A PROJECT REPORT ON A COMPARATIVE STUDY OF ULIP PLANS OFFERED
BYICICI PRUDENTIAL COMPANIES AND OTHER LIFE INSURANCE
Submitted To: PUNJAB TECHNICAL UNIVERSITY, JALANDHAR
FOR THE PARTIAL FULFILLMENT OF THE AWARD OF DEGREE OF MASTER OF
BUSINESS ADMINISTRATION
(Session 2008-10)UNDER GUIDANCE OF: SUBMITTED BY;
Mrs. Sukhmeet kaur
Dixit Kumar Roll No. : 80906317020 SVIET Contact no. -
09017076571
SWAMI VIVEKNAND INSTITUTE OF ENGINEERING AND TECHNOLOGY PUNJAB
TECHNICAL UNIVERSITY, JALANDHAR
PrefaceMBA is a stepping-stone to the Management carrier and to
develop good Managers is necessary that the theoretical must be
supplement with exposure to the real environment. Theoretical
knowledge just provides the base and its not sufficient to produce
a good Manager thats why the practical knowledge is needed.
Therefore the Research Project is an essential requirement for the
student of MBA. This research project not only helps the students
to utilize his skills properly and learn field realities but also
provides a chance to the organization to find out talent among the
building Managers in the very beginning. In accordance with the
requirement of MBA course I have done my research project on the
topic COMPARATIVE STUDY OF ULIP PLANS OFFERED BY ICICI PUDENTIAL
AND OTHER LIFE INSURANCE COMPANIES with special reference to ICICI
Prudential.
2
Certificate by the Faculty Guide
GUIDES CERTIFICATE
This is to certify that Mr. /Ms. __________________bearing the
Reg. No. ____________ currently undergoing IVth Semester MBA in
Swami Vivekanand Institute of Engineering and Technology affiliated
to Punjab Technical University, Jalandhar he carried out a project
on ACOMPARATIVE STUDY OF ULIP PLANS OFFERED BY ICICI PRUDENTIAL AND
OTHER LIFE INSURANCE COMPANIES under my guidance and
supervision and the work done by her is original and outcome of
her sincere efforts.
Mrs. Sukhmeet Kaur Date: ----------
(PROJECT GUIDE)
3
INDEX
I. PREFACE II. CERTIFICATE III. EXECUTIVE SUMMARY IV. LITERATURE
REVIEW
Sr.noChapter-1
TitleINTRODUCTION Introduction - basics of insurance Need of
life of insurance Roles of insurance Types of life insurance
Chapter-2 Chapter-3 Chapter-4 Chapter-5 Chapter-6 Chapter-7 (i)
(ii) (iii) (iv)
INDUSTY PROFILE COMPANY PROFILE RESEARCH METHODOLOGY COMPARATIVE
STUDY DATA ANALYSIS & INTERPRETATIONS LIMITATIONS
RECOMMENDATIONS CONCLUSION BIBLIOGRAPHY ANNEXURE
4
5
Literature ReviewHow a company does announced a name change
especially when the old name was well known? How does the company
explain itself to constituents who may have known the company quite
well in an earlier incarnation but may be struggling to figure out
what the new organization stands for? How can the company create a
new image while retaining the strengths of the old one? And what
role might corporate advertising play in all this? Corporate
advertising can tell a story about a company as a whole, large
organizations may need to use corporate ads to simplify their image
in the minds of key constituents and to show what unifies the
company, despite the geographical spread and variety of its
businesses. We can very well understand the concept of corporate
advertising by taking the example of ICICI Prudential
communication. When Company first began operations, the task was to
present the visiting card of the company to the public at large and
build credibility and stature and to give the consumer the
confidence that ''here is a company that can be trusted to invest
funds with.'' This required a corporate campaign - to establish the
brand, build awareness and give the brand a larger-than-life image.
The advertising idea, which was encapsulated in symbols of
protection from the initial print campaign, culminated in the
corporate film where sindhoor was used as an endearing and lasting
symbol of protection. Once the corporate image and brand identity
were established, and as the company expanded and its product range
grew, the next phase of communication was to give the consumer a
rational and tangible reason to buy - first of all insurance and
secondly from ICICI Prudential Life. This was tackled through
product-specific advertising, such as for ICICI Pru Smart Kid,
retirement solutions or LifeTime.
Key Summery Create a good citizen image through consistent &
dedicated effort. Convey the organizations commitment to the
concerned publics as well as to the masses & eliminate
prejudices, if any held by opinion leaders in particular & by
the public in general.
6
Boost both employee management relation & employee morale
enabling all Members of the internal public to discover a new
vitality.
EXECUTIVE SUMMARY
Title of the project:Study ULIP in current market scenario/
Study customer response towards ULIP
Objectives: Working of the unit linked insurance plans Swot
analysis of the product Comparative study of the competition Study
tax planning solutions available in the market Study asset
allocation through insurance plans Market interface
Comparative analysis done on: Life insurance corporation HDFC
Stan Life Birla Sun Life Bajaj Allianz
Research Methodology:7
Primary data collected by personally visiting these leading
insurance players. Eg: LIC, Max New York Life Insurance, Bajaj
Alliance, Birla Sunlife, HDFC Stan life.
Data Collection: Primary data collected through direct
intrection with customer. Sample size 100 people. Secondary
database from different magazines. First and foremost, accumulating
information from newspapers , Journals, Magazines, and company
webside. Secondly, taking a sample size and doing a market survey
by filling up questionnaires from customers to find out what
different companies are offering in the ULIP section and how are
they similar/different from ICICI PRUDENTIAL products. Also keeping
a track and taking down the feedback regarding perception,
attitude, taste and preferences of the customer. Thirdly, analyzing
the data collected. Comparing the ULIP products offered by other
insurance players. Critical analysis of consumer perception; their
choice and preferences. Eventually, deciding on how to familiarize
ULIP products in the market and what all safeguards need to be
taken while approaching the customers.
8
CHAPTER-1
9
INTRODUCTION TO INSURANCE
LIFE
INSURANCE
GENERAL
Insurance is a system to alleviate financial losses by
transferring risk of loss from one entity to another. Insurance is
basically a sharing device. The losses to assets resulting from
natural calamities like fire, flood, earthquake, accidents, etc.
are met out of the common pool contributed by large number of
persons who are exposed to similar risks. This contribution of many
is used to pay the losses suffered by unfortunate few. However the
basic principle is that loss should occur as a result of natural
calamities or unexpected events which are beyond the human control.
Secondly insured person should not make any gains out of insurance.
It is natural to think of insurance of physical assets such as
motor car insurance or fire insurance but often we forget that
creator of all these assets is the human being whose
efforts have gone a long way in building up the assets. In that
sense, human life is a unique income generating assets. Unlike the
physical assets, which decrease in value with passage of time, the
individual becomes more experienced and more matured as he advances
in age. This raises his earning capacity and the purpose of life
insurance 10
is to protect the income in the event of his premature death.
The individual himself also needs financial security for the old
age or on his becoming permanently disabled when his income will
stop. Insurance also has an element of savings in certain cases.
How insurance works? Suppose there are 1000 persons all aged 35
years and healthy lives. They are insured for one year against the
risk of death. Each person is insured for Rs. 50,000. If the past
experience indicated that 4 out of 1000 persons, at this age are
expected to die during the year, expected amount of death claim to
be paid to the family of four persons would come to Rs. 2,00,000.
The contribution to be paid by each of the 1000 persons will come
to Rs. 200 per year. Thus, all the 1000 persons share loss caused
to the 4 unfortunate families. 996 persons who survived till one
year have not lost anything as they secured peace of mind and a
feeling of security of their family. While insurance cannot prevent
accidents or premature death, it can help protect the family of the
decreased against the loss of income caused by the death of the
main breadwinner. In return for specified payments, insurance will
provide protection against the incidence of an uncertain event-
such as premature death. The business of insurance company called
insurer is to bring together persons who are exposed to similar
risks, collect contribution (premium) from them on some equitable
basis and pay the losses (claims) to the unfortunate few who
suffer. Classification of Insurance Insurance business can be
divided into two broad categories, life and non-life. Life
insurance is concerned with making provision for a specific event
happing to the individual, such as death whereas non life (or
general insurance) is more commonly concerned with the provision
for a specific event which affects a property, such as fire, flood,
theft etc. In this course we will only cover life insurance. So,
let us now move on to the definition of life insurance.
Definition of Life Insurance 11
According to the U.S. Life Office Management Association Inc.
