGraw Hill
Publishing Co. LTD., New Delhi, Third Edition (2002)
Saxana Rajan, Marketing Management, Tata McGraw
Hill Publishing Co. LTD, New Delhi, Second Edition
(2001)
Saxena R.S., Marketing Management, Himalaya
Publication, New Delhi, Ninth Edition (2000)
Kotlar Philip, Marketing Management, Pren Tice-hall of
India PVT. LTD., New Delhi, Ninth Edition (2002)
Bhandari, Research Methodology, Print 2004, Second
edition

Yogakshema (LIC House Magazine)

www.hdfcsl.com
www.lifeinsurance.com
www.google.com
www.rediff.com
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