Professional Documents
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Srinivasan Varadharajan
Bundling of products is a universal marketing strategy purchase of multiple products at the same time reduces
ranging from physical commodities to intangible the costs incurred by insurer and by bundling the
products like insurance. Internet Explorer with Windows products the benefit is passed on to the consumer.
OS by Microsoft; basket bundling of apparel at lower Insurers generally offer a basket of rider benefits, which
prices by retailers, buffet offered by hotels, low cost a prospect can choose from depending on requirements,
credit or health insurance by credit card companies and which offers cost advantage. Bundling also aids selling
multiple benefits under a single policy by insurance using the already existing intent by offering the riders
providers are some examples.. and benefits.
Price Bundling and Product Bundling are prominent Effects of bundling on risk evaluation
among different sales strategies. Price Bundling offers Bundling of products alter the likelihood of pay out and
multiple related products at a price less than the the associated risk. Diagram 1, depicts the impact of
combined price offering price advantage to the bundling from the perspective of various stakeholders in
consumer, e.g., price reductions for multiple purchases an insurance contract.
such as 'Buy 2 get 1 free' offers. Product Bundling offers
increased value to the base component, examples being Some Best of the breed Life Insurance Bundles:
car models with base and luxury versions; extended As Product Bundling has been inherent feature of
service or free regular check ups. Inseparable and insurance products for a long time, there is many a
dependent supplementary benefits such as accelerated product bundle available in the market. To cite some
death benefit or premium waiver represent Product examples:
Bundling, whereas additional Riders like accidental
New York Life's “Custom Whole Life Insurance”: A
death benefit and critical illness are that of Price whole life product with choice of paid-up date.
Bundling. “Dividend Option Term” rider, a combination of
Decreasing Term Rider and Paid up Addition
Bundling of Insurance Products:
Dividend Option, provides more insurance
Bundling of products is advantageous to both the
coverage at lower cost. It provides a level death
benefit with reduced cost of Term Insurance as
What Bundling means to diffrent stakeholders
Paid up Additions increase. It also has an option to
convert to other Whole Life products within the
first 10 policy years.
“ProtectorPlus” of Sun Life Financial a Universal
Actuaries
- Enhanced risk owing to similar bundling - Disablity and Mortality Life Product, with Long Term Care (LTC) rider. The
- Complementary bundling offers natural hedge - Term and Annuity
- Lower expenses and competitive pricing
rider provides acceleration of the policy's death
- Multiple effects of risk owing to building of riders benefit and other benefits. It also comes with a
- Moral hazard
Distributor Provider/Seller unique feature called Assist America, which
- More attractive and - Satisfy Multiple need
easier to sell than individual in single offering reimburses insured for emergency medical care
products
- More commission
- Attractive and innovative
products
expenses incurred while traveling more than 100
with lesser effort - Basket bundles offer miles from home anywhere in the world. Also
speed to market
Consumer
- Single policy satisfies multiple needs
bundled are -- choice of care providers, language
- Reduced fixed costs and hence cost advantage interpreter services and evacuation and
- Hassle free - One application
- Additional products with no additional requirements transportation to home.
- Bundled product purchase over a period of time
Jeevan Tarang from Life Insurance Corporation of
Diagram 1 India: A with-profits whole of life plan which
provides for annual survival benefit at a rate of
consumer as well as the insurer. Price variation based on 5½% of the Sum Assured after the chosen
consumer's condition is unique to Insurance. Another Accumulation Period. The Sum Assured, along
unique factor is that the requirements based on with Loyalty Additions, if any, is payable on
condition will be valid for a long enough period. Hence, survival to age 100 years or on earlier death.
Product bundling vis-à-vis Product mix some of them:
Product bundling is where the bundled products are sold
at a price less than that of the sum of individual prices.
Externalizing rules provides flexibility
Product mix is where products meeting a particular need
Build once and reuse infinitely Rules and rates can
are supplied together but the fact they are sold together be built once and reused a number of times to
doesn't necessarily reduce the price. Best example for achieve 'Speed to Market'
this is deposits, insurance, loans and mutual funds
offered under one umbrella to satisfy completely and
fulfil the financial needs of a person. Life & Other
Finance
P&C
Provider
Annuity
Provider Provider
Initially bundling does not enable product mix, as
customer was required to go to different providers to Base price of the independent products
satisfy his different financial needs. With increase in
customer focus, the trend now is to provide all that the
customer wants as a single package rather than what the
seller has. Hence product mix is all about product E- Commerce Portal
bundling now.
Distributor 1 Distributor 2
Srinivasan Varadharajan is a Life and Pensions Domain Consultant with a combined experience of over 15 years in Life
Insurance industry and Information Technology services. He holds FLMI (LOMA, USA) and, AIII (Associate of Insurance
Institute of India) Certifications. He has experience in Estimation, Requirement Development, Requirement Management,
Gap Analysis and, Quality Control activities apart from Insurance Industry business areas. His work experience spans
across India, United States and the United Kingdom. He holds a graduate degree in Mathematics.
The opinions expressed and conclusions reached by the authors are their own and do not represent any official position of
Wipro Technologies. Unless explicitly stated, the information and views expressed in this article may not be construed as
those of Wipro Technologies.