(LOMA), life insurance is defined as follows: Life insurance
provides a sum of money if the person who is insured dies whilst
the policy is in effect.
NEED FOR LIFE INSURANCERisks and uncertainties are part of
life's great adventure -- accident, illness, theft, natural
disaster - they're all built into the workings of the Universe,
waiting to happen. Insurance then is man's answer to the vagaries
of life. If you cannot beat man-made and natural calamities, well,
at least be prepared for them and their aftermath. Insurance is a
contract between two parties - the insurer (the insurance company)
and the insured (the person or entity seeking the cover) - wherein
the insurer agrees to pay the insured for financial losses arising
out of any unforeseen events in return for a regular payment of
"premium". These unforeseen events are defined as "risk" and that
is why insurance is called a risk cover. Hence, insurance is
essentially the means to financially compensate for losses that
life throws at people - corporate and otherwise. The principle of
insurance works on the concept of a large number of people exposed
to a similar risk making a contribution to a common fund. Those who
suffer losses due to the occurrence of these events are compensated
for them from this fund.
12
ROLE OF LIFE INSURANCELife Insurance As An Investment: Insurance
is an attractive option for investment. While most people recognize
the risk hedging and tax saving potential of insurance, many are
not aware of its advantages as an investment option as well.
Insurance products yield more compared to regular investment
options, and this is besides the added incentives offered by
insurers. You cannot compare an insurance product with other
investment schemes for the simple reason that it offers financial
protection from risks, something that is missing in non-insurance
products. In fact, the premium you pay for an insurance policy is
an investment against risk. Thus, before comparing with other
schemes, you must accept that a part of the total amount invested
in life insurance goes towards providing for the risk cover, while
the rest is used for savings. In life insurance, unlike non-life
products, you get maturity benefits on survival at the end of the
term. In other words, if you take a life insurance policy for 20
years and survive the term, the amount invested as premium in the
policy will come back to you with added returns. In the unfortunate
event of death within the tenure of the policy, the family of the
deceased will receive the sum assured. Now, let us compare
insurance as an investment options. If you invest Rs 10,000 in PPF,
your money grows to Rs 10,950 at 9.5 per cent interest over a year.
But in this case, the access to your funds will be limited. One can
withdraw 50 per cent of the initial deposit only after 4 years. The
same amount of Rs 10,000 can give you an insurance cover of up to
approximately Rs 5-12 lakh (depending upon the plan, age and
medical condition of the life insured, etc) and this amount can
become immediately available to the nominee of the policyholder on
death. Thus insurance is a unique investment avenue that delivers
sound returns in addition to protection.
TYPES OF LIFE INSURANCE PLANS13
Life Insurance Plans: Under Life insurance plans, ICICI
Prudential offers plans under the following major need categories:
Education Insurance Plans Wealth Creation Plans Premium Guarantee
plans Protection Plans
Education Insurance Plans
One of your most important responsibilities as a parent is to
ensure that your child gets the best possible education that can be
provided. ICICI Prudential offers a wide portfolio of education
insurance plans that are designed to provide peace of mind to you,
as a parent, that your child's education will be secure. These
plans ensure that money is made available at the crucial junctures
in a child's education - Class X, Class XII, graduation and
post-graduation - to fund crucial commitments for the child's
future. Importantly, education insurance plans ensure that in the
unfortunate event of the death of a parent, the child's education
continues unhampered. Under the education insurance plans platform,
ICICI Prudential brings the following products to you. Please click
on the product name to know more about the plans.
Plan Name SmartKid New Unit-linked Regular Premium SmartKid New
Unit-linked Single Premium SmartKid Regular Premium
Plan Type Unit Linked Unit Linked Traditional
Wealth Creation Plans Wealth Creation Plans give the customer
the dual benefit of protection along with the potentially higher
returns of market-linked instruments. The most important benefit of
14
ULIPs is the flexibility they give the customer in choosing the
premium amount and also choosing the underlying fund in which this
money is to be invested. Wealth creation plans also offer the
customer more liquidity options as compared to traditional plans.
As such, ULIPs are ideal for customers who want the protection of a
life cover to be allied to the returns of market linked instrument
giving them an unmatched combination of benefits. Under the wealth
creation platform, ICICI Prudential brings the following products
to you. Please click on the product name to know more about the
plans.
Plan Name
Plan Type
LifeTime Super LifeLink Super PremierLife Gold LifeTime Plus
Unit Unit Unit Unit
Linked Linked Linked Linked
Premium Guarantee Plans The latest addition to the life
insurance product portfolio of ICICI Prudential is the Premium
Guarantee plan - InvestShield Life New. Premium Guarantee plans are
the ideal insurance-cum-investment option for customers who want to
enjoy the potentially higher returns of a market linked instrument,
but without taking any market risk. Under the Premium Guarantee
Plans platform, ICICI Prudential brings to you the following
products:
Plan Name
Plan Type
InvestShield Life New InvestShield CashBak
Unit Linked Unit Linked
15
Protection Plans The sole objective of these plans, as their
name indicates, is to serve the protection needs of the customer
and by doing so, safeguard ones family from the financial
implications of unfortunate circumstances than one cannot foresee.
Under the Protection Plans platform, ICICI Prudential brings to you
the following products:
Plan Name
Plan Type
LifeGuard Save'n'Protect CashBak Home Assure
Traditional Traditional Traditional Traditional
THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA)
16
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 decision 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.
17
WHY PRIVATE INSURANCE? All the private companies have a lock in
period of 3 yrs hence no Minimum net worth of 500 Cr required for
acquiring license with a minimum Commitment to increase the paid up
capital manifold in next five years. Re insurance for all its
policies worth more than 5 lakhs. Reinsurance partners, Audit of
accounts by at least 2 independent approved auditors each year.
Products and pricing are cleared by IRDA, which looks into the
financial IRDA is now proposing a Pvt. Policy Protection fund.
Funds to be invested in only regulated and controlled areas with
close to
disinvestments possible. paid up capital of 100 Cr in their
insurance venture.
best and the largest in the world general cologne and Swiss
reinsurance.
visibility of the product and the financial implication.
80%being pumped into only gilts thereby assuring safety of
funds.
18
CHAPTER-2
19
INDUSTRY PROFILEBackgroundIn 1912, the Indian life insurance
companies Act was passed . This was the first comprehensive
legislation in India to regulate the business of insurance. it had
been observed that the provisions of Indian Companys Act did not
meet the purpose. A further legislation was passed in 1928, But a
comprehensive legislation was passed in 1938. The amendments in the
act were made in 1956 when insurance was nationalized and LIC and
GIC were formed. Life insurance business was nationalized with
effect from 19 January 1956 and 256 companies were merged.
Insurance Act was further amended in 1999 and IRDA was formed in
view of the circumstances arising out of opening up of insurance
industry in 2000.IRDA authority to protect the interest of the
holders of insurance policies, to regulate , promote and ensure the
working of all companies. As we enter into the new millennium,
economies of the world over are getting redefined and remodeled
with the new mindsets, new technologies, new riles and new
directions. Financial sector reforms received top priority ever
since the Govt. of India initiated the process of economic
liberalization. These reforms are extending the horizons of the
financial services sector and have been transforming our capital
markets , banking and financial services industries. In the last
four decades , after nationalization of the insurance industry ,
certain socio-economic objectives were achieved through public
ownership of the insurance business. Yet, market oriented dynamism
was missing as evidenced by the lack of product innovations, high
premium rates and limited use of information technology. 20
The insurance sector reforms have encouraged Blue-Bloods of
Indian corporate sector TATA,ICICI,HDFC,BIRLA,SBI,RELIANCE,KOTAK
etc to tie up with worlds largest insurance majors to capture slice
of the countrys potential insurance market. This has brought abuzz
activities in insurance business. New players are wooing the
customer with promises of better services and customized products.
The LIC and GIC are countering the competition on the strength of
their track records, distribution networks and so on. This new
scenario will witness financially sound and experienced players
transforming the industry with best products in service and product
development , operational efficiency, marketing capability, service
plus and tech-savvy orientation. As a result, the insurance
business can become global with e-business applications. It is
awkward business playing value figures on peoples lives. It is
almost as awkward as selling the likelihood of an event people do
not want crossing their minds . in India, it is rather a shrub. For
this reason alone life insurance is no ordinary market. Under the
pressure of competitors differentiate their offerings, insurers no
longer sell life insurance as a product that meets a basic need ,
many of them sell though the appeal of a wide variety of add on
benefits ranging from tax saving to investment return, sometimes
pitying more emphasis on these basic benefits. This assumes
significance because India is witnessing foreign competition in
this sector after a long monopoly period. There is consensus on
success becoming a function of market strategy. So far the market
has been shaped by LIC . it is only recently that private insurers
with 74:26 joint ventures between Indian and foreign companies have
been formed under the watch of IRDA. ICICI prudential, HDFC
slandered life and Max New York Life were first off the block,
followed by Kotak 21
Mahindra, Royal Sundram,TATA Aig,Birla Sunlife,SBI Life and ING
Vyasa which were started later. Sudden burst of competition itself
is a unique occurrence. The Indian market distinguishes itself in
other ways too, most notably in the areas of consumer perception
and investment option. So it is worth which will the market move
and what could be the winning strategies. Basic premise is clear
that life insurance is a specialized business.
22
LIFE INSURERS1. 2. 3. 4. 5. 6. 7. 8. 9. BAJAJ ALLIANZ LIFE
INSURANCE CO.LTD. BIRLA SUNLIFE INSURANCE CO. LTD. HDFC STANDARD
LIFE INSURANCE CO. LTD. ICICI PRUDENTIAL LIFE INSURANCE CO. LTD.
ING VYSYA LIFE INSURANCE CO.PVT.LTD. LIFE INSURANCE CORPORATION OF
INDIA. MAX NEWYORK LIFE INSURANCE CO. LTD. METLIFE INDIA INSURANCE
CO. PVT.LTD. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE CO. LTD. 10.
11. 12. 13. SBI LIFE INSURANCE CO.LTD. TATA AIG LIFE INSURANCE
CO.LTD. AVIVA LIFE INSURANCE CO. LTD. SAHARA LIFE INSURANCE CO.
LTD.
23
Life Insurance CompaniesICICI Prudential Life Insurance Company
Limited ICICI Prudential Life Insurance Company Limited was
incorporated on July 20,2000.The authorized capital of the company
is Rs 2300 million and the paid up capital is Rs 1500 million. The
Company is joint of ICICI (74%) and Prudential plc UK (26%) The
company was granted certificate of registration for carrying out
life insurance business, by the insurance regulatory and
development Authority on November 24,2000.it commenced commercial
operations on December 19, 2000,becoming one of the first few
private sector players to enter the liberalized arena. ICICI
Prudential collected Rs.1584 corers as their premium during 2004-05
& the market share of ICICI pru. as per their premium is 5.63%
as a whole but in the pvt .co .ICICI hold 40% of market share. ING
VYSYA LIFE INSURANCE COMPANY PVT. LTD. ING Vysya Life Insurance is
a joint venture between three pioneers, ING Insurance Vysya
Bank.ING Group: Over
the last 150 years, ING Group has grown to become one of the
largest life insurance organizations in the world. Today it
touches the lives of over 50 millions people across 65 countries.
It offers a range of financial services including insurance,
pensions, banking and asset management. In the year 2000,total
assets of the group stood at over INR 28,42000 corers.
24
KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD. Kotak Mahindra life
Insurance Company Limited is a joint venture between Kotak Mahindra
Finance Ltd and Old Mutual. Kotak Mahindra Finance Ltd. Kotak
Mahindra is one of the Indias leading financial institutions,
offering complete financial solution that encompasses every sphere
of life. From Banking, to stock Broking, to Mutual Funds, to Life
Insurance, to Investment Banking, the company caters to the
financial needs of individuals and corporates. Old Mutual Old
Mutual, a company with over 157 years of experience in life
insurance business, has the largest financial services business in
South Africa, through its life assurance, asset management, banking
and general insurance operations. Being listed in London Stock
Exchange and included in FTSE 100 list of companies, old Mutuals
assets under management are worth $208 billion.
Tata AIG Life Insurance Company:Tata AIG General Insurance
Company Ltd and Tata AIG Life Insurance Company Ltd (collectively
Tata AIG) are joint venture companies between the Tata group Indias
most trusted industrial house and American International grouping
(AIG), the leading U.S based international insurance and financial
services organization. Both promoters have a deep and abiding
interest in Indias Insurance sector. Prior to nationalization, the
Tantas pioneered private insurance in India when Sir Dorab Tata set
up new India assurance in 1919.By 1973,when General Insurance was
nationalized the Tata company had a global presence with 56
overseas offices. Aig too has always 25
considered the Indian insurance sector to be of significance.
The AIG companies entered India in 1954 and had offices in several
Indian cities prior to nationalization. HDFC Standard Life: HDFC
Standard Life Insurance company is a joint venture between Indias
largest housing finance provider, HDFC and Europes largest mutual
life assurance company The Standard Life Assurance Company (UK).
HDFC Standard Life Insurance Company Limited is the first private
sector life insurance company to be granted a license. Standard
Life, UK, found in 1825. The UK insurance industry for 175 years by
combining sound financial judgment with integrity and reliability.
It is the largest mutual life company in Europe and has total
assets of Rs.5,50,000 crore sit is one of the very few insurance
companies in the world to have AAA rating from two of the leading
international credit rating agencies, Moody and Standard and Poors.
Standard Life was recently voted company of the decade in UK by the
independent Brokers called IFAs. LIFE INSURANCE CORPORATION OF
INDIA (LIC) The Life Insurance Corporation (LIC) was established
about 49 (in1956) years ago with a view to provide an insurance
cover against various risks in life .A monolith then, the
corporation, enjoyed a monopoly status and become synonymous with
life insurance.Its main asset is its staff strength of 1.24 lakhs
employees and 2048 branches and over six-lakh agency force. LIC has
hundred divisional offices and has established extensive training
facilities at all levels .At the apex, is the Management
Development Institute, Seven Zonal Training centers and 35 Sales
Training Centers.
26
At the industry level, along with the Government and GIC, it has
helped established the National Insurance Academy. It presently
transacts individual life insurance businesses, group insurance
businesses, social security schemes and pensions, grants housing
loans through its subsidiary; and markets saving and investment
products through its mutual fund. It payoff about Rs 6000 crore
annually to 5.6 million policyholders. Market share of LIC which is
82.3%.By the LIC 1.09 crores policies has been sold that was in the
2004-05 & the total premium that are collected by LIC in
2004-05 was Rs.9007 crores.
ALLIANZ BAZAZ LIFE INSURANCE COMPANY Allianz AG with over 110
years of experience in over 70 countries and Bajaj Auto, trusted
for over 55 years in the Indian market ,together are committed to
offering financial solutions. Characterized by global presence with
a local focus and driven by customer orientation to establish high
earnings potential and financial strength, Allianz Bajaj Life
Insurance Co Ltd was incorporated on 12th March 2001.The company
received the insurance regulatory and development Authority (IRDA)
Certificate of Registration on 3rd August 2001 to conduct Life
Insurance business in India. The Market share of Bajaj Allianz in
2003-04 was .95% which has been increases in 2004-05 and it is know
2.03% which depicts the financial position of the co.
27
CHAPTER-3
28
COMPANY PROFILEOverview Indias Number One private life insurer,
ICICI Prudential Life Insurance Company is a joint venture between
ICICI Bank-one of Indias foremost financial services companies-and
Prudential plc- a leading international financial services group
headquartered in the United Kingdom. Total capital infusion stands
at Rs. 20.60 billion, with ICICI Bank holding a stake of 74% and
Prudential plc holding 26%. We began our operations in December
2000 after receiving approval from Insurance Regulatory Development
Authority (IRDA). Today, our nation-wide team comprises of over 580
offices, over 234,000 advisors; and 22 bancassurance partners.
ICICI Prudential was the first life insurer in India to receive a
National Insurer Financial Strength rating of AAA (Ind) from Fitch
ratings. For three years in a row, ICICI Prudential has been voted
as Indias Most Trusted Private Life Insurer, by The Economic Times
AC Nielsen ORG Marg survey of Most Trusted Brands. As we grow our
distribution, product range and customer base, we continue to
tirelessly uphold our commitment to deliver worldclass financial
solutions to customers all over India.
29
Vision & Values Our vision: To make ICICI Prudential the
dominant Life and Pensions player built on trust by world-class
people and service. This we hope to achieve by: Understanding the
needs of customers and offering them superior products and service
Leveraging technology to service customers quickly, efficiently and
conveniently Developing and implementing superior risk management
and investment strategies to offer sustainable and stable returns
to our policyholders Providing an enabling environment to foster
growth and learning for our employees And above all, building
transparency in all our dealings. The success of the company will
be founded in its unflinching commitment to 5 core values
Integrity, Customer First, Boundary less, Ownership and Passion.
Each of the values describe what the company stands for, the
qualities of our people and the way we work. We do believe that we
are on the threshold of an exciting new opportunity, where we can
play a significant role in redefining and reshaping the sector.
Given the quality of our parentage and the commitment of our team,
there are no limits to our growth. Our values : Every member of the
ICICI Prudential team is committed to 5 core values: Integrity,
Customer First, Boundary less, Ownership, and Passion. These values
shine forth in all we do, and have become the keystones of our
success.
The ICICI Prudential edge comes from our commitment to our
customers, in all that we do be it product development,
distribution, the sales process or servicing. Heres a peek into
what makes us leaders. 30
1. Our products have been developed after a clear and thorough
understanding of customers needs. It is this research that helps us
develop Education plans that offer the ideal way to truly guarantee
your childs education, Retirement solutions that are a hedge
against inflation and yet promise a fixed income after you retire,
or Health insurance that arms you with the funds you might need to
recover from a dreaded disease. 2. Having the right products is the
first step, but its equally important to ensure that our customers
can access them easily and quickly. To this end, ICICI Prudential
has an advisor base across the length and breadth of the country,
and also partners with leading banks, corporate agents and brokers
to distribute our products 3. Robust risk management and
underwriting practices form the core of our business. With clear
guidelines in place, we ensure equitable costing of risks, and
thereby ensure a smooth and hassle-free claims process. 4.
Entrusted with helping our customers meet their long-term goals, we
adopt an investment philosophy that aims to achieve risk adjusted
returns over the long-term. 5. Last but definitely not the least,
our 16,000 plus strong team is given the opportunity to learn and
grow, every day in a multitude of ways. We believe this keeps them
engaged and enthusiastic, so that they can deliver on our promise
to cover you, at every step in life.
Promoters ICICI Bank
ICICI Bank (NYSE:IBN) is Indias second largest bank and largest
private sector bank with over 50 years presence in financial
services and with assets of over Rs 3446.58 bn (USD 79 billion) as
on March 31, 2007. The Bank offers a wide range of banking products
and financial services to corporate and retail customers through a
variety of delivery channels and through its 31pecialized
subsidiaries in the areas of investment banking, life and non-life
insurance, private equity and asset management. ICICI Bank is a
leading player in the retail banking market and services its large
customer base through a network of over 950 branches and extension
counters, 3300 ATMs, call centers and internet banking
(www.icicibank.com) 31
to ensure that customers have access to its services at all
times. Prudential Plc Established in London in 1848, Prudential
plc, through its businesses in the UK and Europe, the US and Asia,
provides retail financial services products and services to more
than 20 million customers, policyholder and unit holders and
manages over 251 billion of funds worldwide (as of 31 December
2006). In Asia, Prudential is the leading European life insurance
company with life operations in China, Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan,
Thailand, Vietnam. Prudential is the second largest retail fund
manager for Asian sourced assets ex-Japan as at June 2006. Its fund
management business has expanded into a total of ten markets :
China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan,
Vietnam and United Arab Emirates.
Sheet
THE Company ICICI Prudential Life Insurance Company is a joint
venture between ICICI Bank, a premier financial powerhouse, and
Prudential plc, a leading international financial services group
headquartered in the United Kingdom. ICICI 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 Prudential's capital stands at
Rs. 20.60 billion with ICICI Bank and Prudential plc holding 74%
and 26% stake respectively. As of March 31, 2007, the company
garnered Rs. 4,843 crore of weighted retail + group new business
premiums and wrote over 1.96 million retail policies. The company
has assets held to the tune of over Rs. 15,000 crore. ICICI
Prudential is also the only private life insurer in India to
receive a National 32
Insurer Financial Strength rating of AAA (Ind) from Fitch
ratings. The AAA (Ind) rating is the highest rating, and is a clear
assurance of ICICI Prudential's ability to meet its obligations to
customers at the time of maturity or claims. For the past six
years, ICICI Prudential has retained its position as the No. 1
private life insurer in the country, with a wide range of flexible
products that meet the needs of the Indian customer at every step
in life. To know more about the company, please visit Distribution
ICICI Prudential has one of the largest distribution networks
amongst private life insurers in India. As of March 31, 2007 the
company has over 580 offices across the country and over 234,000
advisors. The company has over 22 bancassurnace partners, having
tie-ups with ICICI Bank, Federal Bank, South Indian Bank, Bank of
India, Lord Krishna Bank, Idukki District Co-operative Bank,
Jalgaon Peoples Co-operative Bank, Shamrao Vithal Co-op Bank,
Ernakulam Bank, 9 Bank of India sponsored Regional Rural Banks
(RRBs), Sangli Urban Co-operative Bank, Baramati Co-operative Bank,
Ballia Kshetriya Gramin Bank, The Haryana State Co-operative Bank.
Flexible Rider Options ICICI Pru Life offers 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 rider sum
assured under the policy. If an accident results in total and
permanent disability, 10% of rider sum assured will be paid each
year, from the end of the 1st year after the disability date for
the remainder of the base policy term or 10 years, whichever is
lesser. 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. 2. Critical Illness Benefit:
protects the insured against financial loss in the event of 9
specified critical illnesses. Benefits are 33
payable to the insured for medical expenses prior to death. 3.
Waiver of Premium: In case of total and permanent disability due to
an accident, the future premiums continue to be paid by the company
till the time of maturity. This rider is available with LifeTime
Super, LifeTime Super Pension and CashPlus. About the Promoters
ICICI Bank (NYSE:IBN) is India's second largest bank and largest
private sector bank with over 50 years presence in financial
services and with assets of over Rs 3446.58 bn (USD 79 billion) as
on March 31, 2007. The Bank offers a wide range of banking products
and financial services to corporate and retail customers through a
variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking, life and non-life
insurance, private equity and asset management. ICICI Bank is a
leading player in the retail banking market and services its large
customer base through a network of over 950 branches and extension
counters, 3300 ATMs, call centers and internet banking
www.iciciprulife.com to ensure that customers have access to its
services at all times. Established in London in 1848, Prudential
plc, through its businesses in the UK and Europe, the US and Asia,
provides retail financial services products and services to more
than 20 million customers, policyholder and unit holders and
manages over 251 billion of funds worldwide (as of 31 December
2006). In Asia, Prudential is the leading
European life insurance company with life operations in China,
Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the
Philippines, Singapore, Taiwan, Thailand, Vietnam. Prudential is
the second largest retail fund manager for Asian sourced assets
ex-Japan as at June 2006. Its fund management business has expanded
into a total of ten markets : China, Hong Kong, India, Japan,
Korea, Malaysia, Singapore, Taiwan, Vietnam and United Arab
Emirates. The ICICI Prudential Life Insurance Company Limited
Management team comprises reputed people from the finance industry
both from India and abroad. 34
Ms. Shikha Sharma, Managing Director & CEO Mr. N. S. Kannan,
Executive Director Mr. Bhargav Dasgupta, Executive Director Ms.
Anita Pai, EVP Customer Service & Technology Mr. Azim Mithani,
Chief Actuary Mr. Puneet Nanda, Chief Investments Officer Mr.
Binayak Dutta, Chief Sales and distribution
Mr. N. S. Kannan Executive Director ICICI Prudential Life
Insurance Company Limited
N. S. Kannan joined ICICI Prudential Life Insurance Company Ltd
as Executive Director in August 2005, where he has overall
responsibility for sales, marketing, investments, group business
and business intelligence. Prior to joining ICICI Prudential,
Kannan was the Chief Financial Officer and Treasurer of ICICI Bank
Limited where he was responsible for investor relations and for the
finance, performance management, accounts, taxation, risk
management, secretarial and credit middle office functions. The
treasury operations of ICICI Bank include Balance Sheet Management
and Asset and Liability Management. ICICI Bank is the second
largest bank in India with an asset base of about US$ 55 billion.
The bank is listed on Indian national stock exchanges and the New
York stock exchange. Kannan joined ICICI group in 1991 as a project
officer. During his tenure at ICICI group, he has handled project
finance operations, infrastructure financing, structured finance
and treasury operations. Prior to his current assignment, he has
headed the Telecom & Transportation group and Structured
Finance group of the bank.Kannan is a postgraduate in management
from the Indian Institute of Management, Bangalore with a gold
medal for best all-round performance. He is also a Chartered
Financial Analyst from the Institute of Chartered Financial
Analysts of India and an Honours graduate in Mechanical
Engineering. His work experience includes 3 years of industrial
experience with a large engineering group in India. 35
SWOT ANALYSIS OF ICICI PRUDENTIALSTRENGTHS ICICI PRUDENTIAL is
the largest private player in the insurance industry in India, with
a market share of around 36% amongst the private players. ICICI
PRUDENTIAL has deposited a paid up capital of Rs. 925 crores with
IRDA as a caution deposit, the highest amongst all the life
insurance companies in India whereas LIC has deposited only 60
crores so far. ICICI PRUDENTIAL is the first life insurance company
to offer ECS debit facility. ICICI PRUDENTIAL is the first company
to introduce unit linked life insurance and pension products.
Presently the maximum numbers of ranges are under ULIP like life
insurance, investment as well as pension plans. Its Venture funds
management co. Ltd is Indias largest venture capital company.
PRODUCTS:
Flexibility to switch your fund value at your own discretion 4
times a year Viz Maximiser, Protector, Balancer, Preserver. Greater
transparency- policyholder knows what is happening to his money and
where the company has invested the money. Liquidity option: you can
make partial or complete withdrawals anytime after 3 years. Life
insurance plans are eligible for deduction under Sec. 80C. The
proceeds or withdrawals of life insurance policies are exempt under
Sec 10(10D), subject to norms prescribed in that section. Riders
are provided to give the policyholder the additional protection at
marginal cost- Accident and Disability rider, Critical Illness
Rider, Accidental benefit rider. 36
Loan against the policy : After the policy has acquired a
surrender value one can avail loan against the policy. WEAKNESSES
Industry in nascent stage. Rural areas still not covered. Not very
well known among the Indian population. Lack of credibility in the
public because ICICI being a private player. Premiums are high as
compared to its competitors. Very few branches in the country.
PRODUCTS: The policy doesnt have the surrender option before the
3rd year. Plan do not offer any guarantee or assured return The
product profile is not very comprehensive. Mortality, management
and administrative charges are sky-scraping as compared to its
competitors.
OPPORTUNITIES Liberalization of Indian economy. As the industry
is growing the whole market is virgin. The whole private sector is
open to be tapped even though the competition is fierce from
government owned insurance companies. Its a volume business that is
even if the company has few good corporates the turnover ceases to
increase by manifold. PRODUCTS: Preserver fund looks good due to
comfortable liquidity in the economy and there is little chance of
any hike in short-term rates by RBI.
37
Finance minister unveiled a budget-favoring consumer spending,
boosting demand and therefore higher economic growth THREATS The
Govt. players will become aggressive thus growth is going to be
tough. Entry of other new players is not ruled out Apprehension
towards ICICI PRUDENTIAL being a private life insurance company. We
expect the industry to rationalize in future that is mergers and
acquisitions will happen which will impact the industry and ICICI
PRUDENTIAL fortunes. PRODUCTS: Past performance of these plans is
not indicative of the future performance of the plan The sum
invested in the funds is subject to market risks and there can be
no assurance that the objective of the plans will be achieved. All
benefits payable under the policy are subject to the tax laws and
other financial enactment, as they exist from time to time
38
MEANING OF ULIPA policy, which provides for life insurance where
the policy value at any time varies according to the value of the
underlying assets at the time. ULIP is life insurance solution that
provides for the benefits of protection and flexibility in
investment. The investment is denoted as units and is represented
by the value that it has attained called as Net Asset Value
(NAV).
Unit linked insurance plans
Units in funds
Underlying investment
Contribution A ULIP structure looks like as follows:
Less charge
Investment represented as units
Life cover
39
FEATURES OF ULIPULIP distinguishes itself through the multiple
benefits that it provides to the consumer. The plan is a one-stop
solution providing: Life protection Investment and Savings
Flexibility - Adjustable Life Cover - Investment Options
Transparency Options to take additional cover against - Death due
to accident - Disability - Critical Illness - Surgeries Liquidity
Tax planning The two strong arguments in favour of unit-linked
plans are: Firstly, the investor knows exactly what is happening to
his money Secondly it allows the investor to choose the assets into
which he wants his funds invested. An investor in a ULIP knows how
much he is paying towards mortality, management and administration
charges. He also knows where the insurance company has invested his
money. The investor gets exactly the same returns that the fund
earns but he also bears the investment risk. The transparency makes
the product more competitive. So if you are willing to bear the
investment risks in order to generate a higher return on your
retirement funds ULIPs are for you. Traditional with profits
policies too invest in the market and generate the same returns
prevailing in the market. But here the insurance company evens out
returns to ensure that policyholders do not hold money in a bad
year. In that sense they are safer. ULIPs also offer flexibility.
For instance a policyholder can ask 40
the insurance company to liquidate units in his account to meet
to mortality charges if he is unable to pay any premium
installment. This eats into savings but ensures that the policy
will continue to cover his life. ULIP came into play in the 1960s
and became very popular in Western Europe and Americas. The reason
that is attributed to the wide spread popularity of ULIP is because
of the transparency and the flexibility which it offers. Unit-
linked plans are a contemporary product: transparent and flexible.
Individuals have greater control over their investments. The
popularity of ULIPS stems from the fact that they offer customers
integrated financial solutions with a transparent charge structure.
In todays times, ULIP provides solutions for insurance planning,
financial needs, financial planning for childrens future and
retirement planning. Unit-linked insurance plans (ULIPs) have
become something of a rage with their 'promise' of market-linked
returns combined with the dual benefit of insuring your life from
eventualities. Why do insurers prefer ULIPs? Insurers love ULIPs
for several reasons. Most important of all, insurers can sell these
policies with lesser capital of their own than what would be
required if they sold traditional policies. In traditional with
profits policies the insurance company bears the investment risk to
the extent of insured amount. In ULIPs the policyholder bears most
of the investment risk. Since ULIPs are designed to mobilize
savings, they give insurance companies an opportunity to get a
large chunk of asset management business which has been
traditionally dominated by mutual funds. ULIPs are suitable for
individuals who are already adequately insured and are reasonably
well-informed and savvy to take active investment decisions by
using the `switch option' that is provided to a ULIP policyholder.
Also policyholders with regular endowment plans who are not
satisfied with the 4-6% returns can consider taking a ULIP with a
lower equity component. It is best if insurance-seekers tread the
middle path and choose balanced plans (with about 50-60% equity
component). Ideally they need to avoid taking the aggressive 100%
equity ULIP, which could needlessly expose their assets to market
volatility. So if insurancesseekers/investors play their cards
right, they can make this marriage work.
41
WORKING OF UNIT LINKED INSURANCE PLANS UNIT LINKED PLANSSUPER
SMART KIDSmartKid offers an exclusive choice of 3 education
insurance plans: SmartKid New Unit-linked Regular Premium, SmartKid
New Unit-linked Single Premium and SmartKid Regular Premium. Take a
look at the features and benefits of each plan: 1. SmartKid New
Unit-linked Regular Premium SmartKid New Unit-linked Regular
Premium is a unit-linked plan, which enables you and your child to
accumulate wealth by virtue of the performance of the underlying
market-linked instrument. Take a look at the features of the plan:
Premium: The minimum premium to be invested is Rs. 10,000 per
annum. After deducting premium allocation charges from the premium,
the remaining amount will be invested in a fund of your choice. Sum
Assured: The minimum Sum Assured that the policyholder can opt for
is Term * Annual Premium/2, subject to a minimum of Rs 1 Lac Policy
term: The term of the policy will be calculated as the difference
between your child's current age and the age of your child when the
policy matures. Mortality, Policy Administration charges: These and
other charges will be deducted from the units in the fund. 2.
SmartKid New Unit-linked Single Premium SmartKid New Unit-linked
Single Premium works in much the same way as SmartKid New
Unit-linked Regular Premium policy mentioned above. The only
different feature is the premium amount-you will be required to pay
only a single premium, which starts at as low as Rs. 50,000.
Additional Features and Benefits Common to All 3 Plans
Regular payouts: As your child approaches key educational
milestones such as 12th standard or graduation exams, he or she
will receive regular payouts, guaranteeing he or she continues to
study, no matter what the circumstance. Death Benefit: Your child
will receive the Sum Assured immediately, should something happen
to you. ICICI Prudential will pay the remaining premiums, ensuring
your child continues to receive policy benefits, as always. Income
Benefit Rider: You can choose to add the benefits of this rider to
your child's education plan. Should you depart before your son's or
daughter's education is 42
complete, you child will receive 10% of Rider Sum Assured, for
the balance term of the policy. Add-on riders: 'Accidental Death
and Disability Rider' and 'Waiver of Premium Rider' ensure your
child stays doubly protected, at all times. You can choose to add
these to your child's education policy. Tax benefits: Premiums you
pay for a SmartKid policy are eligible for tax savings [u/s 80(C)].
Maturity and death benefits are eligible for tax exemptions [u/s
10(10D)]. 3. SmartKid Regular Premium Flexible investment option:
Choose the amount of premium with which you wish to safeguard your
child's education. Flexible policy tenure: The tenure of the plan
will be calculated as the difference between your child's current
age and his or her age at which the policy matures. Flexible
premium options: The premium will be calculated based on 3 factors:
Sum Assured, policy tenure and your age. Guaranteed bonus: A
guaranteed bonus of 3.5% per annum is declared for the first 4
premium paying years plus an annual vested bonus declared in
subsequent years.
LifeLink Super
Well-deserved financial incentives, rewarding business profits
and even ancestral money are precious amounts that you should
invest immediately so they earn you potentially higher returns in
the long run. Invest in ICICI Prudential's LifeLink Super policy-a
single-premium unit-linked policy
that works best for investors who have in mind long-term
financial goals, such as the education of a child or the purchase
of a larger home. Apart from the potentially higher returns that
you can earn, LifeLink Super insures your family against
misfortunes with its protective insurance cover. Read more about
the features and benefits of this plan, right away.
43
LifeLink Super at a glanceMinimum/Maximum Entry Age Minimum
Policy Term Minimum Single Premium Minimum Sum Assured Tax Benefit
0 years to 65 years 5 years Up to age 44: Rs. 25,000, age 45 and
above: Rs. 50,000 Annual Premium x Term/2. Subject to a minimum of
Rs. 1,00,000 Premium payment up to 20% of the Sum Assured is
eligible for benefit under Sec. 80C. Any amount paid to you will be
eligible for tax benefits under Sec. 10 (10D) exemption, if premium
paid in any year does not exceed 20% of the Sum Assured.
Maximum Age at Policy Maturity 70 years
Features and benefits of LifeLink Super2 options of Sum Assured:
Choose to receive either 125% or 500% of the single premium amount.
Flexible policy term: Decide how long you wish to invest in this
policy. You can invest for a minimum of 5 years and keep your
investment growing for as long as you wish after that. Partial
withdrawal of money: Withdraw funds in installments from the 4th
year onwards.
Attractive premium allocation rates: Enjoy 100% allocation for
premium amounts equal to or greater than Rs. 5 lacs. 6 investment
funds: Select among Flexi-Growth, Maximiser, Flexi-Balanced,
Balancer, Protector, and Preserver, based on your financial goals
and risk profile. Switch benefit: Switch between funds anytime to
maximize on market movements. You can switch funds 4 times a year,
at no cost. For subsequent switches, you will be required to pay a
switch fee of Rs. 100. 44
Maturity benefit: Receive the Fund Value when your policy
matures. Choose to take this value as a single lump-sum amount or
in monthly, bi-annual or annual installments spread over 1 to 5
years. Death benefit: Your family receives the higher of Fund Value
or Sum Assured should something happen to you.
Why LifeTime SuperAs an individual who desires a lot from life-a
car, a beautiful home and of course, the comfort and contentment of
your family-you would undoubtedly want to plan your finances such
that you can take care of all your requirements. Invest in ICICI
Prudential's LifeTime Super policy-a regular-premium unit-linked
policy, which offers potentially higher returns that systematically
enable you to meet your long-term financial objectives. In
addition, LifeTime Super also provides the protective benefit of an
insurance cover, which keeps your family secure, always. Read more
about the features and benefits of this plan.
LifeTime Super at a glance
45
Minimum/Maximum Entry Age Maximum Age at Policy Maturity
Minimum/Maximum Policy Term Premium Payment Frequency Minimum
Premium Minimum Sum Assured Tax Benefit (8)
0 years to 65 years 75 years 10 years to 75 years Monthly,
half-yearly, yearly Rs. 18,000 per annum Annual Premium x Term/2.
Subject to a minimum of Rs. 1,00,000 Premium paid for the policy
and critical illness benefit rider will be eligible for tax benefit
under Sec. 80C and 80D respectively. Any amount paid to you will be
eligible for tax benefits under Sec. 10 (10D) as per prevailing
Income Tax laws.
Features and benefits of LifeTime SuperFlexible policy term:
Decide for how long you want your policy. You can invest for a
minimum of 10 years and a maximum of 75 years. 3 choices of premium
payment: Opt to pay the premium on a monthly, bi-annual or an
annual basis. 6 investment funds: Select among Flexi-Growth,
Maximiser, Flexi-Balanced, Balancer, Protector, and Preserver,
based on your financial goals and risk profile. Systematic
withdrawal of money: Withdraw money in installments from the 4th
year onwards. Maturity benefit: Receive the Fund Value when your
policy matures. Choose to take this value as a single lump-sum
amount or in monthly, bi-annual or annual installments. Death
benefit: Your family receives the higher of Fund Value or Sum
Assured should something happen to you. Switch benefit: Switch
between funds anytime to adjust your portfolio, based on your goals
and risk profiles. You can switch funds 4 times a year, at no cost.
For subsequent switches, you will be required to pay a switch fee
of Rs. 100.
ROLE OF AN ADVISOR IN UNIT LINKED INVESTMENT PLANS
46
It is important for us to know that what is the role that an
advisor will play. At ICICI Prudential, you are an advisor is to 1.
Provide ongoing financial advice for his/her clients: You are an
advisor and just like a lawyer or a doctor you advice the client
about insurance and finance. 2. Identify future clients: Life
insurance is a business of contacts an the advisor constantly need
to know people so that his business expands. 3. Constantly make
appointments: Just making contacts will not be enough to develop a
good life insurance business. 4. Advisor needs to meet these
contacts and thus should make appointments on constantly. 5.
Conduct financial review meetings with prospects/ clients: As an
advisor it is necessary to meet with client not only for the
purpose of selling but also to review the need of the client and
prospects. Many people would not be in for life insurance today but
as time moves they can be requiring one. Similarly an existing
client may also be in need of more insurance as responsibilities
and liabilities increase. Close sale: Ultimately success is defined
as sales. The advisor should lead each appointment towards a sale
and close it effectively where in the client is happy on purchasing
the insurance solution and feels satisfied with it.
CHAPTER-4
47
RESEARCH METHODOLOGYResearch Methodology has many dimensions, it
include not only research methods but also considers the logic
behind the methods used in the context of the study and explains
why only a particular method of technique had been used so that
research lend themselves to p[roper evaluations. Thus in a way it
is a written game plan for concluding research therefore in order
to solve research problem it is necessary to design a research
methodology for the problem as the same may differ from problem to
problem. Research design is the conceptual structure within which
the research is conducted. Its functions are to provide for the
collection of relevant evidence with minimum expenditure of effort,
time and money. But, how this can be achieved depends on the
research purpose. In my study the research purpose is
48
exploratory study i.e. to gain familiarity with phenomena or to
achieve new insights in it. MARKET RESEARCH DESIGN : Descriptive
type DATA SOURCES RESEARCH APPROACH RESEARCH INSTRUMENT TYPE OF
QUESTIONS SAMPLE SIZE : Primary source : Survey method :
Questionnaire : Close-ended : 100 samples
MODE OF COLLECTING DATA: Respondents to be chosen randomly.
SAMPLE DESIGN: Social phenomenon being very vast, it becomes
impossible to contact each and every individual of population due
to limitation of essential resources like time and money.
Therefore, the study is preferably narrowed down to a
representative sample to make the study more manageable. Quota
sampling is adopted in the exploratory study. It is a
non-probability study in which various insurance players are taken.
SAMPLING UNIT: The data can be collected from primary sources. The
basic premises of my study are primary data but at the same time it
is supplemented with the secondary data. Sampling unit is a unit
which would be considered for the purpose of study to conduct the
comparative study of the ICICI Prudential and other insurance
companies with special reference to Unit Link Plans. SAMPLING SIZE:
It refers to the number of items to be selected from the universal,
to constitute a sample. To commence the study various insurance
players are taken. HOW DID I GO ABOUT THE PROJECT:SAMPLE SIZE A
sample size of 100 customers was selected to do this project, which
was random sampling keeping in mind the basic criteria.
49
FIELD WORK The research was done for a period of 2 months in
(students, government employee & other) ambala. I started with
MY MARKET 100 and thereafter I used to give cold calls from the
companys database and if seemed interested I take along with me the
representatives of the company for further information gathering.
1) Study of Secondary Data: The quickest and the most economical
way for researchers to find possible hypothesis is to take the
advantage of the work done earlier and thus utilize their efforts.
2) In-depth Interviews: I used in-depth interviews because it
attempts to influence respondents to talk freely about their
subject of interest .A formal questionnaire was made and according
to which the questions were asked to the respondents. Basic methods
of collecting Primary Data: 1) Questionnaire Method: The
questionnaire used by me for the purpose of data collection were of
structured type (Non-disguised). 2) Contact Method: In order to
derive information from the intended organization, it was
elementary for me to search for a link which could enable me to
conduct a research in that organization.
OBJECTIVE OF THE STUDY The project undertaken by me as a part of
my Summar Training of M.B.A.course is an effort made to study the
ULIP policies and activities in ICICI PRUDENTIAL with special
emphasis on unit linked products of the company. In this era of cut
throat competition, any organization needs to select and retain the
best talent. People selected should have positive attitude, ability
to inspire others and must be dynamic.
50
The main objectives of this study are: Working of Unit linked
Insurance Plans SWOT analysis of the product sold Comparative study
with the competitor. Study tax planning solutions available in the
market. Study asset allocation through insurance plans. Market
interphase.
CHAPTER-5
51
COMPARATIVE STUDY WITH THE COMPETITORS
LIST: LifeTime Super Vs LIC BimaPlus 52
LifeTime Super Vs Birla SunLife Classic Life LifeTime Super Vs
HDFC Linked PremierLife Vs Bajaj Allianz Unitgain Plus
LIFETIME SUPER VS LIC BIMAPLUS
Features Age Term Sum Assured
LifeTime Super LIC BimaPlus 0 60 years 12 - 55 years Minimum
premium payment term of 3years 10 years Choose your sum assured,
subject to Maximum limit upto Rs. 2 lakhs a minimum sum assured of
Rs. 1 lakh Value of units (3rd year onwards)
Survival benefit
Bid Value of the fund units 53
along with maturity bonus at 5% Death benefit of the Sum Assured
Higher of Sum Assured or value of Death during the first 6 months
units. 30% of SA + value of units, next 6 months - 60% of SA +
value of units. Death after 1st year SA + value of units. Death
during the 10th year - 105% of SA + value of units. Withdrawal
benefit Partial or complete withdrawals are Premature withdrawal
allowed available from the 3rd year onwards Contribution Flexible
contribution Investment options Minimum: Rs. 18,000 p.a.
Flexibility to increase or decrease in after one year (after
applying bid-offer spread. Not specified
contribution Not available Maximiser, Balancer, Protector &
Balanced, Secured & Risk Not available
Preserver. Increase / Decrease Available. of death benefit Bonus
units Top-up
Available Not Available. Available. Minimum top-up of Rs.
Available (Charges: 1.5% of the 5000. Charges - 1% of top-up.
top-up) 4 free switches a year, with the No free switches. Cost
of
minimum switch amount being Rs. switching is 2% of the fund
Switch Surrender value 2000. value. The policy will acquire a
surrender Partial surrender up to 50% of value after 3 complete
premium- bid value of units allowed after 3 paying years. The
surrender value is years Initial Charge from date of 100% of the
value of investments. commencement % Allocation of the premium Not
Disclosed 18000- 49,999: 1st year - 80%; 2nd year - 92.5% ; 3rd
year onwards 96%. 50000 and above: 1st year - 82%; 2nd year -
92.5%; 3rd year onwards Admin Charge 96%. None Not applicable
54
Other Charges
Not applicable Not applicable The annual administrative and fund
management charge is 2.25% for Maximiser, 2.25% for Balancer,
Fund Management 1.50% for Protector & 0.75% for Charges
Preserver. 1% of the fund per annum
IFETIME SUPER VS HDFC LINKED Features Age Term Sum Assured
LifeTime Super HDFC Linked 0 - 60 years 18 - 60 years Minimum
premium payment term of 10 - 30 years 3years Choose your sum
assured, subject to Only 5,10, 20 (age-based)
a minimum sum assured of Rs. 1 multiples are allowed as Sum
Survival benefit Death benefit lakh Assured. Value of units (3rd
year onwards) Value of units Higher of Sum Assured or value of
Higher of Sum Assured or value available
units. of units. Withdrawal benefit Partial or complete
withdrawals are Partial withdrawal available from the 3rd year
onwards
from the 3rd year onwards, provided that the Value of Units does
not go below the Sum
Contribution Flexible contribution Investment options
Assured. Minimum: Rs. 18,000 p.a. Minimum: Rs. 10,000 p.a.
Flexibility to increase or decrease in Available contribution.
Maximiser, Balancer, Protector & 5 Preserver. Fund
OptionsBalancer, Safe
Defensive
Managed, 55
Increase / Decrease Available. of death benefit Bonus units
Top-up Switch
Managed, Liquid & Growth Not available
Available Not available Available. Minimum top-up of Rs.
Available 5000. Charges - 1% of top-up. 4 free switches a year,
with the Switches are free as of now. But minimum switch amount
being Rs. the company reserves the right 2000. to put a charge on
the switches. The policy will acquire a surrender The surrender
charge is 25% of value after 3 complete premium- 3 paying years.
years outstanding regular premium. No charges after 3
Surrender value
Initial Charge
years % Allocation of the premium Charges 18000- 49,999: 1st
year - 80%; 2nd 1st yr-27%, 2nd yr- 27%, 3rd yr year - 92.5%; 3rd
year onwards - onwards- 1% 96%. 50000 and above: 1st year - 82%;
2nd year - 92.5%; 3rd year onwards 96%. None
Admin Charge
Admin charges of Rs.180 fixed
charge per annum. Other Charges Not applicable Not applicable
Fund Management The annual administrative and fund Investment
charge of 0.80% of Charges management charge is 2.25% for the Fund
Value across all the Maximiser, 2.25% for Balancer, funds. 1.50%
for Protector & 0.75% for Rider Preserver. ADBR, CIBR &
MSAR ABR & CIBR
56
SUPER PREMIER LIFE VS BAJAJ ALLIANZ UNITGAIN PLUS Features Age
Term Sum Assured Survival benefit Death benefit Super Premier Life
Bajaj Allianz Unitgain Plus 18 - 60 years 0 - 60 years Premium
paying term of 3 years, 5 Minimum premium payment years, 7 years or
10 years. term of 3 years Sum Assured multiple is 1 - 25 times
Minimum Sum Assured is 5 the annual premium Value of units Higher
of Sum Assured decreased by the amount of withdrawals made or
Higher of Sum Assured or value of units. value of units Withdrawal
benefit Partial withdrawals are available after Partial or of 3
years' premiums. complete times the premium paid. Anytime after
payment of 3 full year's premiums.
the 3rd policy year and after payment withdrawals are available
after Complete the 3rd years contribution withdrawals are available
after the 1st year premium. Contribution Flexible contribution
Investment options However surrender Minimum: Rs. 10,000 p.a.
Available & Equity Index Fund, Equity Plus Fund, Debt Fund,
Balanced Fund, Cash Fund Available penalties will apply. Minimum:
Rs. 60,000 p.a. Available Maximiser, Preserver. Decrease in death
Available. benefit Bonus units Top-up Switch Surrender value
Balancer, Protector
Available. Not available Available. Minimum top-up of Rs.
Available. Charge are 2% of 5000. Charges - 1% of top-up. the
top-up amount 4 free switches a year. Three free switches every
year. The policy will acquire a surrender Withdrawals are only
allowed value from the 1st year onwards. after payment of 3 full
year's 57
Initial Charges
% Allocation of the premium 3 year premium paying term Rs.
60.000 - Rs. 4,99,999: 1st year: 87%; 2nd and 3rd year: 96% Rs.
5,00,000 and above: 1st year: 89%; 2nd and 3rd year: 96% 5, 7 and
10 year premium paying term Rs. 60.000 - Rs. 4,99,999: 1st year:
88%; 2nd and 3rd year: 97%; 4th and 5th year: 98%;6th year onwards:
100% Rs. 5,00,000 and above: 1st year: 90%; 2nd and 3rd year: 97%;
4th and 5th year: 98%; 6th year onwards: 100% Admin charge of Rs.
60 / month
premiums % Allocation of the premium 1st year - 76%; 97% from
year 2 onwards
Admin Charge
Annual admin charges of Rs.
20 Fund Management The annual investment charge is 1.50% 1.5%
p.a. for a Equity Plus Charges for Maximiser, 1.00% for Balancer,
Fund, 1% p.a. for Equity Index 0.75% for Protector & Preserver.
Fund, No specific charges in case of Balanced Fund, 0.7% p.a. for
Debt Plus Fund and 0.7% in case of Cash Plus Rider ADBR & CIBR
Fund. ABR, ADBR, CI & Hospital Cash Benefit
STUDY TAX PLANNING SOLUTIONS AVAILABLE IN THE MARKETTAX BENEFITS
ON INSURANCE AND PENSION 58
Life insurance and retirement plans are effective ways of saving
taxes. The tax breaks that are available under various insurance
and pension policies are described below: Life insurance plans are
eligible for deduction under Sec. 80C Pension plans are eligible
for a deduction under Sec. 80CCC Health riders are eligible for
deduction under Sec. 80D The proceeds or withdrawals of life
insurance policies are exempt under Sec 10(10D), subject to norms
prescribed in that section. Tax Rates for Individuals The rates of
income tax for FY 2007-08 are as follows:
Total Income (Rs.)
Rate of tax Senior citizen Women below 65 Nil Nil Nil Nil 20%
30% years Nil Nil 10% 20% 20% 30%
Others Nil 10% 10% 20% 20% 30%
Upto Rs 1,00,000/Above Rs 100,000/- to 145,000/Above Rs
145,000/- to 150,000/Above Rs 150,000/- to 195,000/Above Rs
195,000/- to 250,000/Above Rs 250,000/-
Surcharge on Income Tax: In case where the Total Income exceeds
Rs 10,00,000, there would be a surcharge @ 10%. Education Cess on
Income Tax: Education Cess @2% will be payable on the amount of
income tax (including surcharge). Benefits under insurance policy -
Section 10(10D) As per Section 10(10D) of Income tax Act, 1961, any
sum received under a life insurance policy, including the sum
allocated by way of bonus on such policy is exempt from tax.
However, this rule does not apply to following amounts: Sum
received under Section 80DD (3), or 59
Any sum received under a Keyman Insurance Policy, or Any sum
received other than as death benefit under an insurance policy
which has been issued on or after April 1 2003 and if the premium
paid in any of the years during the term of the policy is more than
20% of the sum assured.
60
CHAPTER-6
61
DATA ANALYSIS & FINDINGS1). Are you interested in products
offered by the ICICI PRUDENTIAL? Yes No Will think 61% 22% 17%
17%
Yes No22% 61%
Will think
INTERPRETATION The good thing is that atleast the corporates
were quite eager to find out what ICICI PRUDENTIAL has to offer
whereas the major 39 % of the corporates were not even interested
in the products as they are quite satisfied by the LIC and they are
not in breaking their long relationship with them. The private
players will have to play a long battle in order to ensure that
they are serious player in the market. Basically corporates think
that its too early to invest in private companies as they have just
entered the scene and they are unsure of the security they will
have about their investment.
62
2). Are you satisfied with your present insurer?
YES No
65% 35%
35%
Yes No65%
INTERPRETATION
Here is where the challenge is. Inevitably most of the players
are very satisfied with their present insurer which makes it more
tough for the private players to attract the corporates. The
remaining 35 % are also not very dissatisfied by the services but
they are just open to new avenues and are looking forward that
private companies come with good offers so that they may shift to
them. Thus private players will have to be very proactive and in
this regard since LIC is the leader and ICICI PRUDENTIAL is lagging
behind its competitors in terms of competition.
3). Where would you like to insure if given chance? 63
LIC ICICI BAJAJ ALLIANZ TATA AIG SBI KOTAK MAHINDRA60 5060
-
60 10 5 15 8 2
NO OF PEOPLE
40 30 20 10 0LIC SBI TATA AIG ICICI
15 8 10 5 2
BAJAJ
KOTAK MAHINDRA
COMPANIES INTERPRETATION
Thus we see that the companies are comfortable in having
business with govt. owned companies as they feel its safe &
secure to have business with them which is followed by SBI as it is
the biggest bank and then followed by TATA AIG as the name TATA is
associated with it which commands huge premium in the market .
Whereas in the case of ICICI PRUDENTIAL the figures represent
mediocre performance after compelling and coxing the corporates and
creating a strong impression whether they feel interested in doing
business with the company.
4). What is peoples main concern while taking a insurance policy
(ULIP)? 64
A) Security B) Returns C) Tax rebate
40% 28% 32%
50% 40% 30% 20% 10% 0% SECURITY RETURNS FACTOR TAX REBATE
%AGE
Series1
INTERPRETATION People invest in insurance mainly because of
security concern.
5). Are you aware of LifetimeSuper introduced by ICICI
Prudential limited?
65
Yes No
58% 42%
%AGE OF PEOPLE
80% 60% 40% 20% 0% YES RESPONSE NO Series1
INTERPRETATION
The awareness level among the corporate about ICICI PRUDENTIAL
offering services is very low and the company needs to work on it.
Today is the world of marketing thus it is recommended that company
should become more media friendly by advertising more through
television channels, radio, newspapers, magazines, journals
&editorials.
66
CHAPTER-7
67
LIMITATIONS The geographical area was very much limited to
residential area & so the results are not particularly
reflection of the current behavior. Biases and non-cooperation of
the respondents. Due to limited time period and constrained working
hours for most of the respondents, the answers at times were vague
enough to be ignored. Most of the people in India take their
policies in the period preceeding March(for tax saving purposes)
& so the response to initial contacts were not all encouraging
and that has been the primary reason in the inability to quantify
the results large enough so as to reduce any relevant outcomes.
Most of the results that are spelt out have been of qualitative
aspects. People are not interested in giving personal opinion.
68
69
RECOMMENDATIONS More emphasis should be on promotional
activities. Plenty of advertisement should be done through T.V,
Newspaper and Radio as these medias are having maximum recall
value. Total financial planning and advice should be given to every
customer. More business opportunity seminars should be conducted to
make people aware of the offer given. The company should quite
frequently send their agent to the customer so that they should be
aware of the latest offer. The company should attempt to open more
and more of its branches in the country so as to promote their
product publicity.
70
71
CONCLUSIONLIC enjoys credibility over other private players in
the industry People look for security over returns in market linked
plans .Lifetime is the most popular product among the people who
are aware about ICICI Prudentials products. People are now showing
more interest in ULIP as compared to some of the traditional plans.
ICICI PRUDENTIAL has to counter the distribution network of LIC
.The product profile of ICICI PRUDENTIAL is not very
comprehensive
72
73
BIBLOGRAPHY
www.iciciresearchcenter.org www.tata-aig.com
www.iciciprulife.com www.personalfn.com
74
75
ANNEXUREDo you have any life insurance policies? Yes No
If Yes: Name of the Company Name of the plan Term of plan
________________ _________________ _________________
Annual Amount of premium _________________
1. Are you satisfied with present insurer? A) YES 2. A) Security
B) Returns C) Tax saving D) Others please specify_________ 3. Are
you aware of Unit Linked Insurance Plans offered by various
companies in India? A) ICICI C) TATA AIG E) LIC G) MAX NEW YORK B)
OM KOTAK MAHINDRA D) BAJAJ ALLIANZ F) SBI H) BIRLA SUNLIFE B) NO
Which are the main issues that you take into consideration while
purchasing any life insurance policy?
76
4. Do you know how a Unit Linked Insurance Plan works? A) YES B)
NO
5. Can you please highlight risk attached with them? A) HIGH B)
MODERATE C) LOW 6. What is your perception about the Unit link
insurance plans, are they give you a sense of security? A) YES B)
NO 7. Are you aware of Lifetime pension plan introduced by ICICI
Prudential limited? A) YES B) NO 8. If you are given a choice,
which one you take: A) ICICI C) TATA AIG E) LIC A) Fewer premiums
B) More returns C) Complementary gifts 10. Are you interested in
buying products of ICICI Prudential? A) YES B) NO B) OM KOTAK
MAHINDRA D) BAJAJ ALLIANZ F) SBI
9. What other plans or flexibility you expect from Insurance
companies?
77